How do Telegram mini-games make money?

Author: Jaleel Jia Liu, BlockBeats

"The Ton ecosystem has been on the verge of takeoff for three years." This has been a common joke about the Ton chain recently. Many people believe that as Telegram's public chain, Ton once ranked high in crypto fundraising, but for years it has felt like a plane circling the runway at the airport, never taking off.

But today, it seems to be a response to that joke, as mini-games on Telegram have entered a prosperous phase.

"There are currently at least over a hundred mini-games running on Telegram, and by the end of this month, more than 2,000 games are in preparation for launch. I guess Telegram itself didn't expect this day, with so many mini-games suddenly flooding in," said Zong Yue (pseudonym) excitedly.

In a previous article titled "Domestic Mini-Game Developers Being Saved by the TON Chain," we explored the development of the Telegram mini-game market from the perspective of game developers. However, developing game code and technical services is entirely different from successfully operating and profiting on TON.

How can project parties of Telegram mini-games achieve profitability? Will people really spend money on Telegram mini-games? With these questions in mind, I spoke with more game project parties.

Traffic Business: A Dominance Zone for Chinese People

When discussing how Telegram mini-games can make money through a mixed monetization model, selling traffic ads is one important method.

In addition to working on projects in the crypto space, 30-year-old Zong Yue is also a middle-aged man who loves playing games and considers himself well-versed in the gaming industry. He pointed out that most of the revenue from mini-games on Telegram comes from advertising income from other project parties, rather than player top-ups.

"The domestic gaming market mostly operates this way; for those with internet thinking, this is their dominance zone." In fact, rather than saying that Telegram mini-games are thriving now, it would be more accurate to say that the traffic business on Telegram is thriving.

If you are a newly established project party needing a traffic platform to help gain more exposure and real traffic, what options do you have? Finding crypto media could be one way, such as Rhythm BlockBeats.

Another widely used method is to seek out mainstream web3 task platforms. However, according to Zong Yue, after testing their traffic channels, these platforms now have very few real users, "Basically, studios are doing it, and very few individual users are using these task platforms anymore."

Newly established project parties need a traffic platform to gain exposure and real traffic, and Telegram mini-games happen to provide such a platform.

Most Telegram mini-games operate similarly to these web3 task platforms, with the core business model being to earn money by taking on advertising from project parties, thus creating competition for traditional web3 task platforms.

Zong Yue pointed out: "Even if the previous revenue was good and traffic was high, the prosperity of Telegram mini-games may indeed lead to the elimination of traditional web3 task platforms unless they also enter the market to capture this segment."

Not only project parties, but also savvy VC capital is eyeing the traffic gold mine of TON and is getting involved. Vertex Capital is one of them. After investing in projects, it doesn't mean everything is smooth sailing; most capital also has post-investment services, including helping projects with incubation and resource support.

Therefore, to activate users across different project parties, especially their NFT and metaverse projects like HAPE and Meet48, Vertex Capital is developing a mini-game called Token Hunter on Telegram.

Token Hunter game internal test screenshot

Like most VCs, Vertex Capital is optimistic about the market for Telegram mini-games. "Currently, although it mainly consists of yield farming games, from a technical perspective, Telegram mini-games are very similar to WeChat mini-games and can fully support some exquisite games."

It is said that VCs cannot get a foothold in the TON ecosystem, but Vertex Capital has found another way to enter. Their needs are clear: the game features do not need to be too deep, focusing on simplicity and fun to facilitate entry for web2 users, and the development process should allow for easy iteration. There seems to be no better channel than Telegram mini-games for this.

"Moreover, Telegram has lower compliance costs for reviews, and the gaming market is likely to surpass the WeChat mini-game market. This means it could be a market with hundreds of millions of monthly active users and annual market revenues in the tens of billions," a relevant person from Vertex Capital told BlockBeats. They believe that with the backing of Telegram's user base, many new project parties will gain a huge potential user base.

Will People Really Spend Money on TG Mini-Games?

Initially, I was skeptical about whether players would top up in Telegram mini-games, but my conversation with Sleepy changed my perspective.

"People think that Telegram mini-games are just for yield farming and airdrops, but this is a misconception and an information cocoon." Sleepy is the founder of NFT Weirdo Ghost Gang, established at the end of 2021 and now one of the well-known web3 NFT brands in the Chinese-speaking region. They recently announced their Telegram mini-game "OUTA," expected to launch in August.

Unlike relying solely on selling traffic in Telegram mini-games, Sleepy wants to provide a game that can better carry the IP for the holders of the Weirdo NFT. He is also confident about the possibility of players spending money on the game. "Including other project parties we have previously interacted with, they all say that the number of users willing to spend money on games far exceeds their expectations."

OUTA partial game announcement visuals

For example, Scarlett, an investor in Pluto, the publisher of Catizen, revealed that through a paid module for in-game items, Catizen has achieved over $16 million in revenue, with more than 500,000 paying customers (Atomic Wallet). This indicates that players are willing to pay for virtual items and value-added services in games.

"Besides Catizen, some top projects generate revenue through ads, reaching monthly revenues of $1.8 million, which is a significant income that can help stabilize the market and extend the game's lifespan." This was said by Jeremy, who has two Telegram mini-games, QGame and PalMiner, currently launching.

"The blockchain gaming industry has always faced sell-off pressure, and the NFT market has almost collapsed, with many games disappearing due to sell-off pressure. However, the top-up channels in games can partially alleviate this sell-off pressure." Before working on Telegram mini-games, Jeremy also had a background in NFT projects.

Jeremy also pointed out that to attract more web2 users into the game, the original intention of making games is to make them more attractive and playable. Users should top up through game experiences rather than just for airdrops, which can help alleviate some sell-off pressure.

Delving deeper into the topic of player top-ups, Sleepy believes that today's Telegram mini-games can better help manage player segmentation, but it is difficult to achieve this under traditional blockchain gaming models. For instance, users can be divided into purely free players, light spenders, and heavy spenders. "There is no hierarchy among these players; they all contribute to the game. However, many projects attempt to convert light spenders into heavy spenders, which I think is very difficult because these two types of users are fundamentally different."

Traditional blockchain gaming models limit the participation of light spenders because many projects require purchasing "shovels" to play, and these "shovels" are usually expensive. In contrast, the prices of items in web2 mobile games are relatively low; for example, a skin in Honor of Kings costs about $5, while many blockchain game items may cost dozens or even hundreds of dollars, which undoubtedly hinders the participation of light spenders.

In contrast, mini-games can better attract these light spenders to participate, achieving the previously mentioned "Twisted Tangle," where small payments of $0.99 or $1.99 can accumulate to significant amounts, allowing for a "sand pile" effect and thin profit margins with high sales volume.

As a player who has topped up over a thousand dollars in Telegram mini-games, Zong Yue is also optimistic and agrees with the top-up prospects of Telegram mini-games. "Although the playability is a bit lacking now, to put it bluntly, everyone is currently topping up for airdrops, but we will soon see some more addictive mini-games."

Mixed Monetization Will Be the Mainstream of the Future

Today's Telegram mini-games are often compared to WeChat mini-games, which has become deeply ingrained. Therefore, most current Telegram mini-games can also draw on traditional mini-game monetization models.

A visible trend is that traditional mini-games are trying mixed monetization to increase revenue sources, meaning that the original single revenue channel has been expanded into multiple channels.

Casual games that previously monetized only through ads may suddenly explode into pay-to-win casual games. Zynga's "Twisted Tangle" is a typical case; as a puzzle knot game, it accumulates revenue through small payments, with no $648 purchases, only $0.99 or $1.99 for ad-free packages, allowing for a "sand pile" effect and thin profit margins with high sales volume, resulting in a surge in in-game purchases, with monthly revenues nearing $30 million.

Not only casual games but also heavy games are attempting to pursue mixed monetization. Many heavy games are also exploring the necessity of ad monetization, adding ads for non-paying players is also a trend; it's all business, and there's nothing to be embarrassed about.

In the gaming industry, especially in the web3 sector, acquiring users for blockchain games is becoming increasingly difficult, and mixed monetization has become an important means of converting non-paying players into paying users. Telegram mini-games inherently possess this capability and can significantly enhance profitability through a combination of ads and in-game purchases.

This can also be seen in Telegram mini-games; statistics show that Notcoin's monthly revenue exceeds $300,000, and Catizen (currently one of the hottest TG mini-games) has total revenue exceeding $16 million, which includes both advertising revenue and player top-ups. So another question arises: with such considerable revenue, will these projects still issue tokens?

Issuing Tokens Is an Art

"Most projects that will issue tokens still plan to do so," Zong Yue said firmly.

In Zong Yue's view, although many Telegram mini-games are already performing excellently in terms of revenue and have a wide traffic base, the traffic business is structural and has a time window, so projects that do not issue tokens are short-sighted.

Issuing tokens is also an art. "Many Telegram mini-games have yet to issue tokens; one possibility is that they are negotiating conditions with major exchanges, and there are many nuances in this; another possibility is that they lack channels and resources, are not familiar with token management, and are purely dragging users along."

In the latest podcast and article, Sleepy also discussed their views and strategies regarding token issuance in detail. His attitude towards token issuance has undergone a significant change. Initially, Sleepy and his team were resistant to issuing tokens, mainly due to compliance issues and the long-term impact on project development. Sleepy believes that issuing tokens is a double-edged sword; while it can accelerate project development, improper use can also lead to rapid project collapse.

They believe that only infrastructure projects are suitable for early token issuance because these projects have long verification cycles, and it is difficult to maintain long-term development without tokens. However, for consumer, IP, and application projects, Sleepy believes that early token issuance may become a burden because these projects need time to validate market acceptance.

After a period of development, Sleepy's business model gradually became viable, and they began to consider how to use tokens to incentivize community members. They realized that many Telegram users are willing to pay for content, and the number of users willing to spend money on games far exceeds expectations. This changed their perspective on token issuance, believing that issuing tokens at the right time could promote further project development.

An increasing number of project parties and VC capital are joining this ecosystem, demonstrating the enormous potential of this market. Despite facing numerous challenges, such as game playability and the risk of "crashing" after issuing tokens, the profitable revenue and massive traffic are gradually proving the market value of Telegram mini-games.

Perhaps soon, we will see a truly large-scale Telegram mini-game on TON, or it may already be in our sights; it’s just that people have not yet fully realized it.