The billion-dollar industry you didn’t know existed 🧨
Blockchain gaming is creating Loyalty points 2.0 and putting your air miles to shame
NFTs have been all the rage in 2021 . Digital pieces of art , bored apes and punks are selling for tens of millions of dollars (actually a digital punk sold for $90mln but who is counting). There is one area of crypto that is taking off that may not have heard of. It holds massive implications for not only the sector but also the world of commerce. Play-to-earn gaming.
🐱Axie Infinity (AXS) just breached $1bln in all-time sales, 1mln daily players and $11mln a day in revenue. The game is Tamagotchi (for those 90s kids) on steroids. You can buy, breed and sell digital pets BUT the difference is that all pets are stored on the blockchain and can be traded for real money.
📈 The game’s popularity has been exponential with an 830% increase in just 2 months.
👩🌾 In the past, we have all toiled away on games to win some sort of in-game currency that was only valuable within the game, but now that has changed. Whilst this has been a long time coming, it is as game-changing as humans moving from farm living sustenance to being paid a currency to work on the farm and spend it where you like.
What is it?
🐣 Vietnamese developer Sky Mavis created a game where you buy, breed and train creatures to complete challenges to do battles online. The objective is to obtain small love potions (SLPs) which can be used to breed new Axies.
🧉 SLPs are also a cryptocurrency so the more you play more the more you can earn.
Top players can earn over $400 a day from their Axies whose price has been volatile but massively upward trending
💲 Axis themselves are NFTs with specific attributes that can also be traded for money.
😎 Sky Mavis said that 40% of its users are from the Philippines, with Venezuela and the US close behind.
👩🏫 To get started players need to buy three Axies, that can sell for $350 each (highest price was $120k and a piece of virtual in-game real estate was sold for $1.5mln earlier this year). If you can’t afford to buy one you can rent one and there are lots of people willing to either rent or revenue share on a scholarship, allowing anyone to get in on the ground floor.
💸People are now literally making a living from playing this game. Stories of people supporting their entire families from playing the game are not uncommon.
🎎 Some people accuse Axies infinity of being a Ponzi scheme as you need more players to play to keep the token price going up, but I think they are missing the point.
Implications beyond gaming
👍🏾 Whilst being able to take your rewards to the real world via the blockchain is clearer better than it being locked in to one game, what I find really exciting are the real-world implications.
✈ Loyalty programmes have been a core business driver for many companies. In fact, some airlines’ loyalty programmes “valuation” can be as high as the airline itself (note I do think it is hard to value these things separately). Earlier this year, American Airlines issued $10bln of debt backed by its air miles programme!
🤗 In crypto are many projects where the person that is using the product earns part of the income of the project itself. It would be equivalent of buying a frappuccino and getting a cold sugary drink as well as Starbucks equity. This creates a self-reinforcing mechanism and is a natural loyalty programme. With the use of play to earn tokens, your use of the product is of value in itself. This is not just some funny money in a game, these are real dollars.
☕What would happen if real-world businesses adopted this up? What if you bought and consumed 10 Starbucks coffees they gave you a Starbucks token that could be traded in the real world for cash or to keep if you really believed in the future of Starbucks that token could buy many more coffees in the future. What if combining your tokens with your friends would produce some special token that would give you extra special privileges (meet the CEO or have a coffee named after you). This would naturally breed loyalty and value. There is that old adage that if you have had just bought Apple shares instead of iPhones you would have been a millionaire. What if by buying the iPhone, Apple gave you an iPhone NFT that can be traded or exchanged. Could just be an authenticated NFT of the phone for the first 1000 customers or unlock discounts, jump the queue or even somehow benefit from more phones being sold. It would mean that early adopters get rewarded and share in Apple’s success. You turn fans into promoters.
😍But what I am excited about is just how much of a leveler tech actually is. From seeing India wins their first athletics gold in Javelin from an athlete that learned how to throw a javelin from youtube. To allowing a graduate in the Philippines to look after his family through playing a game. The future is so exciting.
At Smile Group we are actively looking are crypto & blockchain projects at all stages, if you have an idea or are raising money or looking for strategic help do reach out.