The milk tea shop downstairs closed last month; it used to be bustling with daily queues.
Later, I heard from the owner of the shop next door that the queue is real, but it's all driven by buy one get one free and 9.99 promotions; the regular-priced products are barely selling. It looks bustling, but in fact, it's been losing money. The user base is there, but it's not a profitable user base.
I thought of this because I've been looking at $PIXEL @Pixels recently.
10 million players, market value around 5.75 million, today's price is around 0.0075. 10 million users is quite a good number in the traditional gaming industry, many listed gaming companies don't even have this many registered users for daily active users.
But with a market value of 575 million, that averages to less than 1 yuan per user.
The valuation logic of traditional games is very straightforward.
Users come in, a portion spend money, buying skins, buying items, buying monthly cards; these expenditures become company revenue, and the revenue supports the valuation.
The more users there are, the more potential paying users there are, and the higher the valuation. If a mobile game has 10 million monthly active users, even with a payment rate of only 5%, 500,000 paying users multiplying by an average annual consumption of 200 to 300, that’s one to two billion in revenue per year. This number, when placed on A-shares or Hong Kong stocks, has a valuation of at least tens of billions.
The logic of chain games is the opposite. Users do not come in to spend money; they come in to make money.
Playing games generates tokens, and after generating them, selling them converts tokens into real money. The more users there are, the more output there is, and the larger the sell side becomes. In traditional games, users are a source of income; in chain games, users are a source of cost.
This is the fundamental reason why #pixel 10 million users can only support a market value of 575 million.
These 10 million people are not consumers; they are producers. Every action they take in the game is not creating income for the project party but producing new sell orders.
Some may say that PIXEL has usage scenarios in the game, such as creating guilds, minting pets, and VIP features.
That's right, there are consumption entry points designed in. But in reality, most players do not need these functions or can meet their needs through free means. The proportion of those who are truly willing to spend money to buy PIXEL and then spend it in the game is too low, low enough to support any valuation.
I compared before; the transaction volume reached 30 million the day before yesterday and has returned to just over 10 million these past two days. The turnover rate has always been high, but the price keeps going down.
The chips circulate rapidly between hands, but no one is willing to hold on for the long term. This is a typical net selling structure; every participant at each stage is thinking about how to sell, and no one is thinking about how to consume.
Can this model be changed?
In theory, it's possible. If a chain game can make players feel that spending money to buy tokens for consumption is worth it, just like I willingly spend several dozen yuan to buy mobile game skins without expecting to sell them for profit, then the number of users can truly convert into token value.
But the reality is that currently, no chain game has achieved this.
From Axie to Pixels, from StepN to all token-based games, they all follow the same path: attracting users with tokens, and when users receive tokens, they sell them, causing the price to drop continuously.
The premise to change this is that the gaming experience itself is good enough to make people willing to spend money on it, but the graphics, gameplay, and social experience of chain games compared to traditional mobile games have too big a gap.
The milk tea shop downstairs, if the people queuing at that time were there for the taste and willing to pay the full price, it wouldn't have failed. PIXEL is the same; if these 10 million users were there for the gaming experience and willing to pay for it, the market value wouldn't be 575 million.
But the reality is that the people in line are there for the nine yuan and nine cents, while players are there to make money. User quantity does not equal value, especially in the chain game sector.
The above is just a personal observation and does not constitute investment advice!