I recently came across a quote from Luke during an interview last year, where he essentially said: Pixels' initial strategy was to bring in earn-motivated players first, and then gradually convert them into real spenders. However, they found out that this route is basically a dead end; the Web3 user base is predominantly withdrawal-driven, making it tough to convert anyone willing to pay for the experience from that pool.
My first reaction to this statement is: this person is publicly admitting that their core strategy was wrong.
In the Web3 space, you don't usually hear stuff like this. Most project founders publicly express, 'Our strategy has always been right; the market just isn't ready yet.' Luke flipped the script and said, 'Our judgment on users was wrong, so we need to switch out our user base to make it work.' This kind of self-criticism takes some serious guts.
But later I thought about it, and there's a concern that's making me a bit uneasy.
Pixels' new strategy is to shift the target audience from Web3 natives to traditional gamers, using mobile platforms and a more user-friendly onboarding experience to attract these players. Logically, this makes sense; traditional gamers are used to paying for experiences and are generally more willing to spend than the Web3 crowd. However, these new users have no concept of the $PIXEL token itself; they're here to play games, not to hold tokens.
If a lot of traditional players come in and the daily active users go up, but these folks aren't buying the token, staking, or participating in on-chain governance, the demand for $PIXEL won't necessarily increase just because the user base grows. This contradicts my previous understanding; I thought more users would mean higher token demand, but there's also a conversion rate issue between the two.
Pixels' in-game revenue for 2024 is projected to be $20 million, all from in-game purchases, not from token appreciation. This figure indicates that the game itself has monetization potential, but it also means that this business model doesn't necessarily rely on the price of $PIXEL going up; if the game is fun, people will spend money, and the relationship with the token isn't as direct as I initially thought.
I'm not sure if this is a bullish or bearish signal. If you're a long-term player in the game, this logic makes sense; however, if you're buying $PIXEL just to wait for the token price to pump, the connection between these two might be weaker than you think.