The Axie Infinity Empire is in decline, and the Game Guild is looking for new targets

At the age of 18, Kevin Hoang dreamed of playing games to earn money. Ten years later, when he first saw the NFT game Axie Infinity, he felt that his childhood dream had come true. He quickly brought AcadArena, the Filipino esports community he founded years ago, into the vast realm of "game guilds, companies that push new players into the game through funding and then keep them in the game through training and management.

NFT games like Axe Infinity require players to own or acquire three Pokémon-like mobs, called Axes, each of which is a unique NFT that can be fought, traded, and multiplied. Their cost is usually around $3,000, which is too high for the average player, most of whom are in the Philippines and Venezuela. The development of unions filled this gap by renting out these creatures as "scholarships", which has become one of their ever-increasing range of services.

Previously, companies like AcadArena relied on temporary brand sponsorships and tournament prize pools, and now, offering scholarships for blockchain games, AcadArena has garnered $3.5 million in seed funding. Hoang said reinventing in the direction of the guild was a step toward stability. He told Rest of World: "The guild model itself, which allows people to play with assets for free, is very tempting. ”

But even in the face of the proliferation of NFT games, Axie's simplest growth may have lagged behind by various indicators. This month, the game's monthly player base will see its first decline since the game's outburst in 2020. The price of Axie is as low as $26. Other highly anticipated games such as Star Atlas and Aurory are in development. As Axie struggled to grow her popularity, battling soaring in-game inflation and falling monthly incomes, the guilds that propelled players into the game had begun to diversify into the games they hoped would be the next successful one.

Guilds draw players into NFT-based games where they can quickly make money by converting in-game tokens into cryptocurrency and then into cash in games like Axe Infinity. In less than 12 months, about $80 million in investor money flowed into AcadArena, Yield Guild Games (YGG) and similar game guilds in Southeast Asia, an extraordinary explosion for such a business that has only existed for more than a year.

The influx of money was in the hope that Axie Infinity would offer a model that would evolve into a complete, profitable game money-making game model, perhaps even setting the standard for the so-called "metaverse," a well-known undefined concept, as the guild founders and investors claim. Piers Kicks, head of cryptocurrencies at venture capital firm Bitkraft Ventures, said that in the long run, the guild aims to provide "infrastructure and economic tracks" by being one of the first movers in the space. YGG is one of the earliest and largest organizations of its kind, with over 10,000 members, and has rapidly expanded to invest in more than 30 games.

Of the $80 million pouring into guilds in Southeast Asia, about $30 million went to YGG. According to Axie Archipelago, a guild tracking project acquired by YGG, more than 500 guilds of varying sizes have sprung up in the Philippines alone. According to Rest of World's analysis based on media coverage and Crunchbase data, the wave of investment in guilds has collectively accounted for around 45% of all funding in the Southeast Asian gaming industry over the past 11 months.

For players, Axies is not the end goal, but a means of obtaining in-game tokens (referring to In this article, Smoke Love Potion), whose buyers are usually cryptocurrency investors who trade the coin like other investments. In late 2020, as prices rise, guilds pour in to buy Axes and rent them to players to get a share of the proceeds. In 2021, Axie Infinity's daily active users increased from around 700,000 to more than 2 million.

At the peak of the game, game-based guilds reap quick rewards. Unlike early-stage local startups like Go-Jek and Grab, which went through a long period of cash burn, guilds can generate significant revenue immediately after players make money.

Founded five months ago, Good Games Guild (GGG), whose slogan is "Play for a Living," was founded after seeing YGG's success. Co-founder Aditia Kinarang said GGG offers a halving share, spending about $1,500 on three Axes on average, and expecting a return on investment within four months. It spends an average of $2,000 per "academic" who enters the Pegasy game and expects to reap those rewards in about two months. "We've spent about $1 million on academics," said Kinarang, who expects to break even out of total scholar investment to date within five months.

But Kinarang also said that due to the fall in SLP prices and high inflation caused by user cash-out, the public will see Axie Infinity's investment payback period extended. He believes that if it continues, it will be detrimental to the game. GGG is working to expand its scholarship program to WonderHero, a newer play-earning mobile role-playing game, while incubating three other games internally to develop more promising products.

Guilds were critical from the start to the ever-expanding user base on which NFT games depended. Yan Liberman, co-founder of venture capital fund Delphi Digital, said that for investors, this makes the guild a complementary investment in the game itself, which has invested in YGG, Axie Infinity and other blockchain games.

The ecosystem of game moneymaking is full of such interrelated investments. In 2021, Andreessen Horowitz venture capital firm A16z invested in YGG and Axie Infinity developer Sky Mavis. (This news was also introduced in the previous articles of the old Yuppe public account, which can be viewed by viewing the historical article.) In January 2022, the company announced a $10 million investment in BreederDAO, which breeds NFT creatures for games like Axe Infinity, Crabada, and Pegasy, and then sells them to guilds.

On top of YGG, Delphi Digital also invests in BrewerDAO and developer Laguna Games, in which Gabby Dizon, co-founder of YGG, has a stake. Hong Kong-based gaming company Animoca Brands has so far taken stakes in about 10 guilds, including GGG, Singapore's Avocado Guild and YGG Southeast Asia. Even the venture capital arm of Indonesia's state-owned bank, Rakyat Indonesia, made a $15 million investment round in YGG.

In the emerging model of game money, it is assumed that some games will fail and some will succeed. Earlier this month, Sky Mavis began taking steps to save Axie Infinity's in-game economy, announcing that it would eliminate Dailies and challenge-based "Adventure Mode" to reduce SLPs. In September 2021, the developer launched an updated version, also aimed at rebalancing the game's economy. Guilds need to continue to attract players to join and create incentives for them to play and hold tokens, rather than simply cashing them out.

"The industry is sustainable, and as long as only a few games fail, other games continue to evolve," said Mihai Vicol, an analyst at Game Market Data and Insights provider Newzoo, "but if the market as a whole goes down, players can't make enough money, assets lose value, and in a serious economic downturn or economic collapse, basically everything will collapse." ”

Kicks of Bitkraft Ventures thinks the guild's funding is likely to stabilize, and if it doesn't decrease in the near future, it's a good thing for an ecosystem with a limited number of games for players to transfer. "It's going to take a long time for games to develop," he says, "and we now need to give game developers time to catch up." ”