We're thrilled to announce the return of GamesBeat Next, hosted in San Francisco this October, where we will explore the theme of "Playing the Edge." Apply to speak here and learn more about sponsorship opportunities here. At the event, we will also announce 25 top game startups as the 2024 Game Changers. Apply or nominate today!
Sky Mavis has raised $7.5 million for its Axie Infinity game, which uses nonfungible tokens (NFTs) to reward players financially the more they play. Backers include billionaire investor and Dallas Mavericks owner Mark Cuban.
The Vietnamese studio set out from the outset to take part in the mass migration toward NFT games. NFTs have exploded in other applications such as art, sports collectibles, and music. NBA Top Shot (a digital take on collectible basketball cards) is one example. Built by Dapper Labs, NBA Top Shot has surpassed $500 million in sales, five months after going public. And an NFT digital collage by the artist Beeple sold at Christie’s for $69.3 million. Investors are pouring money into NFTs, and some of those investors are game fans.
NFTs use the blockchain to uniquely identify and authenticate digital objects, allowing companies to create NFT-based collectibles that can be sold based on rarity. When Axie Infinity started three years ago, almost nobody cared or understood what an NFT was, said Sky Mavis’s Jeffrey Zirlin in an interview with GamesBeat.
Investors in the round include Blocktower Capital, Konvoy Ventures, Libertus, Collab + Currency’s Derek Schloss and Stephen McKeon, as well as Cuban.
GamesBeat Next 2023
Join the GamesBeat community in San Francisco this October 24-25. You’ll hear from the brightest minds within the gaming industry on latest developments and their take on the future of gaming.
“I think Axie is an amazing platform,” said Cuban in a statement. “It’s fun and engaging. It’s a game you want to play for hours on end. Add the Axie economy and you have something special. I’m excited to be part of it.”
A band of missionaries
The team was a band of missionaries (mostly based in Vietnam) who believed that NFTs would enable new types of games. Just as mobile gaming unlocked new design spaces and player archetypes, so too would NFT games. These games won’t look like the games of the past and will require an entirely new perspective and skillset to build, they believed.
They also believed property rights incentivized players to act more like founders and employees rather than users. These rights include being able to sell your game assets to anyone in the world, earning liquid tokens for playing/contributing, and being able to own a piece of the game you’re playing. If you spend money in a game like Axie Infinity, it was more like making an investment, as you might make money on that investment later on by selling what you bought.
“It’s just amazing to see the future of work through games actually happening,” Zirlin said. “I learned about NFTs through CryptoKitties, which was when NFTs burst onto the scene. It was obviously very basic, a brief proof of concept. So a lot of the Axie Infinity team members met playing CryptoKitties. A lot of people saw NFT gaming is going to be huge.”
They also believe that play-to-earn unlocks new types of work around digital Metaverse economies, just as Uber, Airbnb, and DoorDash created new types of jobs and professions. I wrote about Gabby Dizon’s Yield Guild Games as one of the groups of players that is playing Axie Infinity in order to make a living. Many of the group’s members are based in the Philippines, where the rewards from the game are worth multiple times the minimum wage.
Zirlin said that the Philippines has become a major market for Axie Infinity. The game generates money through sales of land, as well as sales of items in its NFT marketplace, where Axie takes 4.25% of each transaction. The market has done more than 30,000 Eth of volume, or $116.1 million in transactions. Players can also purchase a governance token and get a say in how to run the game.
“What we want to do is make Axie basically a decentralized protocol over time,” Zirlin said.
Axie has grown in recent months to 36,000 daily active users and $12 million in monthly NFT volume traded. Its market value is more than $2 billion. That makes it a top NFT game and one of the most-used applications on the Ethereum cryptocurrency network.
“It’s really amazing to see mothers using blockchain,” he said. “We see grandmothers, aunts, and uncles. It’s people who aren’t likely to using blockchain. It’s funny that a game can actually lead to mainstream adoption.”
Some players in the guild can afford more Axies, or the currency in the game, and they can lend them out to players who don’t can’t afford them. Those players can then use them to generate more Axies, and they will keep a large percentage of the tokens earned that way, and the rest goes to the guild.
The guilds can also acquire land, and its players can build out their plots and then the whole guild benefits from the resources generated on that land.
The next steps involve lowering barriers to entry. It’s still too hard to get started with NFT games. Sky Mavis has built Ronin, an Ethereum sidechain to scale Axie Infinity and other digital nations moving forward.
The company has also started hiring traditional game developers to make the game more fun.
The company also plans to scale play-to-learn. As an NFT game grows its community, advertisers and sponsors will start injecting capital into these ecosystems, making them even more attractive to gamers, the company said. This means that NFT games will benefit from network effects in a way that games have never been able to before. The company believes that NFTs with utility and fun baked into them are an inevitable part of the future.
Sky Mavis wants to build more fun experiences on top of Axie by upgrading its battle system, and it is also creating a new game mode via the land system. That part of the game is still in alpha testing.
“Beneath the surface, there is this idea of community ownership of a game, being able to monetize your time and effort and skill to earn actual cryptocurrency rewards,” Zirlin said. “We are actually planning and purposefully designing the game around the real money economy. When you give users more ownership, more opportunities, a lot of really amazing behavior starts to emerge. They feel like they’re owners of the game.”
Sky Mavis has 25 people now, mostly in Ho Chi Minh City in Vietnam, and it may double or triple its size in the coming year. Chief operating officer Aleksander Larsen is from Norwell, while Zirlin is based in the Maldives for the moment.
“We bring together the East and the West in a nice way,” he said. “One of our strengths is we have a global team.”
GamesBeat's creed when covering the game industry is "where passion meets business." What does this mean? We want to tell you how the news matters to you -- not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. Discover our Briefings.