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Luke Barwikowski on how Pixels can lastly make play-to-earn work
Within the newest episode of the Blockchain Gaming World podcast, editor-in-chief Jon Jordan talks to Pixels’ CEO Luke Barwikowski about how the Ronin social RPG has been constructing out its rewarded supply community each for Pixels itself, the video games in its wider ecosystem, and the way it additionally plans to open out the platform for any sport developer – whether or not web2 or web3 – to make use of.
BlockchainGamerbiz: How have you ever discovered 2025 up to now?
Luke Barwikowski: I feel since I’ve been constructing, that is in all probability the worst market sentiment I’ve seen within the area. That is worse than the FTX crash or another black swan occasion. I’m seeing builders who've been right here for a very long time beginning to lose religion. However there’s additionally an optimistic aspect.
I feel why individuals are feeling this manner is as a result of retail has deserted gaming cash utterly. Token efficiency with regards to any gaming coin and most alts as properly haven't had the efficiency. My take is that retail has been burned too many occasions by these altcoins. There’s no narrative to purchase them.
Meme cash actually accelerated the dying of those altcoins. You used to have the ability to purchase an altcoin and maintain it and it might go up for somewhat bit. The meme coin cycle of cash dropping their worth inside 15, half-hour killed retail publicity. Retail has a really adverse sentiment on crypto.
What we actually must do is exit and entice folks in web2 with the actually cool stuff that we’ve realized during the last 4 to 5 years as an trade. As a result of now we have seen sparks of brilliance on this trade and issues that basically labored, and issues which can be higher than their web2 counterparts. We haven’t marketed this proper or at the least introduced them in an approachable option to these web2 customers. That’s lots of my focus transferring ahead.
Constructing blockchain video games is rather a lot tougher beneath these circumstances.
Sure, lots of web3 gaming was sponsored by the hypothesis layer and now that hypothesis layer has mainly dried up. With out hypothesis, it's important to construct one thing that’s basically sound and it’s very troublesome to do and pull off. I feel that’s why much more web3 gaming groups are struggling too, as a result of the fascinating half about web3 is that in concept, hypothesis might bootstrap a sustainable ecosystem.
That was our concept at Pixels. We knew the preliminary stuff was unsustainable, however we had been making an attempt to make use of that unsustainability to maneuver us into sustainability. It’s taken us so lengthy to do it. We've got been grinding on this, making an attempt to show the economics to be sustainable, for the final two years.
Lastly now we’re making good progress. It takes a ton of time. It takes a ton of experimentation and a ton of issues to check out. That’s why lots of the builders within the area are beginning to really feel somewhat discouraged too, as a result of the technical work required to truly construct one thing that may be sustainable, the sport design, there’s so many various items which have to come back collectively. It’s truly utterly unrealistic to anticipate any workforce to have the ability to pull it off by themselves.
And when you’re constructing, you continue to want gamers who're ready to spend money and time on a work-in-progress expertise.
We had been digging via information a 12 months in the past once we launched Pixels Chapter Two. That was one of many issues that made me notice that we wanted to alter issues drastically. We began analyzing the consumer information, the place spending was coming from. It was such a small p.c of our customers that had been truly spending. We knew we wanted to make massive modifications into the sport.
Our sport was liked in early 2024. Clearly it’s tremendous enjoyable to earn cash taking part in a sport, however the challenge is the economics weren’t dialed in the place we had been making any cash. In the event you preserve that up for too lengthy, it’s simply not going to work. Both the token will crash in value or the enterprise will run out of cash. The factor that folks love will go away regardless. We knew we needed to change.
It was truly surprising to me how misbalanced a few of the economics had been in these starting phases as a result of we had some sensible programs in place. We had incomes programs that had been way more superior than anything that web3 gaming had seen on the time, corresponding to our process board. Even segmented duties the place we had been focusing on completely different customers.
We began diving into the information round monetization and we noticed 1% of our customers had been taking 50% of the rewards. The proportion of web spenders had been fairly small. This churned a bunch of the energetic customers. This was principally intentional. When every consumer is dropping you cash, it is sensible to begin churning customers till you'll be able to construct that base up.
That’s what we’ve carried out during the last 12 months. We began tweaking the financial system, making modifications to the gameplay, making modifications to how we give out rewards, not caring about DAU. Caring extra in regards to the macro. We’ve been speaking about this metric referred to as Return On Reward Spend. It’s a very easy metric to know originally phases, however there’s extra that you might want to take into consideration afterwards.
We’re in all probability going to deliver out a brand new metric though I don’t know what to name it but. However Return On Reward Spend is mainly a measurement of what number of rewards your sport provides out versus how a lot spend is within your sport. It will get somewhat bit extra difficult when it's important to additionally take into consideration mixing it in along with your consumer acquisition prices, when you’re grinding paid UA. Then Return On Reward Spend is extra of a retentive mechanism than like a UA mechanism.
However the cool factor is Pixels has crossed Return On Reward Spend greater than 1 during the last two weeks after content material modifications and a few sport financial system modifications. We've got a very massive replace popping out referred to as Chapter 3 that’s supposed to spice up it much more. So, over the previous two weeks, we’ve been persistently seeing a Return On Reward Spend of 1-1.05, so a 5% margin.
How delicate is that this to having the ability to accurately goal customers?
We’ve been constructing this tech resolution for the previous 18 months, which is basically a rewarded supply system that may hype goal the appropriate forms of rewards to the appropriate forms of folks. It does a ton of automated testing. We’ll create a bunch of various presents. It’s just like the TikTok algorithm the place we’ll begin to check particular presents, the precise forms of folks, and analyze the outcomes to maximise the end result that we would like, which for us proper now, is that larger stage of Return On Reward Spend.
However there are different fascinating issues you are able to do with it too. In the event you see a selected set of customers who you wish to retain within the sport longer, you'll be able to ship them a focused supply. In case you have a bunch of customers who we name lapsed spenders, and also you wish to re-engage them, it’s a fantastic system for that. It’s a fantastic system to transform customers into first time purchasers, which actually will increase the LTV of the consumer if you will get them to spend for the primary time. That system has been wildly profitable. We began rolling it out two to 3 weeks in the past and the outcomes that we’ve seen up to now have blown our expectations away.
From first rules, I feel it finally ends up wanting like a loyalty system or a web2 cashback system. It’s a means for us to distribute earnings in a extra exact means the place we’re not giving them to bots, we’re not giving them to people who find themselves web adverse for the sport and the ecosystem. We’re truly in a position to reward individuals who assist and profit the sport.
That tech stack is extraordinarily laborious to construct. We've got a complete information science workforce, a complete infrastructure workforce, in all probability half of the workforce assets have been spent on this infrastructure, so it’s thrilling as a result of we’re lastly beginning to see a few of these outcomes and see it work even higher than we anticipated.
Within the subsequent month, we’ll in all probability be making an announcement that anybody who needs to make use of this tech can try this. This would possibly assist the trade with that essential downside of rewarded play in the way in which they wish to.
My finish objective is I feel we are able to use this to show any sport right into a web3 sport. That’s the way it works. There are web2 connections. We’re experimenting with the forms of rewards we give out. One factor we’ve observed as we’re beginning to run some paid UA campaigns is crypto could be very off-putting for regular customers. We examined sure adverts the place we provide a crypto reward or a present card, Robux or V-Bucks and people web2 rewards are a lot more practical at getting in new customers. And the cool factor is every little thing that we’ve been doing continues to be powered by web3.
What does this imply for the PIXEL token?
A key realization we made just a few months in the past is we had been making an attempt to drive companions to make use of our tokens. We thought extra video games utilizing our tokens, that’s extra token utility. However I spotted that doesn’t actually matter on the finish of the day. What issues is the income behind any of those video games, and that we’re in a position to carry the income of those video games. If we’re in a position to construct out income streams, we are able to use that to assist help the token.
We've got a reasonably elegant staking resolution proper now, the place you'll be able to stake tokens to sure video games. You'll be able to take into consideration the PIXEL ecosystem like a community or a protocol, the place it wants information. We want information to assist construct out this supply system, as a result of this supply system will assist enhance the ecosystem’s attain, visibility, and likewise drive income to the ecosystem. So the ecosystem is prepared to pay for this information, basically.
We pay these video games or their stakers via the PIXEL ecosystem the income made. And the income might be something. So long as stakers of the PIXEL token are receiving some web profit, it helps us get the safety and the information that the ecosystem must construct out a stable community that may distribute rewards in an efficient means. The income might be USD, USDT, PIXEL, we’re blissful to take any of it basically.
Within the long-term, I can see the PIXEL token changing into stake-only. We in all probability will even section out rewarding the token in the long term and basically cease emissions and simply have the token be stake-only.
How does the vPIXEL token match into this?
We began rolling that out silently. We didn’t actually speak about it. vPIXEL is a spend-only token so we may give it out as reward and also you received’t be capable of promote it on an alternate like Binance. So there’s some advantages to that for the ecosystem, proper? It doesn’t add any promote strain to the token. However when you love the Pixels ecosystem and also you wish to spend the token someplace, you'll be able to. You'll be able to spend it inside the sport. You'll be able to give it some thought like a hybrid loyalty foreign money. It’s semi-liquid.
I wish to view in-game rewards on a scale of liquidity. In the event you obtained a comfortable foreign money within a sport. You'll be able to’t spend it elsewhere. You can't even spend that on every little thing within a sport, like when you simply have cash in Pixels. In case you have an in-game merchandise, typically you'll be able to commerce gadgets. They’re somewhat bit extra liquid and so they’re enjoyable as a result of you'll be able to commerce them for cash. In the event you get an NFT you'll be able to commerce down a secondary market That’s extra liquid, however possibly not as liquid as a token as you continue to should checklist it.
vPIXEL sits someplace on this vary of US {dollars} to in-game cash. What I used to be questioning is how a lot folks would need it. So we used our supply system, and we began A/B testing, giving out vPIXEL versus PIXEL for a similar forms of rewards and presents. And, truthfully, it’s been more practical than I assumed. We didn’t wish to roll out too harshly however it’s efficient sufficient that we’re in all probability going to begin rewarding it extra. There would possibly even be some in-game mechanics we’ll begin to use fairly quickly.
Do you assume audiences absolutely perceive what it's?
There are methods to pores and skin it in order that it’s not so scary to customers. In our sport, once we give out vPIXEL, it appears like the opposite token. While you go to money it out, you'll be able to’t money it out, mainly. However you'll be able to take it onchain and you'll stake it. So if you're like a extra superior consumer who is aware of these items, then you are able to do a few of the onchain stuff the place you withdraw it, you stake it, after which you'll be able to earn yield from staking that token, which is cool. However when you’re only a regular consumer, you'll be able to simply spend it within the sport such as you usually would.
Are you able to inform us about Pixels Chapter 3?
The gameplay of Pixels Chapter 3 isn’t groundbreaking. It’s a distinct system that we’re making an attempt out, with some mild aggressive gameplay. The Union system is a faction system. Customers can be a part of a faction without spending a dime, not like our guilds. Our guilds had been paywalled, and we didn’t see nearly as good a participation behind the paywall as we had wished to. So it wasn’t the appropriate factor to make use of right here. And there have been too many guilds. You needed to discuss to folks to affix a guild.
Unions are one thing a free-to-play consumer can be a part of immediately and never have to speak to anyone or socialize. And we are able to create competitors amongst these factions or these unions within the sport. It’s a small, mild aggressive loop the place unions will compete for first, second, and third place prizes. The successful union will receives a commission a bigger a part of a prize pool, second place will receives a commission much less, third place would possibly get comfort gadgets within the sport.
And it’s ongoing. It’s not simply an occasion. It’s going to remain within the sport perpetually. We’re doing dynamic leaderboards. The prize swimming pools come from a operate of spending within the sport, so it’s a lot simpler for us to tweak the economics and make it in order that it’s barely worthwhile for the ecosystem. We’ll in all probability find yourself taking one thing like a 5 or 10% rake within the gameloop.
It provides mild parts of skill-based gameplay, however it’s not tremendous heavy. Pixels continues to be a farming sport. It’s nonetheless somewhat grind-oriented. That is extra of an experiment in order that we are able to see if this mannequin is enjoyable for customers. And whether it is, then we’ll double down and begin to construct out extra aggressive gameplay loops that may have extra depth of talent.
It’s good you’ve made one thing light-weight to see if it really works. Sport designers are inclined to launch options which can be too advanced, I usually assume.
Precisely. This wasn’t a problem with Pixels at first phases. We had been a workforce that mainly obtained to the place we had been from brute drive, the place we'd launch issues very early with out a lot polish. That labored very well for us.
However once we began getting a big userbase, I assumed we must always decelerate and take into consideration issues extra and attempt to construct out excellent programs. That was a mistake so we made some modifications to the workforce and we determined, we’re gonna return to our roots with regards to that philosophy. Our workforce’s energy lies in fast updates, experiments and velocity of iteration. It’s been a lot more practical. Ever since we modified these techniques, we’ve seen much more success getting in direction of our targets. It’s about determining the programs first, determining the economics first, after which we are able to make the gameplay higher and extra fascinating once we know now we have a mannequin that works.
The difficulty with web3 gaming is just not the constancy of video games, in my view. There are excessive constancy video games within web3 now, like Off The Grid however they haven’t actually found out the financial programs. And that’s the place the experimentation actually must occur to ensure that a web3 sport to be sustainable, worthwhile, and be capable of begin to scale.
That’s the following section of what we're occupied with rather a lot. When now we have this base of sustainability, it’s with much less DAU, it’s with much less high line income, however it's higher for money movement or the ecosystem. Now we’re going to wish to begin to scale these numbers again up. We did $20 million income in 2024. This 12 months it’s going to be much less, however this 12 months it’ll truly begin to be sustainable or worthwhile for the ecosystem. So it’s extra constructive for that cause.
Our web emissions from gameplay had been fairly excessive final 12 months. We’re going to finish this 12 months with web emissions being adverse. They received’t be tremendous adverse. It could be on the order of one million tokens a month, two million tokens a month. However the thought is to begin to scale that, getting new customers and getting the appropriate new customers too.
We’re operating paid UA experiments with this new app that we’re engaged on referred to as Chubkins. It simply launched in early entry final week. It’s geo-blocked to the US and it’s simply in early entry solely on Android, however we’re studying a lot from scaling this with paid UA; how we place the true cash elements of the sport; how we place rewards to those customers. All the pieces that we’re studying from this sport we’ll additionally take into the core sport when that’s able to begin to scale.
Why did you wish to launch a brand new app that’s unrelated to Pixels?
This can be a very informal sport however it’s a sport that may be very viral if we're in a position to execute properly. On the excessive stage it’s mainly a social Tamagotchi app the place it's important to elevate a pet with one other consumer.
We’re not going to emphasise something to do with crypto within it, however we'll emphasize rewards. One of many reward sorts will probably be a crypto cash-out. It’s going to be powered by this new incomes system that we’re constructing out. The one option to earn will probably be via this sensible incomes system that we began rolling out within Pixels and the remainder of the ecosystem. It’s good as a result of we are able to tweak the rewards in a means which can be from the very starting, sustainable to the ecosystem.
There’ll be bonuses for referring buddies and getting them to play with you, creating content material. We've got programs the place you’ll be rewarded for hitting sure impressions of sharing content material on TikTok. There are also rewards primarily based on milestones which can be useful for monetization or for retention, like day one, day seven, day 30 rewards. There could be fascinating assortment mechanics that we add rewards to. However the entire level is we introduce all of the ideas that we’ve realized about from Pixels right into a far more digestible format.
I don’t need anyone to be postpone by the actual fact there could be crypto parts. We wish to take the perfect parts of play-to-earn and produce it to a traditional viewers. That’s my concept and thesis. I feel that now we have seen in web3 how crazy-effective play-to-earn might be and most traditional customers haven’t actually been uncovered to this but. So I feel once we present play-to-earn via a enjoyable sport expertise to a traditional viewers not accustomed to establishing wallets or crypto, it’s going to be very fascinating to them.
It’s fascinating you appear to be the one one who nonetheless talks about play-to-earn and nonetheless believes it may be a giant advertising and marketing possibility for sustainable blockchain video games.
Sure, and we’ll discuss extra in regards to the reward system too. We’re additionally going to have a user-facing element. This entire reward system will in all probability launch as a standalone app. It’s going to be just like a few of the stuff you would possibly see in web2 primarily based on rewarded play. We’re going to have our personal tackle it.
Take a look at Pixels right here and Chubkins right here.