Author: kirin_alen d/acc
In less than three months, Catizen has more than 23 million users, nearly 3.5 million DAU, and has accumulated $16 million in in-game purchase revenue. The Telegram Premium user community has more than 2 million members, which means that 40% of Telegram members are Catizen users. In addition, there are 1.5 million on-chain users and more than 550,000 paying users, with an ARPU of $30. It also announced the release of a game center.
Coinciding with the launch of TON on Binance, this article will review why we chose to support Catizen at the end of 2022, and why we continue to be optimistic about Catizen today under the TG ecosystem.
Back in 2022, when I decided to invest in the Catizen team, these were completely unexpected to me. At that time, FTX exploded and the industry was at its lowest point. At that time, in addition to confidence in the prices of Bitcoin and Ethereum, I had no idea what the next wave of projects would be. The vague judgment is that the stories of NFT and MetaVerse in 2021 have made Crypto out of the circle, and many traditional institutions and celebrities have begun to get involved, but the experience was not pleasant. If there is a new Mass Adaption model in the next cycle, at least the model needs to be verified and more replicable to allow these people and even incremental newcomers to re-enter.
“We like incremental growth and want to bring the IAA+IAP mini program hybrid monetization model into the crypto”
This was the idea the Catizen team talked about when they first discussed the project. At this point, they already had experience with GameFi. For this team that originally made traditional traffic-investing games, pure PVP GameFi games lacked prospects. In the team's view, the hybrid model of iaa+iap (in-game ad monetization and in-game purchase monetization) combined with Crypto cashback is more exciting than making money with Ponzi, and it is easier to make use of the team's experience in traditional traffic growth and the reserves of small games - "We think we should try to bring the game to our home turf."
“Mini program games are short videos of game versions, which meet the needs of modern people’s fast-paced life.”
I was aware of this at the time, because I was bored in the bear market, and I often browsed Bilibili and Douyin, and often saw some advertisements for small program games (I recommend "Pea War", a three-match synthesis tower defense). I originally didn't know how to play it as a console player, but these game materials are more human-like and have hidden hooks. There are always some quiet and sleepless nights when you will click on these small games and recharge the first charge of 68, or watch the nesting doll advertisements to pass the level. Then play for 1 or 2 weeks and delete it, and then play another one after a while, just like quitting masturbation. I have an intuitive perception that small program games are addictive and make money.
Almost everyone has played it. The game is average but addictive.
Fast-growing mini-games
I recently read a report from Dataeyes. After only one year, by 2023, the revenue of domestic mini-program games has reached 20 billion yuan. It is expected that the revenue this year will exceed 60 billion yuan, an annual growth of 300%. According to Tencent data, the monthly active users of mini-program games have exceeded 500 million, and the online time is about one hour a day. The 14-day retention rate of the market is more than 50%. User habits are being formed, and mini-program games are entering the iPhone moment this year. At the same time, the overall game market has lacked user growth, and mini-games have become the only hope for domestic games to break through the circle in the "stock game era". The situation of finding increments in the stock era is very similar to that of the crypto.
At present, domestic mini programs are also evolving, with heavy and diversified forms, mixed monetization models, and other directions. The value of mini program games is still increasing. In the first half of 2024, the overseas sales of mini games reached 470 million US dollars, which is still in the early stage of exploration, and there is a lot of room for development.
But it is not so easy to export mini-program games overseas. The main reason is that China has WeChat mini-programs as a natural traffic source and launcher, while overseas there is no mini-program environment. PWA, the predecessor of mini-programs, has not become popular due to interest issues such as "Apple tax" until friend.tech became popular again. (By the way, I recommend playing Ton.place, the pwa version of onlyfans, which has a good user experience).
The team also came up with a solution for this.
“We want to be all in Telegram ecosystem”
At the beginning of 2023, the team felt that the answer to solving the problem of "Mini Program Games + Going Global + Crypto" was TG, the easiest platform to use as a counterpart to WeChat overseas. At the same time, the team was willing to imitate WeChat for commercialization attempts, and also understood Crypto and had a platform with a large number of users.
But at that time, the infrastructure of Telegram and Ton was not mature yet and was still in the stage of commercialization. Unlike now, it has become a prominent source of incremental growth in the crypto. It was not as easy to make this decision and stick to it as we imagine now. But in order to better communicate and run-in with the TG team, the team will also take Russian culture and Russian lessons. Behind the first wave of traffic dividends of the TG ecosystem is invisible persistence and dedication.
"Why did you choose to be a cat?" "Because I am a cat lover" "..."
Now it seems that the initial investment in Catizen was more about metaphysics. I physically recognized the addictiveness and growth of small games, believed in the market growth space for IAA+IAP mixed monetization, and felt that it would perform well when combined with TG. I understood and recognized the team's past successful experience in investing in traffic and buying volume games and their resources in the circle, as well as their experience in the crypto and their ambition for success.
Although the accidental metaphysical factors in the investment at that time were greater, seeing the flourishing of TG mini programs today makes me more optimistic about the future of Catizen.
The former ambiguously corrects, while the latter eliminates incorrect answers.
The paradox of TG ecological investment
1. The functions of TG and Ton are decoupled, and the project needs to seize the TG traffic bonus period
Unlike SOL, what we need is the 900 million potential users on TG to bring incremental users to the crypto, not Ton users. Long before the Ton ecosystem became popular, there were trading bots such as maestro, unibot, bananagun, and pepeboost that relied on TG channels to meet the user's needs for quick transactions on the chain and made a lot of money. They can be operated directly with a custodial wallet. They meet the needs of web3 users. If the project can find products that meet the needs of Web2 users, then the role of TG and Ton wallets is traffic and payment channels, which does not require complex smart contracts and makes business simpler.
Considering that TG is just trying to commercialize its traffic dividend period, overseas users have not been exposed to the penetration of domestic mini-program games (domestic mini-program games are still developing rapidly), and MiniApp itself has H5 restrictions. At the beginning, the quality of MiniApp is low, and the homogeneous competition of Tap projects is serious. It is foreseeable, but the development of MiniApp towards diversification and heavy-duty is also an inevitable trend in the future. At this stage, it is the kingly way to seize the TG traffic dividend first, and then slowly iterate the product after seizing it. Moreover, the product should also be developed from a more "humanistic" perspective, rather than competing with the quality of traditional games.
2. TG MiniApp is more like a small business, suitable for starting a business but not for investment
Traditional crypto projects focus on a narrative + Infra, and they always say, "If you want to get rich, build roads first." After raising rounds of financing from VCs and building one overpass after another, they found that there was no real demand, so they became "ghost towns." The essence of issuing coins is actually a form of non-performing asset disposal of local debt-to-equity swaps, but with the addition of narratives, they are regarded as high-potential assets.
But Telegram has its own infrastructure and residents, and now it is open to investment, allowing people to open small restaurants, milk tea shops, massage parlors and other entertainment facilities to make money. Early entrants who meet the basic needs of residents can reap the traffic dividend as long as they are not too bad, and even those who do well can get rich. But this is more like a small business, and the boss can make money, but it does not mean that it is a good investment target.
From the perspective of whether it is investable, the current low threshold of TG MiniApp means that if a MiniApp team has mastered the traffic code that can be monetized in TG and can make money continuously, then he actually does not need financing, and considering the exit pressure after financing, such as regulatory issues, the need to consider the narrative problem of raising the ceiling in order to issue coins, as well as the issues of issuing coins on exchanges and subsequent price maintenance, community maintenance, etc., there should be many founders who want to make a fortune quietly. If the team has not mastered the traffic code of TG in such a low-threshold entrepreneurial background, it will not be attractive enough to investors. This is the difference between the traditional crypto Infra project caused by the low cost of falsification. This is easy to face in the investment stage. Those who have not run out will be ignored, and those who have run out will either not raise funds or have a high valuation.
From the exit perspective, the traditional coin issuance exit is not as good as the exit mode of water diversion or dividend distribution in the TG-MiniApp track.
As mentioned earlier, the exit from issuing coins involves the willingness of the founders, as well as the narrative ceiling and business model issues (most listed consumer companies make money from supply chain and franchising).
In the crypto, when it comes to withdrawing cash or dividends, there are practical considerations such as very restrictive laws to be enforced.
In fact, TG-MiniApp is very similar to the NFT era. They are all small pictures with no threshold. The competition is about who has stronger community operation and sales ability. Those who can sell have the right to "continue narrative financing". If they can't sell, the cost is not high. But for investors, unless they sell small pictures and share the money with you, when they reach the investable state, the valuation is very expensive, and there are very few projects that can really exit by issuing coins. Most of them are in a state of making noise but not making money.
But the advantage of TG MiniApp over PFP is that PFP is a one-time deal and it is not easy to issue more at will, while TG MiniApp may have continuous in-app purchase income. However, in the environment of weak Crypto constraints, there is still the problem of how to ensure that turnover and dividends can be distributed.
Therefore, for teams with strong execution capabilities, TG MiniApp is a low-threshold track suitable for active development to acquire real users and revenue, but for investors, it is no different from Meme to retail investors, and the main focus is on luck. It is suitable for entrepreneurship, but not for investment.
Does this mean that TG is completely unsuitable for investment? But in my opinion:
TG's investment paradox proves the scarcity of Catizen.
In summary, if we use the above logic to reverse the process, to invest in a project on TG, you need a team that:
1. Basic capabilities: The team can complete product/market fit, find the fit between TG channels and applications, and complete user introduction
The above basic capabilities can ensure that the project can survive or make money.
2. The team has the ability and willingness to share profits and issue tokens
Regarding the problem of the difficulty in executing dividends mentioned earlier, if the founder is willing to distribute dividends and issue coins at the same time, or vice versa, the dilemma can be solved by combining the issuance of coins to confirm income on the chain and using smart contracts to execute profit sharing.
3. Ability to upgrade and implement narrative and business models
The randomness and homogeneity of MiniApp’s success means that if the team wants to issue tokens, they need to upgrade the narrative and business model and have the ability to execute.
The narrative expansion corresponding to the mini-game is nothing more than: 1) Game platform (self-made or distributed); 2) Game public chain. This is the legacy left by GameFi, and it has become relatively aesthetically fatigued. The reason is nothing more than the lack of continuous supply of high-quality games. The lack of high-quality game supply ability is mainly due to the fact that the channel end of Mass Adaption is not open, which makes self-made games time-consuming and laborious, and there is no bargaining power for outsourced high-quality games. Fortunately, TG opened the channel port, making the story of the game platform feasible. It depends on whether the team can continue to discover and distribute high-quality games. And find good games and sell them at a good price. In this regard, the Chinese team has a natural advantage.
Catizen can meet all the above points:
1. Catizen has used data to prove its product development, community operation, and traffic acquisition and monetization capabilities on the TG side. In less than 3 months, the number of users has exceeded 23 million, the DAU is nearly 3.5 million, and the cumulative in-game purchase revenue has exceeded 16 million US dollars, with 1.5 million on-chain users and more than 550,000 paying users, and the ARPU has reached 30 US dollars;
2. The team has publicly stated that it will airdrop and will continue to empower in the future;
3. The team has publicly stated that it will release a game platform, and has 200 small games in reserve, including mature games with hundreds of millions of downloads on WeChat and Google Play. This is due to the Chinese game OG background of the Catizen team. Relying on the experience of small games and TG operation, it will be able to better fulfill the role of "bridge" in the future and become the most successful game platform on TG. In addition, the team has a large number of short drama resources, and the short drama platform and e-commerce platform are under development.
Summarize:
Cats are so cute!
