Splinterlands By The Numbers-Still Has Major Issues

Well. I went and got married and took a few days to relax in a cabin with my new wife so I've missed the last week.

However, it looks like everything is basically doing exactly what it was doing when I left. Trailing off lower and lower as rewards dwindle and supply of cards just keep increasing.

So let's start off where we ended last time. Rentals.

They are dead. Last season I was talking about how we were stuck in the mud at 400,000/$29k after it sat right there while all other metrics went up around it for weeks.

Now in the middle of the next season, we are at numbers we haven't seen since the rental market launched. A piddly $12k.

Many people told me it was simply because it was the beginning of the season when I posted the last numbers. I disagreed. And now we are seeing that as we get to the middle of the season, the numbers are getting worse instead of better.

So here's the three questions I get the most and their answers.

1: Why do rentals prices matter other than to my personal bottom line?

2: Isn't this good for the game to have rentals be cheap and abundant?

3: Why is this collapse happening?

And the thing is, all these questions are intertwined.

If you've noticed, one of the things the devs keep talking about is their conversion rate. Most games convert players from free to paid players at a rate of about 1-2%. Splinterlands is over 50% and by some accounts closer to 90%.

Why?

Is it because Splinterlands is a superior game to all others? I mean, it's good but there are plenty of good games out there that convert much lower.

The reason people are coming in and buying the $10 spellbook is because they can get paid to play the game

It's a serious plus that it's a great game but the one thing that puts it above all others is that a person can get paid for playing.

When Splinterlands started exploding, there were times for me when playing in Bronze 1 I was making as much as .60 USD for a single win.

That has come down now to where my average win pays out .03 USD per win. It's down 95%.

If you started playing this game because you get paid to win but the only way to win was to rent cards which was fine because a few wins was worth a dollar and you spent a few dollars that day on rentals and could still then take home a few dollars, you were fine renting.

If it now takes 30 wins to make a single dollar and chances are you'll run your ECR down to nothing and need 4 days to recharge it trying to make that one dollar, you aren't renting cards.

And if people stop renting cards and the price of rentals plummets while the rewards for playing the game plummet even more, you might even decide its better to take the few cards you've earned and put those on the rental market, which sends the rental market down further.

And if you've bought a bunch of cards to make a rental income and suddenly you're not making an income, you might decide to stop buying cards which now means the price of cards isn't going up.

And if the price of cards isn't going up and no one is making much money playing the game, the buzz around a game might just start to die off.

And if the buzz of a game starts to die off, you might find your only growth comes from bots who pay the $10 and make it back a few cents per day and whatever they can get from rewards chests as a bonus.

And if its all bots playing tons of games, the amount of dec per win drops even further and just pushes the cycle on more and more until eventually it's not even worth it for the bots to keep playing and Splitnerlands is a footnote in the history of blockchain games.

And all of this is exactly what's happening and will keep happening if the devs don't figure out rewards.

So what do rentals have to do with this? Rentals are your first indicator of the financial health of the game. The rental market stalled before any other metric. People were still excitedly buying cards even a week after the rental market went stagnant because there's a signal-to-response lag. Player growth rate was still increasing as well for the same reason.

The first sign there was a problem was the rental markets going stagnant. That's because rentals are exciting. They are easy. You rent that cards and go try it out and see if it can make you better. A player gets to test their ideas or instantly get access to a card that they just got rocked by against someone else without dropping serious money.

A healthy rental market means people are exploring the game and they are making enough playing the game to make it worth it.

Then a healthy rental market creates a cycle of investment in the Splinterlands economy that no other aspect of the game can create. Most people aren't going to buy a $300 card to play but they will buy it if they see they can make an instant income from it and watch it go up in value.

Without people willing to come in and make those buys, it's just a game. The excitement of maybe finding a card in a chest that could be worth hundreds or even thousands of dollars is gone because no one will buy it. The stories of millionaires being made by playing splitnerlands is gone. The hype is gone.

So let's look at a few charts that show all this happening.

Here's the games played and active accounts metrics.

I actually track the daily percentage gains of the active accounts in a spreadsheet and I can tell you that its slowing. Last month we tripled active accounts in the first 20 days while this month we doubled active accounts.

I understand numbers are higher and it becomes harder to grow at the same rate but we aren't at that point yet. We should have easily been able to get to a million at least before the pace of growth started to fall off. Especially with so many people opening multiple accounts.

As far as the number of games played. I notice its been stagnating for 4 or 5 days and then jumping. I'd love to know if anyone has any idea of why this is happening so regularly?

Next, DEC value. It's just on a steady trajectory downward. I wanted to include this chart but I have enough for a full post on this so I won't say much more about it other than to say, DEC seems to be mismanaged right now. I understand there was a peg at .001 and a lot of people believe it should or will go back to that but I think that's shortsighted and DEC could become something much greater and more important if its managed properly. I'll try to write this post later.

If you read my last post you'll remember it was right at that ramp in buying just at the end of last season. You'll also recall I made the end of the post about the fact that while it was very exciting, it was temporary buying and the rental market told us that. As expected, it collapsed right back down. And this chart now fully shows what I started saying around August 30th, which is the downtrend took hold but within that, the market is stagnating.

You can see the number of cards being traded is going up but this is all the incredible amount of supply coming in from rewards chests and immediately being put on the market to try to make the daily income a little better.

And finally, new players and spellbook purchases.

As you can see, the rate of growth is stuck in the mud now and even heading a little sounth.

Player growth rate and conversions should be the second to last metric to fall if splinterlands is in real trouble. (the last being games played and active accounts) and depending on how you look at this chart, you could say it's falling. The devs will point out that these numbers are historically high and that's very important. However, they should be increasing still. We are too early in the ramp or this whole genre for them to be stuck and turning down. This is a problem.

What's it all mean? Am I Bullish or Bearish on Splinterlands?

OK, so now that's all said, I know people are going to tell me the devs are doing a lot (I agree). And that they are dealng with incredible rates of growth and its not easy to figure everything out (I agree) and that in the end they will figure it all out (I mostly agree but have a healthy skepticism on this point)

I am still bullish on Splinterlands. My thesis on the blockchain games is still very much intact and Splinterlands is a very important game in the genre. I plan to stick around and one day be another of those Splintermillionaires stories.

However, the degree of success this game experiences going forward could vary greatly and it all comes down to a few things that, for now, feel like are being mishandled.

Three potentially critical mistakes factors:

1. DEC management that allows it to float freely during this growth phase at least. Don't try to manage it up or down right now. All things bought in game should be DEC only with the exception of the secondary market.
2. Rewards. The game must be worth playing. Dec rewards should be predictable. Bot rewards need further discouraging through greater ECR sensitivity.
3. Supply. I understand why rewards cards are printed in super high amounts (the more active players the more they run out and need to be refreshed) but the card pack supply should be limited.

Any one of these things if poorly managed can derail the growth of this game and they are. The result is that even in the middle of the crypto game boom that sees new games come out each day, the OG game is floundering in the middle of a flurry of awesome innovations, news, and new content.

This should not be happening. I think the devs are brilliant and they have time to fix all this but they need to be doing it now. Start with the rewards. Sort the rest out later.

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