Moderator: Blair Zhu, Brand Director, Mint Ventures
Guest: Ricky, CEO of Catizen
The origin of Catizen
Blair: Hello everyone, welcome back to Web3 Founders Real Talk, where we will have honest conversations with leading figures in the Web3 industry. Today, we are very happy to invite Ricky, CFO of Catizen, one of the most popular games on TON, to the show, welcome. Can you introduce yourself? How did you get into the crypto industry?
Ricky: Okay, thank you Blair. I'm Ricky. I actually have over 15 years of experience in the financial sector, but more on the investment side. I've invested in traditional industries, and I've also been investing in Web3 since 2018. I've looked at a lot of projects, but I wasn't deeply involved in any of them. When I met the other co-founders of the Catizen team about three or four years ago, also before COVID, we started discussing how to do something in the Web3 world. We really liked the idea of working together. That's how I got involved in the Catizen ecosystem.
Blair: That’s interesting. As I mentioned earlier, Catizen is very popular right now. I see everyone playing it. And your team told me that you actually have 25 million users. We were wondering if there is any interesting behind-the-scenes story behind these cute cat characters. What inspired your team to choose to create this mini-game on the TON platform in the first place?
Ricky: Actually, there is another co-founder named Tim. I have known Tim for more than 10 years, about 15 years. We are all cat lovers, and in these 15 years, we have adopted many stray cats. When we met with the other founders of the Catizen team and brainstormed what to do through video conference, we found that everyone was using cat avatars. So we decided that if we were to do something, we must bring cats into this Web3 world full of dogs, such as Dogecoin, Shiba Inucoin, etc. So if we were to make a game, this game must be related to cats. This is why we started Catizen.
Reasons to choose TON
Blair: It sounds like there are a lot of cat lovers on your team, like everyone has a cat avatar in the virtual meeting. So what motivated you to build this mini game on TON instead of other L1 options?
Ricky: Ten years ago, when I was investing in the traditional market, I looked at a lot of games and teams. We found that it was becoming increasingly difficult to make huge profits by investing in WeChat mini games or even Facebook mini games, because all the competitors in the market were making full use of big data, including WeChat and Facebook, which are also very good at using big data. Therefore, when they push ads to users, the fees are very high, and they know that when the user receives the ad, he/she will spend a lot of money in the game. If they expect the user to spend $10,000 in the game, then they may charge 70% to 80% of the channel fee. So it is becoming increasingly difficult. Through all the experience and big data we have learned from the traditional game market, WeChat and Facebook, this is also an area where the other co-founder Silver is good at. We are very good at user experience and interface design and user game logic. Coupled with the engineers in our team, it is actually easy for us to make or find a game that can become very popular outside the WeChat and Facebook ecosystem. This is how we started, and then we continued to expand and analyze different channels. We also studied different chains, such as Solana, TON, Telegram and many other communities. We have been watching the TON ecosystem for a long time. We think Telegram has very big growth potential and already has a very large user base, about 900 million users already, and it's still growing fast. So we decided to take advantage of the growth of the Telegram system. When Telegram decided to make mini-games and mini-apps as its main components, we thought they would be a great fit for our business model. So we decided to choose TON and Telegram as our partners and create a whole new embedded ecosystem. Catizen is actually just the beginning. We have 18 more games to be released this year, and we will also build other applications for this ecosystem, such as e-commerce and skit apps. This is what we are doing with TON. We are taking advantage of its huge user base and high growth rate and bringing in our experience and expertise from the traditional Web2 world.
A phenomenal and successful disassembly
Blair: This is really exciting. There's a lot to look forward to, and it seems like this is your specialty, as you're very familiar with all the mini-apps in the WeChat ecosystem. Now you're bringing that experience from Web2 to Web3 to attract 25 million users. That's impressive. I feel like the popularity seems to be driven by the growing interest in Web 3 games and all kinds of engaging mechanics. What do you think of this huge success? Did you foresee this popularity? What strategic steps did your team take to achieve such a milestone?
Ricky: As you said, we actually have over 25 million users as of today. But if you only look at the on-chain game player data, Catizen is not particularly outstanding compared to other clicker games like Notcoin. What really makes us different is our ability to continuously convert high-quality users. We had 1.8 million Telegram payers yesterday. Telegram payers pay for Telegram, and they are likely to pay in our games. We also have over 1.4 million blockchain users. This conversion rate has been around 6% to 7% since inception. I think the conversion rate from off-chain to blockchain for Telegram and TON ecosystem is about 0.66%. Our data is actually quite amazing. Our conversion rate is almost 10 times. So it can be said that almost all blockchain users in the Telegram ecosystem are quite stable. And if they continue to stay on Catizen and become active players of Catizen, we are quite sure that they will also turn their attention to our other games and ecosystems. Because according to our plan, when users receive Catizen coins after the airdrop, they can use these coins to play Catizen games. They can also use these Catizen coins to continue playing our upcoming games or games released for other partners. In this way, we can continue to maintain and expand our Catizen ecosystem. So I always emphasize that this is not just a game, but an ecosystem. And based on the in-app purchase and advertising model we set from the beginning, if we can have more paying users stick to playing our games, after all, our games are fun and addictive, and users can actually expect to get some rewards from playing games, this is what GameFi is about, isn't it? This is how we choose or design game releases for ourselves or other partners.
Challenges in Web3 GameFi
Blair: It looks like you have a very comprehensive plan for what you're going to do next. A game is just a starting point, and you're going to build a very rich ecosystem on top of it. Next, my question might be a little tricky. Many Web3 GameFi projects, of course I won't name them, but you can see that the developers of the projects are actually facing some problems, such as unsustainable models. In your experience, do you resonate with this issue? What is the biggest challenge for Catizen? How do you make the entire life cycle of the game more sustainable?
Ricky: I think there are a few reasons why we have achieved these results. The first one is mainly our experience and the expertise of the team in designing and executing game plans. But I think there are some other more specific parts worth sharing, which are our launch pad and mini app center. These two features are actually the main part of our ecosystem growth. In the later stage, Catizen will add us as the center of the attention economy. So our real value is not just the token, but the shared value of the entire community. This community includes our Catizen game players, players of other games, or our original Catizen game players, who earn a lot of Catizen tokens. They can use these tokens in other games or buy items on our e-commerce platform, or play our partners' games, or watch the series we release on the platform. This is what I mean by community. Through this mini app center, they can find many games or applications that we have carefully selected for users and partners. We will continue to attract high-quality users. By high-quality, I mean that they pay close attention to our games and spend their daily gaming time in our ecosystem. Their purchasing habits are also in our ecosystem. If they decide to watch a series, instead of watching Netflix or other media platforms, they may also want to check out the new series released on our platform. By attracting these users and their attention, we can continue to issue tokens, or assets that we have signed agreements with partners or our own studios. So Catizen token holders can continue to stay on our platform, whether it's through payments or playing games. Even if they just contribute their attention, I think it's very valuable for us and our partners. This avoids the death spiral that a lot of other market players face because they don't have the foresight to build an ecosystem. They may decide to rely on a single game. However, even the best game in the world has a life cycle, right? Even if players can play for two years, five years, ten years, the game will eventually have a life cycle.But since we are building the attention economy and are also ecosystem builders, this is not something we need to worry about. We can continue to release great apps and games and keep the attention within our ecosystem. In addition to partnerships, launch pools, and mini app centers, which are means by which we can convert current attention into revenue for our other apps and games, there is another major feature in our ecosystem, which is the SDK and game engine. Because there may be a lot of great game studios in the Web3 world who want to try to make a profit or establish a presence in the Web3 economy. But I think it is not easy for traditional Web2 market players because it requires some technology, especially on TON and Telegram, because TON is a brand new programming language. If they want to connect their games to TON and connect other payment gateways and token systems, it is not so easy. Based on our experience and the experience of the development team, we have SDKs that can quickly connect those Web2 games and convert them into Web3 games and publish them on Telegram. So instead of spending three to nine months of learning time on trial and error, we can actually publish traditional mobile games in less than two weeks, I should say about ten days. So this part of the SDK gives us and our partners an advantage because they can release their games quickly. Especially in this Web3 world, timing is actually very important because if you release a game six to nine months later, your market may be divided up by other people who have copied your game. In addition, we also have our self-developed game engine. In the past, before we had this game engine, we tried to test release some games on Telegram, and the loading success rate at that time was about 80% to 85%. We think this really affected a lot of user experience. So after that, we developed the game engine, which increased our loading success rate to 99.5%, and even during peak hours, the success rate was around 95%. When users try to launch our games, if the loading fails, they may not come back again.So we think the loading success rate is very important to the user experience. So I think SDK and game engine are also our core assets, which distinguishes us from other Web3 projects.
Co-prosperity and competition
Blair: It seems like you guys have a good idea of how to avoid the death spiral, and the SDK will be a game-changer because you really have everything planned out. We’ve seen the rise of other Telegram games like NotCoin seem to have increased interest in Catizen as well. And looking at your Twitter account, I see that you have significant collaborations with several other games. What do you think of these symbiotic relationships and potential competition? I'm sure there will be some competition, what do you think about that situation?
Ricky: Yes, we actually have established good relationships with most of the popular projects in the TON ecosystem, especially with NotCoin, because the market is so big. Competitors can also become our partners. If we cooperate, we can profit from their traffic and they can also profit from our traffic. So this kind of competition actually helps improve the entire TON ecosystem. We are very much looking forward to seeing more competition entering the market, because more competition means they will bring many new users from the Web2 field and increase the market size. I think in the end or even in the medium term, only the best operators or companies with the best ecosystem experience will stand out. So if we are the one that stands out, then we may benefit the most from the increase in market size. So we actually welcome competition because we believe in ourselves, believe in our core tools and core assets. Back to the point, as I mentioned before, we have signed agreements with 18 blockbuster games, each of which is very popular in the Web2 world. Based on our experience, we can smoothly convert them to the Telegram platform, and we may achieve the same success as Catizen. This is the strength of our own launch, our experience and network in the Web2 world helped us get to this point. And then we also open our SDK to allow other projects to integrate on our platform. We can even allow our competitors in the Web2 world to join our Telegram platform, because like I mentioned, the market is just too big. If we can work together to increase the number of Web2 users, it will be good for all market participants, especially for the leading market participants, as well as the TON ecosystem. If the TON ecosystem has more users, then the value of the TON coin will also increase, and our players and users will become richer, and they will spend more on our platform, both in games and when making purchases. So, to answer your question in short, we definitely welcome these competitions.
Blair: It sounds like competition actually makes you stronger. As a player of Catizen, I really like the low barrier to entry of this game, because I am not a veteran gamer in the strict sense. But everything from leveling up your cats to increase productivity to inviting friends to get extra rewards and leveling up is very fun. However, do you think this game mechanic can be easily copied? Does Catizen have any measures or unique means to prevent this? This is another extension of what you just shared.
Ricky: This goes back to the question about competition. I think first of all it is due to our experience and team. Of course, there will always be better teams and better talents because young programmers learn very quickly and they can also learn quickly from the success of existing projects. We have to improve ourselves at the same time to stay competitive. But I think the main part of our competitiveness also includes the technical barriers such as SDK and game engine mentioned earlier. I think if someone tries to spend money and energy to build the same SDK and game engine and release their game, it will take a lot of time, maybe more than a year. If they choose to work with us, they can quickly release their games and enjoy a good user experience with our game engine because we are always upgrading and improving our game engine and SDK. They can develop the market faster and then upgrade their games, and it is also easier to benefit from our ecosystem because if they join our ecosystem, they can monetize the traffic of Catizen and our other games. We will provide traffic transfer of all games and applications to our partners in the Mini App Center. So these technical barriers and our first-mover advantage in the Telegram and TON systems are huge obstacles that are difficult for them to cross. The other is the business model. It's easy to copy a mini game, but it's hard for them to copy our business model because our goal is to be a mini game publishing platform that is actually open to the entire mini app ecosystem. So even Catizen, there are a lot of internal features that are designed specifically for the purpose of this mini app ecosystem. They can simply click some buttons to transfer directly to other apps or games to enable us to alternate traffic more smoothly. There are also models of IAB and IAP in-app purchases, where it's not difficult to create some in-app purchase items, but it's difficult to get players to buy and continue to buy. With all the rewards or assets they have in that game, users can then monetize by playing our other games. So our ecosystem actually helps set a high barrier to entry for other single game copycats to cross.No matter how good the game is, if they don't have a complete ecosystem to support the players, when the players reach the end of their life cycle, they will leave. And we continue to keep the players' attention in the ecosystem by releasing different features. Last but not least, the resource barrier. We already have exclusive rights to a large number of the best Web2 mini games. We have gained a first-mover advantage by launching Catizen and cooperating with many collaborators, major players in the TON ecosystem, and of course the TON Foundation. There will be a lot of mini games that will continue to join our ecosystem. So we can say that we are the largest or one of the largest gaming communities in the market for Telegram and TON. If they try to build an ecosystem or community of similar size, I think it will be difficult because we won these resources in the earliest days of the Telegram and TON system. If they try to negotiate with Telegram and TON and ask for similar resources and support, I think it will be almost impossible. The TON and Telegram ecosystems are already very successful, and I think it will be difficult for a single project operator to obtain a lot of marketing resources, and there will be many market players sharing these resources. But for us, we are the first to grab these resources and monetize them. This is how we have grown to this scale. These resource barriers will help our ecosystem become stronger and stronger.
Token Distribution and Airdrop
Blair: I agree with you that business models are not so easy to copy. Maybe they can copy a single game, but copying the entire gaming ecosystem is actually an impossible task. The next question is for all players, because I know you recently announced that the proportion of token distribution will be increased from the originally planned 35% to 45%, correct? Can you provide more details about the upcoming July airdrop? I think the whole community is eagerly awaiting this news.
Ricky: Okay. First of all, because most of our existing 25 million users are actually very active users, we have implemented penalties for bots or users suspected of cheating, and they will not be able to receive airdrops. However, as I mentioned, the commercialization rate of our high-quality users is quite stable. As the user base grows, the profit space that each user shares from the airdrop will decrease. Therefore, our team continuously allocates the remaining tokens from our token or token economic model to the airdrop pool of Catizen. So actually it was decided before that it was about 20%, but in order to reward our community, we increased it to about 45% today. Even compared to the most recent announcement, it is an increase of 10%. We hope that this will provide enough space for the community to keep users and players in their expectations so that they can continue to believe in our ecosystem and community in the future. Regarding the timing of the airdrop, I would say it is coming soon. Let's wait and see.
Concept of building an ecosystem
Blair: Wow, that's really exciting. In addition to the airdrop, are there any other upcoming features or expansions? I heard that you are about to launch a game platform, and you mentioned several times today that this platform will include over 200 mini games. Can you elaborate on that? Because you mentioned the entire ecosystem. I'm wondering what you envision for this ecosystem?
Ricky: We will launch the SDK this week, and the upcoming mini-games will be revealed along with it. As I mentioned, we have signed 18 mini-games to be released on our platform, and there are more than 200 mini-games that will be added to our game platform in the future. We hope that the community will pay close attention to us, and we will also actively collect feedback on which mini-games they want to be introduced and which other applications they want to join our ecosystem. Our team will definitely work on this, because if users want these applications or games to join, we would rather bring them into our ecosystem than let them join other ecosystems or become independent systems. I think our players can use the airdropped tokens to pay and play these other games or applications we introduce. At the same time, this will also help these applications grow faster because they don’t need to start from scratch, but from our existing user base of 25 million. So we will pay attention to the feedback from the community. As I mentioned earlier, the airdrop is coming because it is an important part of connecting all these mini-games. If we can do the airdrop sooner, then our users can enjoy the benefits of using the airdropped tokens in other games in the ecosystem sooner. This feature will be coming soon.
Blair: It sounds like this podcast comes at a perfect time, with a lot of good news and exciting features coming soon. Thank you for sharing these behind-the-scenes stories. My next question is about the TON ecosystem. You may have partially answered my question, but we know that the number of developer applications within the TON ecosystem continues to increase and has been very impressive. What do you think about the overall state of the TON ecosystem at present? In addition, what advice would you give to developers who are looking to build games or projects on blockchains, such as L1 or L2? Are there any specific challenges or obstacles that need to be avoided, or parts that need to be considered when choosing to build infrastructure?
Ricky: We can actually see that the click games in the TON ecosystem seem to have entered a bottleneck period. In fact, large-scale imitations are no longer as meaningful as they used to be. This leads to too many memes in the ecosystem and a lack of healthy infrastructure and healthy assets. So, for developers who want to build game projects on the blockchain or TON ecosystem, I think they have to look deeper into user behavior. In this ecosystem, a successful market participant, such as us, has been struggling and working in the traditional Web2 field for many years. We may have intuitively known that it is very important to have the best user experience and game logic. Technical issues are also a challenge because TON is a new ecosystem, and although its infrastructure is constantly developing, there are still many parts that have not been touched by people. I think developers can focus on different parts of the infrastructure. For example, there is still a lot of room for development for DeFi projects on the TON ecosystem because they are just beginning to learn and dig deeper. TON's programming language can be said to be a good starting point. If a programmer thinks it is a different language and is unwilling to enter this field, I think it is wrong, because the reason they choose a different programming language is because they think it is a better version of the blockchain language. In fact, for us, I think it is more efficient in terms of transactions. So, as a start, programmers should include this in their skill set and dig deeper into the various parts of the infrastructure, because this is just the beginning. If they think they can build something in other ecosystems and fields, why not try to do it on TON? There is a lot of untapped potential here.
Application and impact of AI technology
Blair: Thank you so much for sharing your insights in such detail. My last question today is, we just had a very rich conversation about Catizen and the roadmap ahead, the good news like the airdrop, and the entire ecosystem. Given the current excitement around AI, how do you see the impact of AI technology on the entire game development industry as a whole? We see a lot of intersection between AI and blockchain and cryptocurrency, and we see a lot of applications emerging in this cycle. What are your thoughts on this?
Ricky: Of course there are a lot of opportunities, such as AI pets. We are one of the largest cat-loving communities in the Web3 space. We actually already use AI a lot in game design and many operations. But if AI can further help our community, whether it is Web2 or Web3 players, launch cloud cats or create electronic pets, or use AI to create some shared fun modes, there is huge potential. We are also working with Google Web3 now to apply multiple AI functions to carry out some preliminary community operation activities. For example, create videos of interacting with cats. If you go to our channel on Telegram, you will find that there are many videos about cats and Web3. This helps user education and allows users to find their social value in the community in a relaxed and enjoyable environment. I think that thanks to AI, we can quickly create a lot of viral videos. These videos are not only of marketing value, but actually have a deeper meaning. Because there is an international conflict between Russia and Ukraine, and a considerable part of our user base is Russian and Ukrainian players. When we look at the comments in these communities, we find that they think Catizen is not just a game, but a tool to heal the trauma of war. Because some of them may be soldiers, or some are refugees fleeing from war zones. They have to leave their hometowns and go to other countries to seek safety. Some people may not be able to bring their cats with them, or they will worry about the stray cats in the neighborhood. Although this game cannot help them actually rescue those cats, at least it can heal them psychologically by letting them watch a lot of funny cat videos and interact with cats in Catizen. This is also the slogan of Catizen - Heal the World. So for us, this is not just a game. We also announced that we will donate 1% of our revenue to stray cat charities to actually rescue those cats. What we really hope is not only to create a good game, but also to actually help people's mental health. At the same time, by donating to these NGOs to help actually rescue stray cats in those war zones, provide more resources. This is our mission in this game.
Blair: It’s very moving and impressive that you’re really saving those stray cats and really making an impact in the world. I couldn’t agree more with your point about educating through entertainment. I talk to a lot of entrepreneurs and we’re all talking about how to attract the next billion users and how to achieve broader mass adoption. We’re always talking about how to make the whole experience more entertaining and more seamless, and how to lower the barrier to entry for users and newcomers. I feel like everything is moving in the right direction. Thank you so much for all the insights and information you’ve shared today, it’s very inspiring. I wish you all the best in all your development work and the good news that’s about to come true. Thank you very much, Ricky.
Ricky: Thank you, Blair.
