I recently came across a great article by @aftersound discussing the "1000 True Fans" model, which is a a popular new economic model for small artists.
I'll link to it here - he has a short 8 minute video which is a good watch.
1000 True Fans? What's that?
The "1000 True Fans" model is incredibly powerful for small artists that create consumable content. It was first given life on the internet back in 2008 and just took off from there..
(here's the link to Kevin Kelly's blog where it first appeared)
It has been popularized by many people who love the simplicity, including mega influencers like Seth Godin and Tim Ferriss.
The core of the idea, as Kevin Kelly first worded it: :
A creator, such as an artist, musician, photographer, craftsperson, performer, animator, designer, videomaker, or author – in other words, anyone producing works of art – needs to acquire only 1,000 True Fans to make a living.
A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shirt, and the mug, and the hat. They can’t wait till you issue your next work. They are true fans.
[...]
Let’s peg that per diem each True Fan spends at $100 per year. If you have 1,000 fans that sums up to $100,000 per year, which minus some modest expenses, is a living for most folks.
So that's the basic concept...
A TRUE FAN IS SOMEONE THAT WANTS EVERYTHING YOU MAKE.
Applying the 1000TF Model to Splinterlands
So this was the first time I saw someone apply this model to Splinterlands.
Aftersound's math:
Splinterlands Costs: $250K per Quarter = $3 Million per year.
To make it sustainable:
Divide $3M by 1000 True Fans = Need to sell $3000 per True Fan
Or if you can get 10,000 True Fans = Need to sell $300 per True Fan
His point is meant to be encouraging: player growth doesn't need to be endless, and we don't need to attract millions of players to be successful. A few thousand is enough!
The math makes sense, let's look at what that means.
The Assumptions
Let's make some quick assumptions about the economics of our True Fans and what they are buying.
Remember the definition: they want to buy everything that Splinterlands is selling. But budgets are real, and we're trying to look at sustainability, so here goes...
Our True Fans want to spend $X each year. That's assuming it all goes to the company, not to other players - if we have to split that money to other products sold by other players, then we would need more True Fans for the breakeven analysis, right?
If they buy old sets or other assets, it doesn't create demand for the products the company is currently selling.
I guess they could also buy individual cards from the current set from the market, since it increases demand for that set, which increases pack value, which will create demand for packs somewhere. It's a bit less efficient though, due to market burns and player profit-taking.
So for efficiency and clarity, let's assume these new players are just buying packs or promos, and the DAO's share of sales eventually all gets funnelled back to the company.
Promos also can work, but as they are usually higher cost, let's do some calcs with just packs first.
For simplicity, let's assume players get enough potions from rewards chests.
Let's assume DEC at Par - because that's the goal, isn't it?
I don't know where to assume SPS. But the math is easies at $0.01, and it's not outside the realm of possibility, so I'll use that for now.
Let me know if you think different token prices affect the outcome, or if you think some assumptions are just crazy?
Scenario 1: 10,000 players buying $300 of new products per year
Let's examine a successful marketing effort brings us to some future state where 10,000 players are happily battling and spending money every year. Our "True Fans" model says the average player needs to spend $300 a year.
I'm gonna call this $300 player our "10K True Fan".
What does our 10K True Fan get for $300 each year?
So we said we were going to look at just packs...
$300 gets you 75 packs - which is 375 cards.
| Rebellion Set | Expected Cards | Number of Cards in Set | Average BCX | Card Level |
|---|---|---|---|---|
| Common | 282 | 29 | 10 BCX | Level 2 (Mid Bronze) |
| Rare | 75 | 28 | 3 BCX | Level 1 (Low Bronze) |
| Epic | 15 | 14 | 1 BCX | Level 1 (Low Bronze) |
| Legendary | 3 | 23 | Missing Most | (Low Bronze) |
Sorry, I guess we should consider that they will get a few Gold Foil in there.
| Rebellion Set | Expected Cards | Number of Cards in Set | Average BCX | Card Level |
|---|---|---|---|---|
| Common GF | 11 | 29 | 11 BCX | Level 3 (High Bronze) |
| Rare GF | 3 | 28 | 3 BCX | Level 2 (High Bronze) |
| Epic GF | 0.6 | 14 | 1 BCX | Level 2 (High Bronze) |
| Legendary GF | 0.1 | 23 | 0 | (None) |
So, this $300 player gets around 14 cards at Bronze level caps - mostly relying on to their luck with Gold Foils. (I hope some of the levelled ones are Summoners!)
$300 10K TF players: What do they buy?
Let's assume they grind for a full year and want to spend another $300 next year.
Since the levelling system increases exponentially, doubling their investment to level up cards would still mostly have a bronze deck, with just a few more stat points. That's pretty bleak.
Two years of spending to increase one stat point per card, isn't going to create any "Swifties-level" of fandom.
New cards, mini sets, and promo are much more fun and attractive to this player, because a card gives way more utility than just a stat point.
What will keep these $300 10K TF players coming back and spending consistently, year-after-year:
- frequent updates to gameplay
- fun, relevant competition and/or seasonal challenges
- chances to improve their deck meaningfully (which, as above, doesn't mean levelling)
- frequent new cards, mini sets, or lots of promos at different price points
- frequent set rotations
With $300 a year - they can be "Gamers", not "Investors".
Many gamers will happily spend $25 a month with no expectation of ROI.
Just make it competitive, and meet their expectations of fun: a wide variety of cards, and fun low investment competition to prevent the game from getting stagnant.
Beyond that, if these types of players are wanted, then you need to find a way to gamify their experience to make it exciting!
For example, a separate low investment bronze-only leaderboard could be a great competitive environment. (Just don't put players with the high level decks here...)
Scenario 2: 1000 players buying $3000 of new products per year
Let's create our hypothetical player that have $3000 annual spend on new products.
Aftersound says we need 1000 of these...
So this player buys 750 packs.
| Rebellion Set | Expected Cards | Number of Cards in Set | Average BCX | Card Level |
|---|---|---|---|---|
| Common | 2820 | 29 | 97 BCX | Level 5/6 (Low Gold) |
| Rare | 750 | 28 | 27 BCX | Level 4 (High Silver) |
| Epic | 150 | 14 | 11 BCX | Level 3 (High Silver) |
| Legendary | 30 | 23 | 1.3 BCX | 1 (Bronze) |
I'm ignoring GF this time. I know, it's money they could use to buy more RF. Sorry but it's not gonna change the outcome all that much, maybe they can sell and bump up some cards into gold, or level up the Legendaries to Silver, but overall they put $3000 per year into cards, and end up with a Silver to Gold deck depending on a bit of luck.
Do we believe this level of annual spending is likely to be just for fun or with expectation of investment?
My gut says there is expectations of investment...
So I'm operating on the assumption that most spenders at this level (or higher) are at least partially investment-motivated, although hopefully not completely DeFi-Degens...
Have we checked earnings at Silver lately? Expect around 4-5 SPS per match these days.
When I looked, averaging ~5 SPS per win, I'm guessing the typical modern silver level player could get around $200 of SPS in a year from daily ranked. (call it around 7% APR then...)
They might be satisfied if they can get ~ 7% yield from ranked battles - but to keep that, we need to solve the wild league price chasm. If not, then earning 7% to lose 50% after wild rotation is likely to make them think twice before repeating that spending decision.
So to summarize this player's priorities:
- they must enjoy the game, otherwise 7% ROI isn't really enough to keep them buying
- they need reasonable mid-level card strength and versatility
- these players CAN'T buy everything
- this spending level is where there's a lot of pressure to "min-max"
- they need stable card prices after wild rotation to avoid buyer's regret
- lots of card variety can be helpful for min-maxing type of behaviour
Scenario 3: 300 players buying $10,000 of new products per year
Let's now consider the really deep-pocketed version of True Fan - the one that is going to max all the cards and buy all the promos.
I mean, we know what a max Rebellion deck costs. Splintercards says it's $7500 for max regular foil rebellion. Add all the promos, and a bit for a pre-requisite SPS, and $10K is probably pretty close.
When I run the numbers on just $10K of packs, that would be 12,500 packs.
BCX expected value looks something like this:
| Rebellion Set | Expected Cards | Number of Cards in Set | Average BCX | Card Level |
|---|---|---|---|---|
| Common | 9400 | 29 | 324 BCX | Level 9 (Low Diamond) |
| Rare | 2500 | 28 | 89 BCX | Level 7 (Low Diamond) |
| Epic | 500 | 14 | 36 BCX | Level 5 (High Gold) |
| Legendary | 100 | 23 | 4 BCX | 2 (Silver) |
You are likely to get around 4 GFL and a bunch of GFE, so you could probably swap those to hopefully max most of your cards in Regular Foil.
Based on the way we've modelled unlocking costs, promo card costs, and future set costs, they are essentially trying to maintain similar cost levels going forward, for modern cards in the foreseable future.
So this $10K per year "300 TF" player is essentially the "max level RF player" model and they are the ones that spend their budget each year to max each new set.
What is important to these players to keep buying NEW sets?
- Max decks and high ratings is where largest SPS battle earnings will be earned
- earnings are correlated to SPS token price
- large SPS bags are required (own/rent) to earn with high ratings
- Large investment in cards means:
- player wants to get a lot of use from them, suggesting longer rotation periods,
- earning potential needs to exceed any loss in card value, and/or
- value needs to be maintained after rotation from modern
- land, alternate modes, etc increase the floor, which reduces downside risk
So SPS token price and card stability is of paramount importance if the intention is to target these kinds of players - that want to spend $10K a year on new cards.
That's enough scenarios I think, the max gold foil modernist is like the max RF guy, but with higher earnings bonuses and more card investment.
Let's try to assess what our current spending playerbase.
What kind of group do we have now?
Well, I can't tell you exactly.
But let's try to follow some breadcrumbs and jump to a few conclusions to try to guesstimate the current fanbase.
Hall of Legends Promo:
Obviously this is still ongoing. But we've seen 2 rounds, so I'll analyze on that basis.
The DAO has collected 256.5 Million DEC.
Let's generously call it $250 thousand in DEC at par.
| Group | High/Low Range | Approx DEC spent per individual | Approx Dollars per individual |
|---|---|---|---|
| Top 10 | 4M to 10.75M | 5.7M | $5,700 each on average |
| 11 to 100 | From 0.55 to 3.9M | ~1.7M | $1,700 avg spend |
I'm gonna actually stop here because the data gets a little wonky - there are definitely some multiaccounters trying to grab a bag of those titles. But if the bots are filling up the mid spaces with $75 bids, we know there are definitely less than 300 players willing to spend $75 on 4 promo cards.
So what we know: the top 100 accounts spent over 200M DEC, 80% of the 250M total sales, and the rest are around $550 or below with a bunch of small purchases.
If 100 accounts are spending $1000 on average for two promo cards - they are likely in the $10,000 spending category, aka the 300 TF type, and even looking at the names, it tends to be many of the same players as the presale data.
I'm actually going to completely ignore the Halving event.
I know, I'm missing a lot of spending there... but I don't think that data is very helpful, since that was a raffle event for flippers and the cards are still relatively oversupplied.
I recognize that undercounts some, but even looking at the top spots on the Halving leaderboard we saw several speculators that aren't players. I don't expect this raffle model will be used much going forward.
Rebellion Presale:
We sold 441,819 packs in the presale leaderboard, plus bonuses for some vouchers.
(I'm also going to assume DEC at par again. DEC was near Peg for the presale, so it's not a bad assumption)
| Group | High/Low Range | Approx Packs Sold per individual | Approx Dollars per individual |
|---|---|---|---|
| Top 10 | Between 5704 and 16014 packs | 11,217 packs | $45,000 each on average |
| 11 to 100 | Between 1215 and 5300 packs | ~3200 packs on avg | $12,800 spender |
| 101 to 200 | Between 451 and 1212 packs | ~700 packs on average | $2,800 spender |
| 201 to 300 | From 431 to 300 packs | ~ 350 packs on avg | $1,200 spend |
Interpreting Rebellion Presale and the True Fans player types:
Half of the Rebellion packs sold at presale, and another half in general sale, so maybe we can double our counts as we look through each category... Not a bulletproof strategy but it's not the craziest assumption either.
Do we have 300 TF at the $10,000 annual spending level?
- We know that some of the top 10 were group buys, while others were individuals
- For the purpose of maximizing the True Fans count, I'll first make the aggressive assumption that each of the top 10 is actually 10 group buys of 4 different "300 TF players."
- Then I'll take the next group - spots 11-100, and say they are also "300 TF" level players.
- Below that seems unlikely to be hitting the 10K spending limit.
So I'll count this as 40 (Top 10) + 90 (next 90) = 130 "300 TF" players in presale, so let's double that through the general sale.... ballpark 260 is pretty close to 300.
So our high level estimate is we probably have just a little less than 300 players that have probably spent $10K or more on Rebellion packs. (Some of those likely much more, to get max GF decks.)
Do we have 1000 TF at the $3,000 annual spending level?
Well, there are only 133 accounts in the Rebellion presale leaderboard above 750 packs. So the only way we get to 1000 is by assuming most of the larger buyers are actually just group buys or flippers.
I guess if you assume that, you'd have 90 batches in top 10,
Instead, I'll turn the top 100 into group buys of $3000 each...
Top ten is 90 batches. 11-100 could cover 380 players.
Double all that to reflect the general sale and we're somewhere near 1000.
However, based on our analysis of the top 300 players, I think there are too many max decks to assume that all the presale leaderboards were group buys for $3000 budget players.
If only 133 accounts bought over 750 packs ($3000), that tells me that we aren't likely near the 1000 players for that level of "True Fan". We had 300 spots in the presale leaderboard, and 500 spots in the Hall of Legends, and the bottom of the leaderboards are nowhere near a $3000 annual spend threshhold. I think 500 players at this level is being generous.
I come up with an estimate of less than 500 players spending at least $3000 per year on new products.
Do we have "10,000 TF" at $300 spending?
No, we almost certainly do not.
I don't even need to do any math: you can play in modern with Chaos Legion, without spending a dime on Rebellion.
And yet even the active players in Modern doesn't take us halfway there...
Our $300 True Fan playerbase is very far from 10,000 players for a breakeven point... It's almost certainly less than 3000, and possibly less than 1000.
What's the takeaway?
Remember, the True Fans concept:
True Fans love the product and want to support year after year.
I'm going to ignore players that want to buy one time and play forever. That's not how the True Fan model works, and that's not the type of player that Splinterlands wants to build for.
But players will only come to a game that is built for them.
| Issue | $300 True Fan | $3000 Ideal True Fan | $10K Ideal True Fan |
|---|---|---|---|
| Required players | 10,000 | 1,000 | 300 |
| Estimated number | 3000 | 500 | 260 |
Meanwhile, this is what I see as the profile of these types of players
| FACTORS | $300 True Fan | $3000 Ideal True Fan | $10K Ideal True Fan |
|---|---|---|---|
| LEAGUE | Bronze | Silver | Diamond+ |
| PURPOSE | Spending money on a fun game | Fun and investment | Fun and investment |
| CARD LEVELS | Unlikely to level much | Let me Min Max | Max whenever practical |
| PROMOS AND MINISETS | Gimme lots of card variety | Sure, I'll level some | Too many cards is REALLY expensive |
| SET ROTATIONS | Keep it fresh - Fast as possible | I'll need to sell them later | I have a lot invested, Let me use my max level cards somewhere |
| EARNINGS | Not much: I'm here to play and have fun | Card prices affect me more than SPS | Let's get a big bag - then to the moon! |
Final Thoughts: Uncharted Waters
The concept for 1000 True Fans is really meant to inspire individuals to take a risk on themselves, and to define an acceptable target income replacement.
It doesn't fit so well as a breakeven analysis for a Corporation like Steem Monsters... which needs profits, not just breakeven.
Personally, I think that to go between a $10,000 spending expectation for 300 True Fans and a $300 expectation for 10K True Fans - you have two completely different player avatars, and despite both wanting to spend some decent money, the game design has to be different enough to appeal to their separate desires. You can't court them both with one-size-fits-all solution.
Once, back when we had leagues, and players could self-organize into similar budget levels, there was good gameplay for both sets of players.
And yet, back then the economy was giving monetary rewards to low investment players that might have just played for fun...
Meanwhile, the changes over the past two years have changed things so the game is no longer designed for $300 players to feel like it's a game for them. I'd argue the $3000 players have been leaving too...
So, trying to get a thousand or ten thousand players to come and spend regularly, that on a game that isn't designed for them...
...well, I think you've seen our new player retention rates.
I don't think we want a game that only courts players with a $10,000 per year spending budget - or we will sink under the return expectations.
Let's make it appealing for those who want to spend $25 a month and call it a good time.
Let's give them as many reasons as possible to park their money in our world.
It's a big world. Let's go get it.
Nice breakdown!