In the latest episode of the Blockchain Gaming World podcast, editor-in-chief Jon Jordan talks to Daniil Shcherbakov, the CEO of new game publisher TonTon Games.
While Telegram is still in its early days in terms of gaming and UA, Shcherbakov sees this as the beginning of a new potentially huge market.
We checked in with him to learn more about TonTon’s publishing strategy, its flagship game DRFT Party, and which pitfalls to avoid as a web3 game startup.
Blockchaingamer: Give us some background into what you’ve been up to in your career?
Daniil Shcherbakov: I have been responsible for launching Eastern European startups on the Western market, specifically UK and US for over a decade now. For instance, I launched marketing platform Radario on the US market and UK. We ended up being integrated as a white label into Eventbrite, the biggest ticketing platform worldwide.
In 2021 I moved to the UK because I was admitted into the University of Cambridge Judge Business School for the MBA program. I had the intention to get more knowledge on how to transform from being a top performing individual contributor to a venture builder who is able not just to start startups but also turn them into sustainable enterprises.
I am also a mentor in Barclays Eagle Labs across the UK and University of Cambridge London School of Economics. It’s a passion for me to share knowledge.
Basically, being a publisher of games on Telegram is a perfect blend of what I love. The industry is going to develop and hopefully with the help of TonTon Games, we’ll soon have great major titles on Telegram, not just click-to-earn mechanics.
How was your transition from tech startups into gaming?
You know, as they say, it takes around 10 to 20 years for an overnight success. It was an aha moment for me. Being 32 right now, I was too young to take part in the app store revolution in 2008. I was actually still in school. The same applies to the social games revolution on Facebook.
This opportunity presented itself and I saw that this is the beginning of a new potentially big market, and I knew I had all the knowledge, as well as a ton of failures. It’s not just knowledge that’s important, but a notion of what not to do at the beginning of a business.
I also have a network of great friends who are in gaming, who have been in the game development industry for ages, so I just felt that it is the right time to take a shot.
What is it that you think Telegram as a platform is offering?
I openly admit that the reason a majority of people are spending time playing gamified web3 experiences is not because they really enjoy tapping on a screen, but because this is some sort of gambling that they would like to invest their time in, with the anticipation of receiving more.
This is obviously not the right intention for gaming. But Telegram claims it will soon surpass the 1 billion monthly active user mark, of which a tiny fraction are people playing web3 games, so there is an enormous opportunity to grow and the market will grow with it.
I believe we are just at the beginning and I don’t consider tap-to-earn clickers and some of the shady schemes some of those tokens try to do to be a defining moment. I genuinely believe that when the mass audience who really doesn’t care about monetary incentives find a button in an interface, they will be keen to try it out. Then rest is in the hands of the developers.
This is the investment thesis for TonTon Games. We are not after short-term reward, but more long-term incentives of creating playing experiences that are both interesting for web2 and web3 audiences. I use the term web2.5 – it’s when web3 components are utilized to make the game more interesting other than to release a token.
I will give you a real-life example. One of our flagship games DRFT Party, which is a merge-2 game will soon have an NFT collection and in order to get those NFTs you need to exchange tickets that you earn while playing DRFT Party through your Telegram app. Later we are going to launch another game in which you can use your NFTs as car skins to style your car and join the drag racing simulator.
So with iteration after iteration, the games become more complicated than just a way to distribute a token. I believe that this is inevitable as the market matures.
Will web3 be a key element to that long-term sustainability in all of TonTon’s games?
We don’t push all of our games to have tokens. We believe that the game should have a real need for a token to be launched. We are trying to put all that we have on the table for a step-by-step shift towards more real games, more genuine experiences, than the things we notice right now on the market.
This is very slow, but we believe in a growth loop where the market and the players mature with the games themselves.
To be honest, the way I’m looking at it, it’s like the ICO market in 2017 or the dot-com crisis in early 2000s. There would be a crisis and then the companies that really make a difference, like Google and Amazon, will survive and lead the market. We are trying to project ourselves in this way to build a sustainable business with real need instead of just going after monetary rewards in the short term.
Aside from the crypto stuff, how are you finding Telegram mini-games in terms of in-app purchase economies?
Let’s look at DRFT Party, it was our first game which we launched in August 2024, so it’s only been on the market for a few months. Currently it generates four figures daily in revenue which is I believe a healthy number.
Is it at Catizen level? No, it is not. But the guys did a great job and I didn’t really see a lot of negative sentiment regarding the TGE. Obviously, there were some people that were upset, but overall it was positively buzzing.
Regarding the in-app monetization, we’re not pushing people to spend more. Looking at DRFT Party, we’re going to have an NFT launch, but we are not trying to put it everywhere in the application. We are not trying to push people to get the money out of their pocket.
In fact, we’re pretty proud that last month our game got into the top 10 grossing apps on Telegram, which is funny because our app has 1.2 million monthly active users, while all other apps around us have at least 5 to 7 million. This also speaks to the fact that we are trying to nurture our users, to build a sustainable enterprise.
You’ve said you’re getting dozens of companies approaching you on a weekly basis. How are TonTon Games approaching publishing?
We do not develop any products internally, and I believe we should draw a fine line between developer and a publisher.
Regarding how do we select the projects, for us it is important to have a proper web3 narrative for the game. Not just to say we’re gonna launch tokens. We would like to see teams that are mature enough not to try and sell umbrellas under the rain, which is great, but we are after a different thing.
Tech-wise, it is important that the game is developed on HTML5 instead of Unity. In terms of design elements, if you see that the product is just generated using AI and chatGPT, for instance Hamster Kombat, that’s definitely not for us.
For us it’s also important to work with teams for at least a few months and to hear how they react to our feedback. The support we provide is not just about traffic and user acquisition, but our team consists of industry veterans from gaming, we help them with game mechanics, with core game loop. I also believe security is important. So if you care about those things it means you are here for the long run of the market.
Overall, that approach allows us to easily reject up to 95% of games that reach out to us.
And speaking of the genres that we are currently looking at, I think it has a resemblance in the next DRFT game of drag racing. We also believe that PvP games like tower defense or mafia wars are in the next circle to become quite popular, and we already have those in the portfolio. Games like Subway Surfers, endless runners, will also be quite popular.
It’s also worth mentioning that it’s not enough to take a web2 game, even a successful web2 game, and put it on Telegram and expect money to grow on trees. There is no audience currently for that. It should have a proper, well-developed web3 narrative. Without it, people won’t play it, at least the people that are playing now.
Overall, the web3 audience currently outweighs the casual players. But over time, and it might happen in months if not weeks, this ratio will start to change due to the wide adoption of Telegram. Then the web3 audience won’t be seen as a main audience of Telegram, just a teeny fraction of the total audience.
In terms of demographics, where are your developers and players based?
Most of our developers are located either in Central Europe, Western Europe, or in the countries from Asia like Azerbaijan and Kazakhstan. Our natural focus is on companies from Europe and Asia.
In terms of Asia, where they are able to speak Russian, we can communicate with them in the same language. Of course, we can switch to English when needed. But let’s be real, it is impossible to compete on the Chinese market, not knowing the nuance, specifics and the culture differences.
As a publisher, how does the UA and marketing side of things work on Telegram?
Sometimes I feel like a jack-of-all-trades to be honest. Because the market is developing so fast, there are very few good quality marketing instruments currently available to drive traffic.
Imagine that you come to us and would like us to publish your game. You pass through the filters and are satisfied with us. The first option we have is so-called traffic from tasks. So all of those big apps, they have a task board where they will add a task for money, let’s say to play this external game. And this will bring you users.
Currently you are able to get users for between one to six cents into your app. We shouldn’t forget that the motivation of those users is very different, they like to get a currency or some sort of advancement in the original game, not in yours. But that’s one avenue, and it’s obviously not automated.
You agree and build those relationships with different applications manually. There are agencies that are trying to do that, but under-the-hood they are doing exactly the same thing, but also adding a margin. There are also thirdparty ad exchanges and many others.
In terms of the platform itself, it’s in the very early stages of development. Only until recently it was impossible to remove your application from a promotion, so you could see an ad for your own game in your own game. You could get traffic from that, but very little targeting options.
Then the third option is launching the Telegram ads themselves. So this is an ad in the groups, in the chats, and this is also something users might be more motivated to test. This is actually one of two sources of acquiring users that might have never heard about Telegram games. This is about enlarging the funnel, and this is why I like this channel.
Last but not least it’s about the users from other sources, whether it is Facebook, Instagram, or TikTok. It might be through ads themselves or viral content, working with influence marketers and that stuff.
At its core, launching a Telegram game is not very different from launching a mobile app or social game because you’re going to use more or less the same channels and tools but simply a lot of the tools are not that well developed.
How many games are you looking to publish by the end of the year?
We plan to release up to 10 more games by the end of the year. We are also switching gears to focus more on the projects we already have published to start understanding who are the top performers, who are the middle ones and who are not meeting the expectations.
In a nutshell, the publishing business is not far different from venture capital, where even the top tier VCs are losing up to half of their investments.
Right now we have basically redeveloped the analytics platform based on Google Looker studio, but still there is no out-of-the-box solution for analytics. We have started to meticulously check the metrics lifetime value, the retention rate of the first 7 to 30 days. We are getting very deep into the data, letting it drive our decisions, whether it is marketing, publishing, or user acquisition.
Can you give us any rough metrics around retention?
This is what we see; if you find a great audience who are genuinely playing your game, your attention would be higher than in the mobile market, because it is easier to play and people spend much more time using Telegram or any other messenger than a single game.
If we are talking about just Webstream enthusiasts looking to get something in return, the retention rates are very poor and this is basically the chicken and egg problem. How to effectively and quite fast find the audience that would really enjoy your game, perhaps for a monetary reward at the end, but without it being their sole motivator? This is why we are getting so deep and building our internal analytics platform in order to be able to segment to be able to compare the audiences.
Currently we are in talks with a few car websites to try to promote DRFT Party there, and at the same time we try to promote the game for crypto wallets. These are very different audiences. They have nothing in common.
But this is how I believe startups fail, it’s not when they are out of money or when founders are inexperienced, but when they run out of hypothesis to test. And gosh, I‘ll tell you, we have a ton in our backlog.
Find out more via the TonTon Games website.