Reporters from Nanduwan Financial Society analyzed and sorted out the 2021 financial reports of 40 A- and H-share game listed companies. Last year, the supervision of the game industry was strengthened, and negative effects continued, such as the new anti-addiction policy and the

Recently, the annual reports and first quarter reports of major game companies have been disclosed. Reporters from Nanduwan Financial Society analyzed and sorted out the 2021 financial reports of 40 A- and H-share game listed companies. Last year, the supervision of the game industry was strengthened, and negative effects continued, such as the new anti-addiction policy and the failure to issue version numbers for 8 consecutive months. Half of the companies had a net loss Profits fell and market value shrank. Although the growth of some domestic game businesses is sluggish, their bets on going global have also allowed them to temporarily get rid of the pressure to increase revenue; some established game companies have even begun to pursue a new direction of "de-gamification", selling assets and reducing expenses. It is worth noting that while the industry is generally under pressure, the profits of some board and card game manufacturers have soared against the market by relying on live broadcasts; in addition, with the rise of the concept of "Metaverse", many companies are also rushing to seize the opportunity in advance. However, in addition to giving away In addition to the "rocketing" stock prices of related companies, there has been no substantial improvement in performance.

Board and card games bucked the market and soared.

The Game Working Committee (GPC) of the China Music and Digital Association and the China Game Industry Research Institute jointly released the "2021 China Game Industry Report", which shows that the sales revenue of China's game market in 2021 will be 296.513 billion yuan, a year-on-year increase of only 296.513 billion yuan. 6.4%. “Growth is almost all sustained by a few phenomenal products,” a game manufacturer told a reporter from Nandu.

Correspondingly, many listed game companies will see a decline in revenue and net profit in 2021. A reporter from Nanduwan Financial Society counted 40 A- and H-share listed game companies and found that during the cold winter of the industry, the head effect became more prominent and the performance differentiation of game companies became more obvious.

Tencent and NetEase, the two first-tier game revenue accounts for nearly 80% of the game market sales revenue, followed by Sanqi Interactive Entertainment , Century Huatong, Perfect World , IGG, Bilibili The combined revenue of the six companies including (referred to as "B station ") and Gigabit accounted for nearly 17% of the total revenue, and other game manufacturers shared a 3% share.

From the perspective of performance, half of the game companies have experienced declines in revenue and net profit, including traditional major companies such as Century Huatong and Perfect World. Especially Perfect World, not only did its revenue fall out of the 10 billion club, but its net profit also shrank. Over 76%. In addition, companies such as Station B, Xindong Company , Zhangqu Technology , Zhongqingbao and other companies are in a state of loss in 2021. Among them, Station B is at the bottom with a loss of 6.789 billion yuan, followed closely by Zhangqu Technology's goodwill explosion. The loss was 1.245 billion yuan, and Xindong Company’s R&D expenses surged, resulting in a loss of 900 million yuan.

The financial reports of many companies show that the decline in performance is mainly caused by insufficient connection between new and old games, increased R&D investment due to intensified competition, and phased pressures during the transition period.

In comparison, thanks to the strong performance of "Yi Nian Xiao Yao", Gigabit's revenue increased by nearly 70% to 4.619 billion yuan in 2021, with net profit of 1.468 billion yuan, a year-on-year increase of 40.3%.

In addition, the overall revenue of leading board and card game listed companies in 2021 will increase significantly year-on-year. Zenyou Technology’s revenue in 2021 doubled to 1.47 billion yuan, and the net profit after non-attributed profits reached 485 million yuan, an increase of more than 130%; Hometown Interactive’s revenue reached 1.287 billion yuan, an increase of nearly 70%, and the net profit after non-attributed profits to the parent company reached 1.287 billion yuan, an increase of nearly 70%. Reaching 521 million yuan, an increase of over 30%.

Nanduwan Financial News reporter noticed that both chess and card companies will launch the new marketing method of short video platform effect-based live broadcast in the second half of 2021. Correspondingly, their revenue and net profit will also welcome in the second half of 21. In recent years, there has been a big explosion, especially for Zenyou Technology. The revenue and net profit in the second half of the year accounted for nearly 70% of the annual revenue and net profit, which directly boosted the annual performance. Of course, new marketing methods have also increased sales expenses. In 2021, the sales expenses of both companies increased by more than 150% year-on-year.

"goes out of gamification" and finds other ways. In an environment where the overall revenue growth of the

game market is sluggish, increasing revenue and reducing expenditure has become an inevitable path. The path for the industry to increase profits through "buy, buy, buy" has gradually narrowed, and it is unable to bring practical results to the industry. As a "burden" of efficiency, more companies have begun to choose to discard them in time.

Tianyu Digital (formerly Tianshen Entertainment ), which has grown through many mergers and acquisitions, has announced that the company plans to transfer 93.5417% of its equity in Fantasy Yuyou for a total consideration of approximately 903 million yuan. Compared with the original purchase price, it was a direct discount of 26%. After Tianyu Digital continued to sell off multiple targets, it gradually drifted away from games. In 2021, game revenue only accounted for 17% of its total revenue.

Kunlun Wanwei is also trying to further tear off the label of a game company.Financial report data shows that as of the end of 2021, the company's revenue from social entertainment, advertising, search and games accounted for 43.70%, 20.17%, 16.22% and 16.04% of operating revenue respectively. The proportion of game revenue has gradually declined. to fourth place.

In December 2021, Perfect World signed an agreement with relevant parties and decided to sell the U.S. R&D studio and related European and American local distribution teams, resulting in a one-time loss of approximately 270 million yuan during the reporting period.

Whether it is selling at a low price or stopping losses in time, it can reflect the caution of small and medium-sized game companies. Especially now that the industry environment continues to tighten, seeking diversified operations has become the choice of more companies.

Shengxunda cooperated with Kuaishou's "e-commerce live broadcast brother" Simba to enter the field of live streaming. In 2021, with game revenue shrinking to 68 million, total revenue still increased by 135.88% year-on-year to 480 million. Yuan, and the net profit attributable to the parent company exceeded 200 million Yuan.

version number is limited, "roll" overseas

On April 11, after game version number was not issued for 8 months, National Press and Publication Administration released the approval list of domestic online games in April 2022. The newly issued 45 Among the version number , the only game produced by a major Internet company is Baidu . However, at the end of December last year, Baidu was involved in rumors that it had abolished its game business.

Although the restart of version number issuance releases a signal of regulatory relaxation to a certain extent, the total amount may continue to tighten. According to the Everbright Securities research report, it is expected that about 50 game version numbers will be issued every month in 2022, and the number of version numbers for the whole year will decrease by 35.5% year-on-year.

industry insiders told Nandu reporters, "This is the second long-term downtime, which will make the future uncertainty of the game industry clear, and going overseas may be a new reshuffle opportunity."

In 2021, the actual sales revenue of China's independently developed games in overseas markets reached US$18.013 billion (approximately 121.3 billion yuan), a year-on-year increase of 16.6%. The increase in overseas markets has exceeded the domestic market.

For a long time, many domestic game companies have been struggling to survive under the two giants Tencent and NetEase. "Escape to the sea" has almost become the consensus of small and medium-sized game companies; but judging from the layout of many game companies in A shares , those who were early in the country Game companies that have grown up are now also joining the trend of going overseas. "The main purpose is to avoid uncertainty and find new growth poles," said an industry insider. Among the

army going overseas, the overseas growth rates of Sanqi Interactive Entertainment, Shenzhou Taiyue (subsidiary of Kemu Games), and China Mobile Games are particularly impressive, and even support the growth of overall revenue and profits. A reporter from Nanduwan Financial Society found that Sanqi Interactive Entertainment’s overseas business growth rate has reached more than 100% for two consecutive years. In 2021, despite the decline in domestic business, it relied on overseas business to maintain stable growth in revenue and net profit. The annual report shows that Sanqi Interactive Entertainment’s domestic business revenue fell 6.7% year-on-year to 11.44 billion yuan, while overseas business revenue increased by 122.9%, with revenue of 4.777 billion yuan. Also benefiting from the overseas game business, Shenzhou Taiyue has maintained stable growth in overall performance. In 2021, its domestic revenue fell by 11.8% year-on-year, while overseas revenue increased by 37.3%, accounting for 74% of the revenue.

"If you don't go to sea, you will be out", but going to sea may also mean "falling into the trap".

Judging from the performance of A-share game companies, half of the companies have not brought any increase in overseas expansion, and their overseas revenue has shown negative growth. Whether it is Zhangqu Technology, Perfect World, the pioneer in going overseas, or the recently increased Kaiying Network , overseas Revenues fell.

A game practitioner told Nandu reporters that with the shift of the incremental market, the competition of domestic game manufacturers has also shifted to foreign countries. There are more and more overseas products on the market, which will inevitably lead to an increase in purchase costs every year; secondly, it is necessary to Researching user preferences in overseas markets, building a team, etc., the cost of project establishment is higher than in China; finally, overseas games need to fit the local market, such as traditional domestic Xianxia products, it is difficult to impress users in Europe and the United States, plus various versions of Translation, operation, etc., localization costs are also high.

"The metaverse is still in preliminary exploration"

Last year, in addition to the sharp decline caused by the suspension of version number issuance and the new anti-addiction policy, the concept of "metaverse" emerged at the right time, leading a wave of rising prices.

However, overall, the stock prices of Hong Kong stocks and game companies generally show a downward trend. Among them, Zulong Entertainment led the decline with a drop of 61%, Station B fell 55%, while A-share listed game companies were relatively stable, only Perfect World , giant network fell by more than 30%.

Zhongqingbao relies on the concept of "Metaverse" to leave many game companies behind with an annual growth rate of 253.7%. However, the Metaverse has not boosted Zhongqingbao's performance and has suffered losses for two consecutive years. Liao Xuhua, a senior analyst at

Analysys, said bluntly that some of the technologies mentioned in the Metaverse are indeed valuable, including blockchain, virtual reality, digital twins, etc., but these are technologies that have been developing and expanding their applications. The real role of technology is to improve the user experience on the C-side and increase the production efficiency on the B-side, and has nothing to do with the abstract concept of the Metaverse. If we take a closer look at the companies that have experienced huge gains and how they plan to lay out the "metaverse", the answer may only be one sentence, "under preliminary exploration."

"No matter how strong this 'wind' blows, in the end we still need to pay attention to whether the Metaverse can bring long-term performance support to the company. Remember not to fall into FOMO (fear of missing out) emotions", Blockchain Expert of China Communications Industry Association Yu Jianing, the rotating chairman of the committee, said.

Nandu reporters found that although the stock prices of A-share game companies are relatively stable in 2021, from July 2020 to the present, there are only a few "Yuanverse concept stocks " such as Zhongqingbao, Tom Cat, Tianyu Digital, and Baotong Technology. "The stock prices are on an upward trend, and 11 A-share companies, including Sanqi Interactive Entertainment, Gigabyte, and Perfect World, have fallen by more than 50%. The former two-hundred-billion-dollar giants Sanqi Interactive Entertainment and Century Huatong now have a combined market value of less than to 100 billion yuan.

"Most A-share game companies have experienced a sharp decline since July 2020, and their market value has been cut in half. Therefore, most of their stock prices will be at lows in 2021, with small increases and decreases," a brokerage person told a reporter from Nandu.

Written by: Nandu·Wancaishe reporter Ye Lu