Since Ren Zhengfei golden mouth opened, the cold air has really spread to various markets. The latest industry that has suffered from cold is games.
According to the latest report released by gamma data , the actual sales revenue of the Chinese game market in the third quarter of this year was 59.703 billion yuan, a month-on-month decrease of 12.61%, and recorded a decline for the third time in the last four quarters, and also fell by 19.13% year-on-year.
, the situation is not optimistic. Earlier this year, analyst firm Ampere Analysis predicted global gaming market sales will fall by 1.2% year-on-year to $188 billion this year. If the prediction comes true, this will be the first time that the global gaming market has experienced a year-on-year decline after seven years of growth.
The environment is cold, and leading companies will not have a good life. Tencent , the number one game manufacturer, has made money every day and has been firmly in the throne of stocks for a long time, has recently stepped down from the throne and its market value has been surpassed by Moutai. Other popular game manufacturers have also encountered their own bottlenecks and urgently need to seek new ways out.
What is the way out? Do you broaden the moat by buying and buying, or go overseas to find new growth? There are candidates for both paths,
, but neither is expected to go too smoothly.
(Picture from UNsplash)
Q3 mobile game market "cold"
In the era of mobile Internet, mobile games are the driving engine of the entire game industry. The domestic game market suddenly entered winter in the third quarter, which naturally has a lot to do with the decline in revenue on mobile games.
According to the "China Game Industry Report" jointly released by the National Press and Publication Administration and China Audio and Digital Association , the proportion of web game revenue has continued to shrink since 2015, and client game revenue has remained stable, but mobile revenue has continued to grow. As of the end of last year, the proportion of mobile game revenue reached 76.06%, and ARPG, card and strategy games accounted for half of the market.
So how bad is the revenue on mobile games in Q3 this year?
also comes from gamma data. The report shows that the actual sales revenue of China's mobile game market in the third quarter of this year was 41.643 billion yuan, a month-on-month decrease of 16.79%, which is the fourth decline in the past five quarters; the year-on-year decline was as high as 24.93%, which is at the lowest point in the same period in history.
Even if you look at the world, the decline in the mobile game industry is very obvious. According to the "2022 Mobile Game Market Outlook" by the well-known data agency Sensor Tower, the global mobile game market's revenue this year is expected to be US$86 billion, a year-on-year decline of 2.3%.
As we all know, the game market has always been divided into peak and low seasons. Because they have two golden periods of Spring Festival and summer vacation, Q1 and Q3 each year are critical periods for game manufacturers to hit the end of the year KPI.
From the financial reports of major manufacturers such as Tencent and NetEase, it can also be seen that the revenue, number of online users, and growth rates in previous years are much higher than those in the off-season Q2 and Q4. In the third quarter of 2020, the popularity of the mobile game market reached its peak. According to the mobile game market analysis report released by APP Annie in that year, the average weekly download volume of mobile games and the average spending of mobile game users both hit the highest level in the same period in history.
summer time has also been very obvious in promoting the mobile game market, which can be reflected in the growth of new users , average daily online time and other data. is now performing sluggishly during the Q3 summer season, and the year-end KPIs of major manufacturers are probably in danger.
On October 21, Perfect World released its third quarter financial report for the 2022 fiscal year. In the quarter, Perfect World achieved revenue of 1.788 billion yuan and net profit attributable to shareholders of 304 million yuan. The former decreased by 15.25% year-on-year, and has recorded a decline for three consecutive quarters. In Perfect World's revenue structure, the gaming business accounts for 95.23%. The group's total revenue is getting worse and worse, and the game business, as the main revenue force, naturally needs to take the blame.
Other major game manufacturers that have not disclosed their third-quarter financial reports have also taken the lead in giving the market and investors a good vaccination, sending out many pessimistic signals.
Sanqi Interactive Entertainment released its performance forecast on October 10, and is expected to achieve a net profit attributable to shareholders of -500 million to -600 million yuan in the third quarter, a year-on-year decrease of 30.83%-42.36%. In the announcement, Sanqi Interactive Entertainment admitted that the decrease in revenue of key game products launched by the company in the domestic market is the main reason for the decline in the group's total revenue.
The reason why the major game manufacturers are disappointed in the summer vacation is actually not complicated: On the one hand, the growth of domestic game users has reached a bottleneck, and the market driving force is already declining; on the other hand, the enthusiasm of old users has also declined. In the absence of new hot products in the market, it is difficult for old games to continue to mobilize players' desire to consume.
Also from the China Audio and Digital Association data shows that the number of game users in China in 2021 was 666 million, with a year-on-year growth rate falling to 0.22%, and the growth basically peaked. In terms of user structure, with the gradual implementation of new anti-addiction regulations, the time for underage players to go online is strictly limited, and it will take some time for a new wave of backbone forces in the game industry to grow.
The situation of user growth peaking is difficult to change in a short period of time. If game manufacturers want to get out of the trough, they have to start from the latter question and find the answers from themselves.
The root cause of the winter: New games are not good, hot products have cooled down
Many people attribute the entry into the game industry to the increasingly strict version number review standards, and the suspension of release of version numbers for a long time in the second half of last year.
But in the view of the Institute of Value Research (ID: jiazhiyanjiusuo), this view is not completely correct. After
enters 2022, the domestic game version number distribution speed and scale have gradually returned to normal, and the supply of new mobile games is not a problem.
htmlOn April 11, the State Administration of Press and Publication announced the first batch of approved games this year, with a total of 45 games obtained version numbers. Sanqi Interactive Entertainment, Lilith, Xindong Network and Xishanju , a subsidiary of Kingsoft Software , all of which have achieved some results. On June 7, the second batch of game versions of the year were officially issued, 60 games passed the review, and the new games of Perfect World and Mihayou were listed as expected.
In the third quarter, the State Administration of Press and Publication issued three batches of game version numbers on July 12, August 1 and September 13, with the number of approved games being 67, 69 and 73 respectively. As of press time, the total number of game versions issued by the State Administration of Press and Publication this year was 314. Judging from the copyright distribution of various batches, the number of games approved this year is increasing, and mobile games account for most of the market.
Of course, this data is still far from the peak of history. Although there was a vacant period of in 2021, 755 version numbers were issued throughout the year. Looking further, the number of approved games in 2018-2020 exceeded 1,000.
However, in a research report released in July, Citi pointed out that the domestic game version number approval process has returned to normalization, but the overall trend of stricter approval process and continuous refinement of rules has not changed. In other words, under the existing regulatory environment, it is difficult for game manufacturers to win by volume.
As a beacon for the entire industry, the dynamics of major manufacturers are particularly worthy of attention.
NetEase's "All-Star Street Ball Party" received the version number in September, which was the first time that the version number was approved after the resumption of the release in April. Although Tencent is still absent, many game manufacturers invested by Tencent have obtained version numbers this year. In addition, major manufacturers such as Mihayou, Lilith, Sanqi Interactive Entertainment, Zhongqingbao have also successively obtained new version numbers.
In short, the cold winter of the version number has ended, and major manufacturers can no longer put all the responsibilities on the regulatory authorities. After all, Q3's actual sales have declined significantly, which is attributed to the incompetence of new mobile games and the decline in attractiveness of old hot products.
According to gamma data statistics, among the top 10 mobile game flow calculation lists in the third quarter, only one of the new mobile game "Diablo Immortal" jointly produced by NetEase and Blizzard , was on the list and ranked fifth.At the top of the list, Tencent's " Honor of Kings ", " Peace Elite " and NetEase's " Fantasy Westward Journey " continue to dominate the top three, and Mihayou's " Genshin Impact " and Lingxi Interactive's "Three Kingdoms Strategy Edition" also ranked among the top.
"Honor of Kings" was launched in 2015, and "Fantasy Westward Journey" was released in 2003. The relatively young "Peace Elite" and "Genshin Impact" have also been online for 2-3 years... Before we knew it, there have been no new hits in the mobile game market for a long time.
mobile game market has lost its vitality and creativity, and new games cannot find room for growth, which has gradually become a problem that has plagued the entire game industry.
data shows that the number of mobile games suspended in the third quarter of this year soared by 88.9% month-on-month. Against this background, the production space of small and medium-sized manufacturers is squeezed, and large manufacturers have become conservative and impatient. Converting online game IP transformation into mobile games has become the choice of many major manufacturers, which will further weaken the innovation capabilities of the game industry.
No matter how powerful "Glory of Kings" and "Peace Elite" are, they will always encounter lows. The former has already shown signs of a decline in revenue in Q2 this year. Tencent’s financial report shows that the gaming business revenue in the second quarter was 42.5 billion yuan, down 1% and 2.5% year-on-year and month-on-month respectively.
Tencent still has this trouble, and the situation of other manufacturers is self-evident. If you want to get out of the predicament, you must take action and make changes as soon as possible.
Competition is intensifying, and the local environment is not adaptable, and it is difficult for large manufacturers to go overseas
game manufacturers of course will not sit still and wait for death. Externally, they compete for high-quality resources and expand their business lines through investment, acquisition, etc.; internally, they actively adjust their development strategies and go overseas to find new growth points.
Value Research Institute (ID: jiazhiyanjiusuo) Previous report " Tencent Game "Alternative Going Overseas", buying and buying is the best choice? 》 mentioned that Tencent has been overseas for nearly ten years, and investment has always been the protagonist. In the third quarter of this year, Tencent first cooperated with Sony to acquire 30.34% of the equity of , and then increased its stake in Guillemot, the major shareholder of Ubisoft, France.
However, not all major manufacturers can be qualified investors. Tencent's giant aircraft carrier's siphon effect on high-quality studios and game manufacturers, as well as its strong financial advantages, often makes other peers sigh. Judging from the current situation, has a high investment risk and requires strong financial resources as support. Only a few large companies can play. For most mid- and low-level manufacturers, going out to the game may be a more realistic choice.
Of course, there are many challenges for game manufacturers to go overseas.
On the one hand, going overseas will also face competition from major manufacturers.
At the beginning of this year, Tencent Senior Vice President Ma Xiaoyi said in an internal sharing event that the globalization of game business is the focus of growth this year. Ding Lei also stated that it would accelerate the development of the international market, and it was also revealed that it set a goal to increase the proportion of overseas market revenue to 50%. You should know that as of the end of last year, overseas market revenue only accounted for 10% of the total revenue of NetEase Game business, which shows Ding Lei's ambitions.
Small and medium-sized manufacturers in China who were killed by major manufacturers have failed to get rid of their fate even when they went overseas. In the September overseas revenue list released by APP Annie, Mihayou, Sanqi Interactive Entertainment, Tencent, Lilith and IM30 ranked in the top five. Including old faces such as NetEase, Habby, IGG, the degree of rigidity of this list is almost the same as that of the domestic market.
Most of the mid-level manufacturers that can get a share of the overseas market are old players who have first-mover advantage and have been going overseas for many years. For example, Motong Technology , which has popular games such as Mobile Legends: Bang Bang, has set overseas as the core strategy as early as 2014, and bypassed the fiercely competitive North America and chose Southeast Asia as its overseas base.
But now, Motong Technology has been acquired by ByteDance.After all, it is better to rely on large factories to enjoy the cool air. Even if going overseas can bring some new growth, the production conditions of mid- and low-rise manufacturers are still not optimistic.
On the other hand, facing completely different cultural backgrounds and market demands, manufacturers are prone to being unacceptable to local conditions, and costs such as marketing and operation will also rise sharply. The report of AppsFlyer shows that the cost of acquiring customers in China's overseas applications in the past year has increased by by 212% year-on-year, and the gaming industry is the first to be affected.
But in general, compared with the domestic market where user growth has peaked, overseas growth potential is still worth looking forward to. The report also from AppsFlyer pointed out that the total number of Chinese overseas mobile game apps has increased by 115% in the past five years. As of the second quarter of this year, the proportion of paid users of overseas mobile game APPs has also increased by 34% compared with the same period last year, with a great prospect.
(Picture from AppsFlyer)
In the view of the Institute of Value Research (ID: jiazhiyanjiusuo), if a mid-level game manufacturer wants to gain a place in the overseas market, it must overcome the difficulties mentioned above. The solution may be two keywords: differentiation and localization.
pursues differentiation and requires manufacturers to anchor an exclusive track, maximize their own technical and operational advantages, and to achieve the ultimate of a type of mobile game.
Glacier Network, which has the fastest-profitable revenue list of overseas game APPs in September, focuses on developing and placement RPG games. Even mobile games that seem to have low technical content and limited monthly flow, as long as they can attract enough active users, the benefits will still be considerable.
The so-called localization requires manufacturers to start from scene construction, game world view, character modeling and marketing after launch, and fully integrate into local culture.
The mobile Legends released by Motong Technology mentioned above: Bang Bang is the best example.
In view of the characteristics of multi-ethnic agglomeration and complex language system in Southeast Asia, Mobile Legends: Bang Bang has launched more than 20 language packs at one time, including small languages such as Tagalo and Khmer , which are not widely used in real life. In addition, for different countries, a login interface with obvious ethnic characteristics is designed; local landmark buildings and cultural customs integrated into the game scene are all methods that game manufacturers should try.
It may be difficult to go overseas, but it is not that there is no chance, but manufacturers need to work hard to overcome various difficulties.
written at the end
htmlOn August 30, Shanghai Enterprise Federation , Shanghai Entrepreneurs Association and Shanghai Economic Group Federation jointly released the 2022 Shanghai Top 100 Enterprises List.
In this freshly released top 100, Lilith, Poker City, Shengqu Game , Yitan Internet four game companies are all among them. It is reported that the list is formulated based on various financial indicators such as revenue, profit, , etc. of each company in the previous fiscal year. The final selected companies are ranked according to their revenue scale.
It is worth mentioning that the reason why Mihayou is absent from the list is likely to be that he did not independently register and report revenue data within the specified time and actively gave up his election. In the last year's top 100 list, Mihayou ranked 88th. Considering the money-making ability of popular games such as "Genshin Impact", if Mihayou runs as scheduled, it should be natural for him to be on the list.
However, four companies have entered the top 100 list, which is already a shot in the game industry in the cold winter. You should know that as the center of the national game industry, Shanghai has gathered a large number of celebrity unicorns, and it can even be said to be the weather vane of the entire game industry in China.
The situation in the game industry is indeed not good, but it has not yet reached the point of collapse. At this critical moment, large companies, as the backbone of the industry, should shoulder the burden and contribute to the rejuvenation of the market. As for small and medium-sized manufacturers living under the shadow of large companies, they should take the initiative to seek a way out.
