has entered March, and it is the season for many listed companies to announce their financial reports.
Recently, Sea Limited, the parent company of Garena, known as the "Southeast Asia Small Tencent ", delivered a brilliant financial report. The financial report shows that Garena's annual pre-sale service revenue reached US$3.19 billion, an increase of 80.3% year-on-year, of which, adjusted EBITDA (profit before interest, tax, depreciation and amortization) reached US$1.98 billion, an increase of 94.0% year-on-year.
It is not difficult to see from the financial report that it occupies all the "right time, place, and people". With the outstanding performance of "Free Fire", Garena has become a big winner in mid-2020. Not only has it hit new highs in revenue, but it also breaks out of its own "comfort zone". "Free Fire" is not only popular in the Southeast Asian market, but also squeezes into the top array in the Latin American market.
The former "Southeast Asian Small Tencent " is stepping out of the Asian market step by step and becoming a game company that cannot be ignored in the global game market.
total revenue for the whole year was US$3.19 billion, and its revenue in Q4 exceeded US$1 billion for the first time
Unlike ordinary game companies, Sea's business structure is very similar to Tencent , and consists of games, e-commerce, and online payment. The company's founder Li Xiaodong once said that the company's benchmark is Tencent , which is also the origin of its nickname Southeast Asia Small Tencent .
Putting aside other businesses such as e-commerce, 2020 is undoubtedly a bumper year for Garena. With excellent market performance of many games, "Free Fire" has repeatedly set new highs.
According to the financial report, Garena's revenue reached US$510 million in the Q1 quarter of 2020, which is precisely because "Free Fire" began to be unstoppable in the Southeast Asian and Latin American markets. According to App Annie data, in the first quarter of 2020, "Free Fire" ranked first in both mobile game revenue lists in Latin America and Southeast Asia.
Then, benefiting from the explosion of the home economy, "Free Fire" continued to heat up in Southeast Asia and Latin America. Garena maintained a growth rate of almost US$200 million per quarter. In the Q4 quarter of 2020, Garena's revenue exceeded the US$1 billion mark for the first time, doubled compared with the Q1 quarter.
Also soared with revenue, the number of users also. The financial report shows that in the first quarter of 2020, the number of Garena users reached 400 million, an increase of 48% year-on-year from Q1 2019, and the quarterly paid users reached 35.7 million, an increase of 72.5% year-on-year.
Among them, in April 2020, the number of monthly paid users of "Free Fire" reached more than twice that of the same period in 2019, and the monthly paid users in India accounted for 10% of monthly active users that month.
But this is just the beginning. In the subsequent quarter, the number of active users and paid users continued to rise, especially in the quarterly paid users, which had an astonishing growth rate in each quarter.
Paid users reached 49.9 million in Q2 2020, an increase of 91.2% year-on-year, and 65.3 million in Q3, an increase of 123.6% year-on-year, and 73.1 million in Q4, an increase of 119.5% year-on-year.
On the one hand, thanks to the outbreak of the home economy, people were confined to their homes, and games have become one of the main ways of entertainment. Most games have improved certainly in active users, especially in games with certain social attributes.
On the other hand, thanks to the further exploration of the Southeast Asian e-sports market, e-sports events represented by the "Free Fire" event began to become popular in Southeast Asia, not only bringing a large number of users to the game, but also increasing the game's revenue.
Financial report shows that in 2020, the related content of "Free Fire" set a record of more than 72 billion views on YouTube, becoming the mobile game with the highest number of views on YouTube for two consecutive years. Among them, the number of viewers of the "Free Fire" online e-sports event held in the fourth quarter hit a new high, and has attracted more than 170 million online viewers so far.
Free Fire surged, and the peak of DAU exceeded 100 million
Although it is called small Tencent , in fact, Tencent also invested in Sea and became one of its major shareholders. Due to its connection with Tencent , Garena has obtained the distribution rights of many Tencent games overseas Southeast Asia and other places, such as the popular "League of Legends", "Dungeons and Warriors", etc. In terms of mobile games, Tencent also handed over its ace product " King of Glory " to Garena to release in Southeast Asia.
Relying on the agency rights of these major products and the resources accumulated during their early entrepreneurship, Garena quickly consolidated its position in Southeast Asia, which also provided a good environment for "Free Fire" to be able to become popular in Southeast Asia quickly.
In 2018, " PlayerUnknown's Battlegrounds " emerged, and the trend of tactical competitive categories swept the world. Under the wave, Garena also joined in to develop its first tactical competitive game "Free Fire". Since most chicken-eating mobile games on the market, such as "PUBG Mobile" and " Fortnite " are developed by Unreal Engine, they put higher requirements on users' hardware configurations. In the Southeast Asian market, users' hardware is of varying quality and the overall configuration is not high.
In order to more adapt to the Southeast Asian market "Free Fire", it has made a lot of targeted research and developments to make it compatible with more users. For example, when "Free Fire" was just launched, the installation package was smaller, reducing the memory space burden of users' mobile phones. At the same time, the game chose to sacrifice a certain picture quality to adapt to the terminal devices of more mid- and low-end users. In the gameplay, the number of players in the game was reduced from 100 to 50, and the addition of character skills and other settings with RPG elements can not only be compatible with the market, but also highlight the differences in the game. After the game
After gaining the advantage of "separateness", "time and people" silently came to "Free Fire".
Due to the dispute between Apple and Epic over the issue of channel division, Apple removed the hot "Fortnite" at the time. At the same time, the Indian government removed "PUBG Mobile" from India for no reason. With the departure of "Fortnite" and "PUBG Mobile", the market has seen a rare vacancy. "Free Fire" took over the market that two popular games have given up, and has made rapid progress in the Southeast Asian and Latin American markets.
wrote in Sea's financial report that "Free Fire" is the number one mobile game in the world in 2020, and has maintained this market position for two consecutive years. In addition, the explosion of the home economy in 2020 further increased the number of users of the game.
Driven by a number of external factors, Free Fire completed a feat in mid-2020. According to Sea's Q2 quarterly financial report, the peak daily active users of Free Fire exceeded 100 million in the second quarter, setting a record high.
. In the global game market, only "Honor of Kings" has announced the feat of DAU reaching 100 million. Compared to this, Free Fire seems to be faster and more difficult, because the game has not yet been launched in the mainland market and lacks the world's largest mobile game market. The significant increase in active users of
ultimately further boosted the game's revenue. According to the financial report, in July 2020, the number of monthly paid users of "Free Fire" hit a new high of 49.9 million, almost more than double that in 2019. Thanks to this, Garena's monthly adjusted revenue also hit a new high.
As the popularity of "Free Fire" continues to rise, Garena significantly raised its expected revenue in 2020. In its 2019 financial report, Garena estimated that its revenue in 2020 will be approximately US$1.9 billion to US$2 billion, while in its 2020Q3 financial report, it increased by US$1 billion, with an estimated revenue of more than US$3.1 billion. At the beginning of
acquires the developer of "Fearlessness" and focuses on self-developed products
annual revenue is nearly 5 billion US dollars, entering the Latin American market. Today, Garena can be said to have truly entered Asia and gradually entered the world. After achieving breakthrough results, Garena also got more thoughts. Since Garena's previous games rely mostly on the product line with Tencent , and then released in Southeast Asia and other markets. However, as Tencent gradually expands its territory overseas, if Tencent chooses to independently issue in overseas markets, it may mean that Garena will face the problem of insufficient product supply, and strengthening its self-development strength will naturally become Garena's top priority.
In February last year, Garena announced the acquisition of European and American developer Phoenix Labs, and some industry insiders said the transaction volume reached US$150 million. Phoenix Labs has a very strong R&D capability. It once successfully produced the multiplayer ARPG game "Fearless", with more than 20 million users.
Currently, Phoenix Labs has more than 100 employees and has offices in Vancouver, San Francisco and Seattle. After the acquisition is completed, it may also promote Garena's further development in the US market. Jesse Houston, CEO and co-founder of
Phoenix Labs, said, "Our partner Garena has always been our strongest supporter, and we are excited to work hand in hand with global game leaders. Next, we can ensure that we provide the best experience for "Default" players around the world and explore new games."
Phoenix Labs CEO (left) and Sea CEO (right)
In addition to enrolling external forces, self-development is also the path Garena insists on, in Sea At the 2018 annual meeting, a strategy of strengthening self-development strength was proposed. The success of "Free Fire" is undoubtedly a shot of heart-warming agent, and judging from the current quality of "Free Fire", Garena's R&D strength is actually not low.
It is understood that "Free Fire" was developed by Garena's Shanghai team, and it can also be seen from Garena's domestic recruitment information that in addition to a large number of distribution positions, game producers, main strategies, main processes, and main beauty are also the targets of their recruitment, which means that Garena will have more self-developed products to surface in the future.
At the same time, from the recruitment information, we can also find that Garena is not limited to the FPS mobile game category, but instead focuses on more diversified products. In the distribution position, we can see that Garena has a demand for relevant talents in categories such as SLG, women-oriented, match-three, and cards. Even in the R&D art position, there is a demand for related R&D talents such as realistic/cartoon/magic/2D.
Since domestic developers are good at games in these categories, it is not difficult to guess that these categories may all be the direction of Garena's self-developed products in the future. Of course, self-developed products are not the only way to play. Now Garena has become the number one publisher in the Southeast Asian market. In addition to "Free Fire", Garena may have begun to agent or even develop more diversified game products and enter more fields.
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