The first game stock in the capital market during the year was broken

On December 16, Celadon Games Limited was listed on the Hong Kong Stock Exchange. It is understood that the issue price of Celadon Games is HK$11.2 per share, and the net amount of funds raised is HK$863 million. As the first game stock in China this year, in the market environment of the overall industry development slowdown and stricter supervision, celadon has undoubtedly attracted a lot of attention. On the first day of listing, Celadon Games fell below the issue price, with the lowest intraday price of HK$9.25 per share, a decline of 17.41%.

If you look at it from a product point of view, celadon breakage is not unpredictable. Half a year ago, when it handed over the watch to the Hong Kong Stock Exchange, the game value theory was in the "Celadon Game Table Delivery Hong Kong Stock Exchange What can we see?" Carried out relevant analysis, did not rely on IP, paid attention to gameplay and relatively stand-alone experience, product stylization and kryptonite card trade-offs, the current situation of soaring marketing expenses, and many labels on Celadon games also showed the current popular category vane and changes in user preferences.

At the same time, like other game companies, celadon that relied on "The Strongest Snail" to show beautiful numbers and seek to go public has also declined in the baton of "Lanterns and Dungeons".

In half a year, the phenomenon of product decline has become more serious, in the iOS best-selling list of "Lanterns and Dungeons" fell to 400+ outside, the core product "The Strongest Snail" 76, and the products planned to be launched in 2021 in the prospectus did not take over the baton as expected to stimulate the market.

With an imbalance in R&D and marketing investment, and a plan to go to sea that is still brewing, Celadon has not yet escaped the spell of open source products.

The product has a tone, distribution market

Huang Zhiqiang, CEO of Celadon Games, positioned the company as "the leader of casual games and Rougue-like RPGs in China" in his listing speech.

Looking back at its product line, celadon is inseparable from its product tonality. According to official documents, as of now, the group has a reserve of 6 mobile games and 10 games. The 6 mobile games are "Fool Moving Mountain 3", "Endless Adventure", "Lantern and Dungeon", "Ares Virus", "Incredible Labyrinth" and "Strongest Snail", of which "Lantern and Dungeon" and "Ares Virus" are agent-operated games, and the other four are self-developed games.

Looking at these successful products, Celadon Games did not choose to blindly enter the Red Sea of cards and MMO categories before, but focused on the track and other changes in user preferences, and now placed, Roguelike RPG is the direction that various manufacturers are studying and thinking, to a certain extent, Celadon does have a first-mover category advantage.

On the other hand, Celadon's focus on fun and funny game content and marketing also attracts the attention of a large number of young users, which is another key to Celadon's attention from capital. Before the IPO, Gigabit accounted for 21.37% of the shares, and Alibaba, Tencent, and Shanghai Phantom Power (Station B) also held 4.99% of the shares in Celadon Games after equity transfer and strategic investment in April this year.

According to Frost & Sullivan, about 76 percent of Celadon players are 30 or younger, higher than the industry average of 65 percent. The prospectus also makes it clear that Celadon has established a close partnership with vertical distribution channels such as TapTap and Bilibili in the game distribution, which will help it more effectively capture its target audience.

In 2020, Celadon Games ranked third and second respectively among all mobile game companies in China in terms of the flow of casual games and placement games; According to the rollover of self-developed Roguelike RPG, Celadon Games ranked second; Based on the average turnover of self-developed games, it ranks fourth among Chinese mobile game companies with a total turnover of more than 1 billion yuan last year.

Unbalanced marketing and R&D investment

Zeng Xiangshuo, COO of Celadon, also said before, "We are good at finding a subdivision category to play, coupled with commercialization." "There's nothing wrong with making money and seeking to go public, but what game companies need to move forward is open source and be able to continue to produce competitive new products." Celadon as a new generation of enterprises, there is no capital lying on the credit book of IP.

As a research and development, celadon has its own pursuit and characteristics, and the success of "Wonder Labyrinth" has made it famous among the player group, but due to the distribution of others, celadon itself has not obtained a higher share income. According to the prospectus, in 2018 and 2019, Celadon achieved operating income of 98.421 million and 88.704 million respectively, which also contributed to the choice of "The Strongest Snail" in 2020, which was one-handed, transformed into a research and transportation integration, catered to the general trend of market buying and marketing, and increased its efforts in the subsequent issuance of "Lanterns and Dungeons". In 2018, 2019, 2020 and the first half of 2021, Celadon Games' sales and marketing expenses were $13.9 million, $16.8 million, $559.2 million and $245.1 million, respectively. Among them, the marketing and promotion expenses (including traffic acquisition and brand marketing and promotion expenses) paid to online and offline marketing service providers accounted for 72.0%, 67.3%, 93.7% and 95.1% of the total sales and marketing expenses respectively.

In 2018, 2019, 2020 and the first half of 2021, the R&D expenditure of celadon was 25.3 million yuan, 25.6 million yuan, 146.1 million yuan and 18 million yuan, accounting for 25.7%, 28.9%, 11.9% and 2.4% of the total revenue, respectively.

To some extent, the original advantage of celadon product tone and extreme market-oriented operation has produced a sense of contradiction, heavy marketing and light research and development is not a good choice.

In addition, the cost of buying volume is also a commonality in the industry, not a personality.

Although the prospectus predicts that the remaining life cycle of the self-issued "Strongest Snail" is still 79 months, and "Lantern and Dungeon" has another 52 months. In fact, at that time, it was already possible to see the decline of the product, according to the original plan, Celadon was expected to launch four self-developed games in 2021, 2022 and 2023, and will continue to import licensed games from other excellent game developers, and plans to distribute six licensed games in 2022.

If the new products launched at the end of the year can achieve good results, they are bound to escort their listed stock prices, but the result is that they broke on the first day.

From the perspective of the market, for the current hot sea, celadon has not yet proved itself, but has pinned its hopes on the future. It plans to launch a local version of Lanterns and Dungeons in Hong Kong, Macao and Taiwan in the second quarter of 2022, and push "The Strongest Snail" to the Japanese market where the placement game is highly active. In addition, in terms of game reserves, 10 games such as "Time Travel Agency", "Magic Plan" and "Blade Heart 2" in the development of Celadon Games also have plans for overseas release.

In short, the advantage of celadon is the control of product tone, relying on the past few products to indeed look at their own brand awareness in the young user group, one of the purposes of this round of fundraising is also to strengthen the market awareness of the "Celadon" brand and its own IP.

However, although young users are full of enthusiasm and fickle, the key is whether the follow-up new products can continue to support the existing height and balance the pace between research and development and distribution. Don't dwell on a moment of praise and singing, only follow-up products determine whether celadon is following the old path of its predecessors or the brilliant beginning of another competitive rising star.