Image source @ Visual China
Mantis observation | the author | Coco Duck
At present, as long as it can be next to a little side, a "meta-universe" can be added to the enterprise concept column.
In the game field, the metaverse concept is equivalent to the wealth code. The meta-universe is to the game what the concept of new energy is to the car company. It seems that everyone can build a car across borders, but is this really the case?
The core of metaverse games lies in high user stickiness
Roblox is a game that came online 17 years ago. After landing in the U.S. stock market this year, the stock price has soared, and the market value has even surpassed the traditional game giants such as Nintendo and Activision Blizzard.
After that, the metaverse game concept was hyped up. In the A-share market, many game companies have also begun to rub on the concept of meta-universe. Represented by Zhongqingbao, it announced that it would release a meta-universe concept simulation business game, although the game is still under development and its properties cannot be confirmed. However, this has caused Zhongqingbao's stock price to rise more than 3 times in 51 trading days.
In fact, Roblox has been in a state of operating loss since its listing, and the loss margin has increased significantly in the past year. The 2021 Q3 loss was $74 million sequentially, narrowing from the $140 million loss in Q2, but the loss widened from last year.
The first share of the metaverse game has not yet made a profit, but imagine how big a bubble will be in other metaverse games that are still in concept. What investors should want to figure out is what is the core of Roblox's pursuit? Let's tell whether other games that also focus on the metaverse concept really have the potential to develop.
Mantis Watch selected the world's 5 hottest game keywords, namely Roblox (Robles), LOL (League of Legends), Fortnite (Fortnite), PUBG (PUBG), and WOW (World of Warcraft), comparing the search trends worldwide in the past 9 years.
It can be seen that normally, the popularity of a game will decline as the time it is online, and after reaching the peak, it is often a continuous decay of popularity, but Roblox as a whole shows a different trend.
Roblox, as the first stock of the meta-universe game, showed that it did not make a stable profit through revenue after listing. However, as shown in the chart above, Roblox highlights are prominent, and the popularity curve of an old game has risen smoothly, still maintaining a high user growth rate.
This trend can also be reflected in Roblox's financial report, which reached 47.3 million daily active users in Roblox Q3, a 31% increase year-on-year. More importantly, in the past two years, Roblox's daily active users have never declined, and the growth rate of the user base has accelerated last year.
The continued high growth of Roblox's daily active users is charting the limitless promise of metaverse games. That's the key to attracting investors and recognizing the metaverse game. But in reality, Chinese game companies may have a hard time learning Roblox's growth kernel, and even if they do, they will have to face a longer monetization cycle.
Chinese game companies cannot replicate Roblox
In September this year, "Squid Game" was launched on the streaming platform Netflix, and in less than a month, in the world's major game social media and game live broadcast, you can see a game screen modeled on the levels and scenes in the play.
It was Roblox that set off this second wave of "squid craze", which allows players to use the platform to quickly copy the scenes in the play and quickly gamify them. This phenomenon is also a good explanation for why Roblox can flourish for a long time.
Roblox actually only takes on the role of platform operation, and its content is mainly user-produced (UCG). Users keep up with current events, constantly making games, and enriching the game experience on the platform. This makes it not dependent on a particular IP, or requires iterative updates that developers rack their brains for.
If you want games to be not easy to become obsolete, you need to provide users with a high degree of freedom, and metaverse games are very likely to be presented in the form of platforms. However, as a platform, although it can better face the problem of user decay, it also has to face a longer monetization and profit period.
Some senior game practitioners pointed out that compared with the strategy of launching a single game, doing a platform like Roblox is like building a B station in the video field, and most game practitioners will not choose this road. Mantis Watch believes that this is also one of the reasons why Chinese game companies can't replicate Roblox, and the core of metaverse games is the way they operate.
First of all, being an operator comes at a high price.
In order to accumulate users, Roblox chose to distribute the player's kryptonite revenue to game developers to create better content and attract more players to join. Roblox's earnings report also shows that the company's profit to developers this year reached $130 million, which is five times the amount of selling expenses in the same period.
Metaverse games emphasize high degrees of freedom and social attributes, encourage users to create, and improve the interactive experience of virtual friends playing and competing together to form a virtuous circle. This means that game companies need to focus on operations to improve the user experience. Whether it is to share the creative users or maintain the stickiness of the community, it needs to be premised on sacrificing the profits of a part of the company.
Chinese game companies like to roughly do the opposite, and are more willing to take the initiative to make game promotion content into pictures, videos, etc., and put it on various media, forums, short videos and other platforms to "buy". This model keeps the cost of game companies high. The most prominent is 37 Interactive Entertainment, which sold 1.91 billion yuan in 2017 and soared to 8.21 billion yuan in 2020.
There are three main types of domestic game charging paths, selling props, in-game function charges, and in-game advertising charges. In the case of Glory of Kings, heroes, skins, and runes are the main ways players spend. In order to increase revenue to cover the high promotion costs, the phenomenon of krypton is very common in various domestic games.
It is foreseeable that it will still be in a state of loss during the expansion period, which is the only way for meta-universe game companies. Even if Chinese game companies technically implement the elements of meta-universe games, it may be difficult to put down the hands of urgent profitability in operation management and lean over to cultivate carefully.
Specifically, a game actually has a lot of uncertainty in the operation process, such as a BUG may seriously affect the playing experience. Or a failed marketing campaign will hurt kryptonite game feelings, resulting in user loss. All of this will have a negative impact on the sustainable operation of this game.
Metaverse games like Roblox should be niche at the beginning, requiring a long period of user development to get follow-up feedback. However, the games in operation are often unexpected, and they still need to be watched while walking. Those of us who are working on the concept of the meta-universe, in fact, the eight characters have not been skimmed, and it is even more difficult to judge its intrinsic value.
In addition, public opinion supervision is actually increasing the uncertainty of the future of meta-universe games.
If the government introduces relevant industry restriction policies, including but not limited to restrictions on minors' games, cancellation of software policy tax incentives and additional taxes, restriction of game version numbers and other measures. This kind of meta-universe game is still in the bud, and it may disappear like the extracurricular education and training industry.
Metaverse games are still "premature babies"
Although the Internet giants have laid out meta-universe games.
Tencent, for example, invested in Roblox and Epic Games. Moreover, he is also developing metaversmic related technologies and applications, such as the blockchain accounting system to the letter chain, the virtual person Siren and so on.
NetEase's Ding Lei also publicly stated that for the meta-universe, at all levels of technology and planning, NetEase has been prepared. With the sound of a gun, NetEase may run faster than anyone.
Mihayou spent $89 million investing in the Stranger Social App Soul to explore how avatars can socialize between avatars in preparation for the metaverse game's identity system.
ByteDance and Tencent are involved in the acquisition competition of VR hardware vendor PICO. In the end, it cost about 9 billion yuan to acquire it. In addition, it also invested in the code of its mobile game company "Restart the World" with the UGC creation platform.
But at this stage, the big factories are obviously just throwing money to find opportunities.
Tencent's page is currently just a display, and there is no payment method. The boss of ByteDance directly said that profits are not considered within 5 years. Mihayou's virtual character sets an amount, but there are very few people who pay the bill.
Big companies may have the best chance of translating metaversic concepts into products, but they are still far from commercialization. And those A-share game companies that are still in trouble talk about meta-universe games, but because this is the only straw they can hold.
For example, the performance of Zhongqingbao Games is not outstanding, and it is mentioned in the 2021 semi-annual report that 6 of the 12 projects that the company has committed to invest in have not generated profits. Its own performance has been dismal enough, coupled with the overall decline of the online game industry. At this time, the concept of meta-universe fell from the sky, and there is no reason not to grasp the hype?
Companies such as 37 Interactive Entertainment, DreamWorld, Electric Soul Network and 4399 have all registered trademarks related to "Meta-Universe". But at present, it is still only at the stage of registering trademarks.
In fact, they know very well that metaverse games are still just super "premature babies". Some game company people told the "Securities Daily" reporter that many game companies currently have a layout on VR, but for whether it is related to the meta-universe, the company is more cautious internally, and further judgment is needed.
Mantis Watch believes that technology is not the biggest difficulty hindering Chinese game companies from developing a metaverse game, because at this stage, as long as certain elements can be met, it is counted as a metaverse game. However, metaverseal games are still fraught with risks in China. Both metaverse and metaverse games are still too illusory to bring economic effects to these companies for a short period of time.
What the metacosm is really concrete is only the virtual reality technology behind it and the reserve of related content creation capabilities. What is concrete about a successful metaverse game is the operational capability behind it. However, how to face a long profit cycle and deeply cultivate a long-tail game, Chinese game companies still need to learn well.