Today's A-shares continue to split, last year's popular sector fell sharply, last week when we rebounded we reminded that this is a chance to get off, do not hesitate.
Recently, we continue to track the infrastructure real estate + meta-universe + new crown drug sector led the rise, focusing on the game stocks detonated by Microsoft's acquisition of Activision Blizzard.
Last night, Microsoft announced that it would acquire Activision Blizzard, the world of Warcraft developer, for $68.7 billion, the largest acquisition in the history of the gaming industry.
Microsoft said that after the transaction is completed, Microsoft will become the third largest game company in the world by revenue, after Tencent and Sony. The acquisition will accelerate the growth of Microsoft's gaming business in the mobile, PC, console and cloud sectors, and will help Microsoft build a metacosm.
In this news, there are several key messages:
First, Microsoft was acquired at a steep premium of $95 per share, a 45% premium to Activision Blizzard's closing price on the 14th, and it was an all-cash shot, which was quite generous.
You know, Microsoft has been established for decades, because of the monopoly position of the Windows system, which is equivalent to mastering the advantages of traffic channels and can easily promote its products, so it has always been stingy to spend money on acquisitions.
There are money-making projects, their own cottage on the line, why spend money to buy it? Right?!
Historically, Microsoft has spent a lot of money to buy, only LinkedIn is more than 10 billion US dollars, but the price of 26.2 billion US dollars is less than half of the 68.7 billion US dollars spent on Blizzard.
Second, although Microsoft bought expensive, the market still recognized this price, and Blizzard's stock price soared 25.88% last night, and it rose more than 32% intraday.
In the same period, U.S. stocks, because of concerns about the Fed's tightening of monetary policy, the Dow plunged more than 500 points, the Nasdaq fell nearly 400 points, and Microsoft's rival Facebook fell 4.14%.
Why?
The core reason for this, perhaps, is the rediscovery of the value of game stocks!
1
Since last year, the concept of metaversity has suddenly exploded, not for no reason.
Combing through various information: Roblox's listing, Facebook's name change, and Microsoft's acquisition of Blizzard can be considered as three milestones in the history of the development of the meta-universe.
They represent: the rise of dark horses, the transformation of established cards, and the entry of players.
Roblox went public in March last year, and in less than a year, its market capitalization has risen to its current $45 billion, reaching a peak of nearly $100 billion.
Behind the soaring stock price is a blockbuster virtual game that is popular with 150 million monthly active users, as well as a huge money scene that can be imagined.
This incident ignited the fire of the "meta-universe" and made the old giants excited, as if opening the door to a whole new world.
Therefore, Facebook, which has a VR hardware foundation, changed its name to Meta and attacked the metaverse.
Microsoft, which has no VR foundation, represents the third path for outsiders, by spending money to take shortcuts and quickly enter.
Microsoft CEO Satya Nadella said in a statement that the acquisition would help the world's largest software maker enter the "dynamic and exciting" world of gaming, which would "play a key role in the development of the metaverseal platform."
He added: "We are making deep investments in world-class content, communities and the cloud to usher in a new era of gaming that puts players and creators first and makes games safe, inclusive and accessible to all." ”
There's a problem here:
The metaverse may have a lot of room for imagination, but Blizzard is not a metaverse, just a traditional established game company.
What exactly is Microsoft seeing?
In fact, the past year, which was a lost year for Blizzard, saw its stock price fall by 40 percent.
Activision Blizzard has a glorious past, including activision, Blizzard, King three subsidiaries, with nearly 400 million monthly active players worldwide, representative works include "World of Warcraft", "Diablo", "Overwatch", "Call of Duty" and "Candy Legends" and so on.
But that's all in the past tense.
Last year's sexual harassment case completely exposed Blizzard's problems.
In late July, The California Department of Fair Employment and Housing filed a lawsuit against Activision Blizzard over scandals including workplace bullying and harassment and discrimination against female employees.
The case shocked the gaming industry, with at least 200 Activision Blizzard employees involved in the strike and rival Ubisoft sending an open letter of solidarity signed by nearly 500 employees:
"It's time to stop the shock. We must demand that effective measures be taken to prevent such incidents, and those responsible must be held accountable for their actions! ”
Under pressure, Blizzard was forced to fire more than 30 mid-level executives, including president J. Allen Brack, Diablo 4 game director Luis Barriga, and Overwatch chief designer Jesse McCree.
Many of the core employees also chose to leave, including Alex Afrasiabi, former senior creative director of World of Warcraft, J. Allen Brack, vice president of Blizzard Entertainment, and Chacko Sonny, executive producer and vice president of Blizzard.
The loss of a large number of core personnel will inevitably lead to problems in the product line.
Sure enough, since the second half of last year, the latest versions of the two IPs of "Diablo" and "Overwatch" have been postponed, and their popular products have repeatedly failed and loopholes.
Since Blizzard has so many problems, why does Microsoft have to buy at a high premium?
The answer is: talent and IP.
Although Blizzard's competitiveness has declined, the skinny camel is bigger than the horse, its talent team is still the first-class in the game industry, and the ability to build brand IP is also first-class in the industry.
Some people have IP, Microsoft bought it, management improvement + transformation meta-universe development + traffic channel promotion, this thing basically became a big half.
2
It's not just Blizzard that's been bogged down in the past year.
For example, Zynga, once the hottest social gaming company on Facebook, was also acquired by Grand Theft Auto's parent company for $11.04 billion.
A large number of established game giants have been acquired, and the important reason is that the traditional way of doing business in this industry has no hope.
In other words: the inside is suffocating.
Foreign countries will not say more, we talk about the domestic game industry.
After the home-at-home consumption boom in the early days of the epidemic, I didn't expect it to be such a disappointing year.
According to the "2021 China Game Industry Report", the growth rate of the user scale of China's game market in 2021 is only 0.22%, reaching the lowest value in 8 years.
The sales scale was 296.513 billion yuan, a growth rate of 6.4%, a decrease of nearly 15 percentage points over 2020, one of the lowest growth rates in recent years.
Chart: Quoted from the 2021 China Game Industry Report.
The reasons for the sluggish demand are nothing more than a few:
Low fertility, demographic dividend peaked, Internet penetration peaked, and the policy Thor's hammer.
The first policy is version review.
In 2019, there were 1570 editions reviewed, and in 2020, the number was 1408, while in the whole of last year, only 768 editions were reviewed, a shrinkage of nearly half.
This has led to a large number of unqualified small and medium-sized enterprises in a dilemma, according to the "Securities Daily" statistics, after the July edition was suspended, about 14,000 game-related companies have been written off in the second half of the year.
Including ByteDance, Baidu and other game business relatively weak Internet manufacturers have also reported a layoff storm, greedy games are more typical, its mobile game "Greedy Blue Moon" accumulated turnover of more than 1 billion yuan, but in the last two months of 2021 was exposed to continuous layoffs, cancellation of year-end awards and so on.
As of now, the suspension of the new round of version numbers has lasted for 5 months, and there is no signal of possible recovery.
The second policy is the strictest new rule in history to prevent addiction.
The "Notice on Further Strict Management and Effectively Preventing Minors from Addicting to Online Games" compresses the time for primary and secondary school students to play games from nearly ten hours per week to three hours a week, and various game companies have also responded, saying that they will actively assume more social responsibilities.
The result of the stagnation of demand is the inner volume, so a large number of game companies choose to lie flat.
In 2021, the games that were discontinued include Tencent's "Call of Duty Online" and "Need for Speed Online", which were once popular, "QQ Hall", "Rhythm Master", NetEase's self-developed "Magic Book Revelation", "Ezhen Miaobi Qianshan" and so on.
3
In the midst of a crisis, hope is also being nurtured.
(1) The increasing cost of buying volume and the tightening of the version number have led to the withdrawal of a large number of copycat enterprises on the supply side;
(2) What remains are enterprises with talent advantages, but also allows a number of independent game companies with innovative gameplay and high-quality IP to stand out, and the dominance of traditional channels has declined.
In short, the pattern of the old world is being subverted.
For example, the new generation of game company Mihayou, at the end of 2020, launched "Original God", according to Sensor Tower data, its revenue in 2021 exceeded $1 billion, ranking third in the world.
There are many reasons for the success of "Original God", such as delicate picture quality, two-dimensional design, excellent visual effects of fighting, and non-krypton gold game experience.
But most importantly, it's the first high-quality open-world game.
The so-called open world means that the game characters can freely decide their own tasks and activities, such as mining, flower picking, butterfly catching, fishing and so on.
This idea is very similar to the metacosm, but the idea is not competitive.
High-quality game experience is, such as the meticulous setting of "Original God", the water meets all the fish in the lake, the water meets the fire will evaporate, etc., combined with the excellent screen design, the continuously upgraded version and gameplay, it is difficult to think of fire.
Behind this high-quality gaming experience, of course, is the blessing of first-class game talents.
Therefore, the new gameplay of the boutique game team + meta-universe will be the main logic of the game industry to subvert the old pattern and bring new opportunities.
In this case, a group of high-quality game teams with inexpensive valuations have received the attention of the market and entered the road of value rediscovery under the trend of the meta-universe.
4
Targets of attention: 37 Mutual Entertainment, Gigabit, Tom Cat
1) Three-seven mutual entertainment
A-share is currently the largest game company, with steady operation and excellent marketing capabilities, and has invested in a number of boutique game teams.
From the performance point of view, between 2014 and 2020, Tencent Group's revenue increased by 6 times, and net profit also increased by 6 times. In the same period, the revenue of 37 Mutual Entertainment increased by 24 times, and the net profit increased by 33 times.
From 2018 to 2020, the overseas business revenue of 37 Interactive Entertainment was 926 million yuan, 1.049 billion yuan and 2.143 billion yuan, respectively. In the first half of last year, the overseas business revenue of 37 Interactive Entertainment was 2.045 billion yuan, an increase of 111.03% year-on-year.
According to Shenwan Hongyuan's expectations, the company's overseas turnover is expected to increase by 50-60% in 2022.
The main driving force for growth lies in a number of boutique game teams that the company has deeply cooperated with, such as the "Douluo Continent: Soul Division Showdown" launched in July, which performed well, with an overall turnover of more than 700 million yuan in August, and the overall overseas turnover of the SLG product "Doomsday Hustle" released by overseas agents in September exceeded 60 million US dollars.
According to SensorTower's September data, 37 Interactive Entertainment ranked 4th in the global revenue of mobile game manufacturers, and Puzzles & Survival and "Song of the City on the Cloud" ranked 5th and 21st respectively in the mobile game overseas revenue list.
In addition, 37 Mutual Entertainment has also actively laid out the "meta-universe". In March 2016, the company invested in VR content developer Archiact; in February 2021, it invested in Shadow Technology (INMO), which focuses on the creation and application of "AR smart glasses"; and in November 2021, it participated in the Series D financing of holographic waveguide manufacturer DigiLens. With the hot speculation of meta-universe in the capital market, the previous investment layout of Sanqi is also expected to be further catalyzed.
2) Gigabits
If 37 Interactive Entertainment is the "little Tencent" of A shares, then Gigabit is the "little NetEase" of A shares.
To put it simply, it is the strong R&D ability of high-quality games + refined user operation = the vitality of ultra-long-term explosive products.
Similar to NetEase, Gigabit is also good at the research and development of high-quality games, adopting a payment mechanism to take into account the balance of the game, and the main games are ultra-long-term operations with a lifespan of more than 5 years.
Last year, the company's revenue in the first three quarters increased by 70%, and Guohai Securities predicted that the net profit attributable to the mother in 2021 would be 1.578 billion yuan, an increase of 50.8% year-on-year, mainly driven by new games such as "A Thought of Escape" and "Moore Manor".
At present, the company is following the pace of leading manufacturers and preparing for further expansion to the sea, focusing on the global distribution of self-developed products.
3) Tom cat
A-share scarce game companies with high-quality IP, the Tom Cat family IP series has a wide range of popularity, but also fits the virtual digital human opportunities in the meta-universe.
At present, "My Tom Cat" has been online and operated for nearly 8 years, and the MAU in the first half of 2021 will remain at 37-43 million people; the MAU will remain 50-70 million times in "Tom Cat Parkour", which has been online for more than 5 years.
Around this well-known IP, two new mobile games were launched in July last year, namely the casual shooting mobile game "Tom Cat Wilderness Party" and the simulated cultivation mobile game "My Angela 2".
According to the statistics of Qimai data, the cumulative download of Q3 on the domestic Huawei, Xiaomi, VIVO, and OPPO ends exceeded 36 million.
According to App Annie's statistics, in the third quarter of 2021, "My Angela 2" successfully ranked first in the global download volume of iOS and Google Play, and the number of downloads on Google Play alone has exceeded 50 million.
Offline, the company has laid out businesses such as parent-child parks, theme commercial complexes, IP theme hotels, as well as IP derivatives and licensing businesses. At present, there are more than 2,000 SKUs authorized by IP, and more than ten IP-themed indoor parent-child parks have been opened in Hangzhou, Ningbo, Shaoxing, Hefei, Foshan, Zhuhai and other cities.
In terms of innovative business, it has been explored in the fields of virtual IP live broadcasting, NFT digital collection, and brain-computer interface. Since 2021, virtual digital people are hot in the consumer and marketing market, and its "Talking Tom Cat Family" IP has a number of virtual IP images with character characteristics, combined with classic IP roles such as talking Tom Cat, Talking Angela, and Talking Dog Ben, the company is focusing on expanding IP application scenarios.
On the evening of January 14, Tom Cat released its annual performance forecast, and it is expected that the net profit after deducting non-deductions in 2021 will be 750 million yuan to 863 million yuan, a substantial increase of 48%-70% over the same period last year.
reference:
Capital Planet Planet: 37 Mutual Entertainment has found a magic weapon other than "buying volume"
Guojin Securities - Gigabit (603444) has "ultra-long-term operation capabilities" of "small NetEase" - 211112
Pacific Securities - Tom Cat (300459) classic IP products continue to iterate, incremental business is poised to develop - 211018