Text/Xing Shubo
Microsoft bought Activision Blizzard for $68.7 billion (about 436.5 billion yuan), a huge profit equivalent to Microsoft's 14 months.
Most of the media comments have gathered in the following aspects -
1. This is the largest acquisition in the global game industry so far;
2, Microsoft became the world's third largest game company in terms of game revenue, surpassing NetEase and Nintendo;
3, there is also Microsoft CEO Nadella's bold words "Activision Blizzard game IP will be a good entrance for Microsoft to enter the metaverse." ”
In fact, in addition to these three aspects, this transaction has a windfall: Activision Blizzard will become Microsoft's fourth premium game channel and distribution platform.
Microsoft currently has two major game channel distribution platforms, Xbox Console and Microsoft Store, as well as Minecraft. Microsoft allows Minecraft developers to develop mods, assemble, model, and trade in-game games. Similar to iOS developers putting software on the AppStore to sell. Microsoft said that Minecraft developers have sold $350 million mods so far, and the highest production group has divided into $1 million in two months, second only to Roblox, the "first share in the meta-universe".
After the acquisition of Activision Blizzard, Microsoft will have the Activision Origin game service platform in terms of PC game channels, second only to Steam. Since its birth in 2011, the Origin platform has been a well-known heavyweight game platform at home and abroad (due to special reasons, the experience of domestic players is not good). It can be considered that after Microsoft's acquisition of EA, Origin will become the most powerful game channel to block the PC game distribution king Steam. In fact, starting in 2020, Microsoft membership service XGP (Xbox Game Pass) can experience the EA play subscription service for free.
Activision EA's Origin game platform
From the perspective of industry, Microsoft is not satisfied with the integration of soft and hard in the game industry, but also strives to integrate game content and channels into one, and seek a greater right to speak in the industrial chain. Although in the past decade of mobile operating system competition, Microsoft has lost to iOS and Android, and has lost the advantage of competing with the appStore and Google Play, two major game distribution channels. The Windows Phone Store disappeared into semiconductor history along with Nokia smartphones.
But now, with acquisitions and its own platform, Microsoft still has a place in the battle for gaming channels.
In terms of trends, the integration of soft and hardware and the co-construction of content channels have become a topic that must be done by game manufacturers in the next generation.
Microsoft, Sony, and Nintendo are on their respective hardware consoles and their game platforms, such as Tencent, NetEase, Bilibili, Byte, and Their Hearts on their respective social platforms, portals, short videos, and game communities. Games without channels, games can not reach players; without the channels of games, channel influence weakens, it is difficult to say benefits.
Image source: Network
Pioneer game manufacturers are sparing no effort to build their own channels, and those manufacturers who do not have exclusive independent channels and channels that do not have their own content CP are opening up a different publicity channel from the traditional app store through the matching of the purchase market, and are also undergoing strong changes.
In 2022, the app store, the buying market, the manufacturer's own channel, is this a trade-off, or the east wind overwhelms the west wind? For some game companies it's a multiple-choice question, for others it's: I want it all.
The Apple Store or the strongest gaming channel?
According to App Growing's "2021 Global Mobile Game Buying White Paper", the market share of iOS has dropped to 21% against the background of a 64% increase in global mobile game advertising. According to gamelook data, the iOS market share in Q3 of 2020 is still 42.03%.
Behind the market share slash is the change in the business strategy of the Apple Store as a channel.
The report only briefly analyzes that due to the Apple Store's adjustment of the IDFA privacy policy update, it has led to pessimism in the advertising industry.
IdFA, created by Apple in 2012, is widely used in digital marketing. Prior to Apple's Privacy Deal, advertisers could track the whereabouts of iPhone users on websites and apps and better target ads and evaluate their effectiveness. After the New Deal, users can choose not to be tracked. IDFA protects user privacy and shackles advertisers.
The most intuitive feeling for ordinary users is that when you use an app or game, the "require APP not to track" option will pop up (Source: Apple's official website IDFA)
Apple claims that the company will pay $60 billion to developers in 2021, an increase of 33% year-on-year. At a 30% commission rate, Apple's App Store sales could reach up to $85.71 billion in 2021, while Apple earned $25.71 billion from the Apple Store alone.
According to a JPMorgan analyst report, ads in Apple Stores mainly come from Apple Store search ads (ASA). This advertising revenue is only $2 billion per year. Analysts expect Apple's advertising revenue to reach $20 billion in 2025.
In general, the growth of advertising revenue will affect the revenue and credibility of the content itself, such as advertising on portals and video websites, or advertising in the channels of domestic Android vendors. How Apple chooses between nearly $100 billion in sales revenue in the App Store and only $2 billion in advertising revenue is a self-evident question.
Therefore, this decline in market share may be a deliberate regulatory measure taken by Apple to maintain the credibility of its store rankings and sky-high sales.
Another move of the Apple Store is due to the previous questions by epic, Tencent and other game companies that it charges a 30% commission as the overlord clause, and antitrust agencies in the United States, Europe, Japan, South Korea and other places have also continued to pressure Apple. Apple updated its share ratio in 2021. Apple launched the Small Business Program, which lowers the percentage of developers with less than $1 million in annual revenue to 15 percent.
However, according to Sensor Tower, although more than 98% of developers are small and medium-sized developers, 93% of the platform's sales are contributed by the top 1% of developers. The 1% of developers include giant companies such as Google and Facebook. This move can not only allow Apple to build trust among small and medium-sized developers, but also to obtain reconciliation from antitrust agencies in various countries, and continue to let the 1% of giant developers continue to contribute profits.
The top ten apps and games in the 2021 App Store can be seen that they are basically produced by big manufacturers (Source: App Annie)
Market share decline revenue is still growing, the initiative to reduce the commission can still ensure profits, Apple Store as a channel, continue to ensure credibility and revenue, whether for developers or advertisers, is a satisfactory answer.
However, for domestic game developers and advertisers, if they continue to choose to run in the Apple Store in 2022, they will face stricter supervision.
According to the "removal application monitoring" data of "Qimai Data", in the last quarter of 2021, the total number of Chinese local developer games that were removed from the Apple App Store exceeded 16,000, and the number of game applications removed from the shelves exceeded 5,000 per month, which was a significant improvement over the third quarter.
Unlike the situation where the Apple Store is dominant, the Direction of the Android Store at home and abroad is different.
Internationally, in 2021, Google Play has followed the Apple Store to reduce the proportion of shares, and due to the high share of Android mobile phones, reflected in the game launch market, Android mobile games and advertising volume surge. The average volume of a single mobile game was basically flat, while ios fell by 49%.
However, the domestic Android market, especially the manufacturer market that joined the hardcore alliance, basically follows the 50:50 share ratio, and the non-hard alliance millet also has 30%.
Compared with the Apple Store, the unit price of customers in the domestic Android market is low, but the payment rate is also low, and game advertisers face high commissions.
Game manufacturers spend money on not being able to buy good services, which is why even an established game company like Kingsoft Games would rather spend a few months communicating more than thirty times after being removed from the Apple Store, rather than spreading marketing expenses equally to the Android market: it is not how good Apple is, it all depends on peers to "raise love".
Buy volume market, winner-take-all?
Affected by Apple's policies, Facebook's parent company Meta plans to start selling more products directly through its Facebook, Instagram and Messenger apps starting in 2022.
Previously, the main buying channels for overseas games were social platforms such as Facebook, AdMob, AppLovin and third-party stores. After Facebook's software opened an in-app store to sell goods directly, it was a shot in the arm for the game buying market.
In fact, the in-app direct conversion of game purchase channels play, domestic channels much earlier than Facebook.
On September 8, 2021, Kunlun Wanwei announced that it has signed an exclusive agency operation agreement with ByteDance for its self-developed game "Tower of the Sacred Realm", and the main cooperation object of ByteDance is The Huge Engine, a wholly-owned subsidiary of ByteDance. Tower of the Sacred Lands is a two-dimensional open world element MMORPG mobile game that will be launched in Q1 2022 Chinese mainland, with a TAPTAP score of 8.3.
Kunlun Wanwei's stock price fluctuated in 2021, down 72.57% year-on-year, and the official hopes to fight a turnaround battle with self-developed boutique games and high-quality channels of huge engines.
On the main forum of ChinaJoy in 2021, Huge Engine released a report that byteDance's entire series of productS MAU has reached 1.9 billion, and the total live broadcast time of the game is as long as 780,000 hours. With the blessing of huge traffic, the report believes that "the huge engine connects game manufacturers and content creators through games + video, game + live broadcast, game + IP and other forms, creating an extremely rich game ecological core, and has many successful cases such as "The Strongest Snail" and "Ninja Must Die 3" in China. ”
The outside world has been a little confused about who can come out on top in the app store and the buying market.
However, according to the report released by the huge engine, the first way for users to obtain games is still the app store, accounting for more than 30%, the direct download of the official website exceeds 12%, the proportion of search, information flow and other purchase channels does not exceed 11%, and the advertising promotion download is only 3%.
This shows that the buying volume market is not dominant compared to traditional download channels, and still has great potential for development.
However, the new game company seizes the new channel, and enters the window of opportunity to grow with the channel platform when the traffic price is depressed, and it becomes no longer easy as the new platform is difficult to produce. This may mean that game manufacturers who abandon the app store and rely solely on the buying market will not be too much in the future.
The heavyweight game products of the head manufacturers are usually grand slam marketing of their own channels, application markets, and buy-volume markets, and then further consolidate their position in the buy-in market after obtaining market initiative and maximum revenue, and finally turn this market into a winner-take-all fighting arena.
Take Miha Tour, for example. In 2020, Mihayou's "Original God" removed the main domestic Android channels and chose the buying market in another way. But in the Apple Store next door, after "Original God" opened the full-platform public beta, Miha Youguang iOS version of the creative produced more than 400.
Source: Guangda - the world's leading advertising and marketing platform
In addition to the app store, in the domestic channels of "Original God", Bilibili's advertising creatives account for more than 50%, and it should be known that the share ratio of Bilibili intermodal games and domestic Android channels is the same, both 50:50. According to Jingnuo, the reason for choosing the former is that "the gross profit of the Bilibili channel is about 5-10% higher than that of the Huawei App Store (the representative of the Android market)." ”
Another domestic purchase channel is more favorable, "TAPTAP does not need channel fees at all, and the gross profit is as high as 50% to 70%." According to the nuclear article.
In overseas markets, Mihayou also uses the buying techniques of the domestic market to maintain the popularity of the app store and increase the purchase volume channel to obtain high exposure.
For example, "Original God" accounted for more than 48% of the ads on Google Ads and more than 23% on Facebook, and the large traffic and accurate data analysis of these two major platforms helped Mihayou gain continuous exposure overseas.
In Akihabara, Japan, where the atmosphere of the second dimension is strong, Mihayu chose to paint the wall for outdoor advertising, as a two-dimensional holy land, its brand effect is greater than the traffic exposure.
"Hara Shin" is a poster of Akihabara, Japan
Looking back, it is not that game companies do not like domestic Android channels, but that they have channels with higher profits and better brand exposure to choose cooperation.
However, the buying volume market is greatly dependent on the external environment, and the app store has a share ratio controlled by the platform. Game companies want channels to cooperate well, but in the final analysis, they still have to establish their own channels.
The biggest variable of the reason why the stock prices of many A-share veteran manufacturers such as Perfect, Sanqi and Gigabit are dive at every turn is how to balance the money they use to buy and the money they use for research and development. For example, according to Sina Finance, the sales fee of 37 Interactive Entertainment Games has increased by 70 times in five years, while its stock price has only risen from 22 yuan in March 2021 to 28.13 yuan.
These companies don't have the luxury to spend $400 billion on a gaming channel like Microsoft, or have enough cash flow to buy ads like Mihayou. If they can't establish their own sales channels, even if they invest in a portal or a community forum, then they will still walk into the high marketing costs in the future, resulting in research and development can not keep up and then lose market share, and finally trigger the strange circle of stock price decline.
To be the king of channels: don't look at content but only look at money?
The transformation of game channels is actually a mirror of the development of the electronics industry.
Originally, games such as Ping Pong were just the product of engineers entertaining themselves in the computer room after tea and dinner, and had not yet formed an industry.
By the 7080s of the last century, Nintendo and Atari's game consoles and cassettes were bundled, setting the tone of today's game console industry: hardware does not make money, and it makes money by selling game software.
From the 1990s to the beginning of 2000s, Internet cafes, pirated audio-visual stores (post-00s have not experienced the scene of game discs and Jay Chou's albums sold together) and arcade game halls entered China, enlightening the first generation of Chinese gamers, but also let the first generation of gamers, such as Daewoo Company, which developed the "Immortal Sword" series, because of the erosion of profits by piracy, was about to close down; genuine games began to advertise in magazines or on the ground like fast moving consumer goods, such as the "Meteor Butterfly Sword" included in "Popular Software". Game manufacturers have a preliminary sense of channel.
Photo of the video store (Source: China Net)
From 2003 to 2010, around 2010, in the ERA of PC Internet, Shanda, Tencent, and NetEase dug into the cornucopia of online games, and the thinking of paying for free props on the game body changed both the way of game production and the way of game dissemination: QQ, NetEase mailbox, flash sidebar of various small websites, and the manufacturer's own channels accompanied the first batch of users who entered the network became childhood memories.
After 2015, in the era of mobile Internet, app stores were initially the first choice for people to download games; later, short video software, live broadcast software, grass planting communities and video websites, as long as they are places where ads can be placed, are the implantation of game ads.
4399, comic games, quick play and other game boxes, and even invest their own money in short video applications to play information flow advertisements, attract users to the box and then distribute the game for secondary distribution.
In terms of advertising content, from the introduction of graphics to the video era, from the inferior star advertisement of "Play blue moon" to the current individually customized advertising PV and advertising theme song, in order to make people unforgettable.
Now, the channels that game manufacturers are eyeing, in addition to online, also appear on subway station signs, shopping mall walls, and telephone poles.
As one of the few cash cattle industry comparable to e-commerce in the Internet era, the ground promotion of game companies is more profitable than the takeaway push, which has become a high-quality customer of outdoor advertising platforms, and also implies the helplessness of game manufacturers: online traffic is too expensive, it is better to go back to the village to paint the wall.
Online game wall painting advertising
From the perspective of a brief history of game channels, to be the king of channels, rather than not looking at content and only looking at money, it is better to say that channels know how to make money more than content.
Whoever can help monetize game content more can get the most influence and benefits from the channel.
Whether it is the offline store in the 8090s, or the online channel relying on Internet services after 2000, or the application store and the buying advertising alliance in the modern era, it can be said that it has little to do with the content itself, and is directly related to the monetization ability of the content.
Now, the channel revolution seems to be back to the 90s when Microsoft first entered the game industry: after the game legalization and software digitization, Microsoft no longer has to worry about piracy, and now Microsoft is more worried about which channel to sell its games? After all, Microsoft is now in decline in the mobile game market, and it does not have its own mobile channels. The mobile market's own channels are strong, such as Tencent and NetEase, and they also need to advertise in the buying market, not to mention Microsoft Mobile, which has no foundation.
But that's not a big problem for Microsoft: if there's no game, buy one; if there's no channel, buy one.
Whether it is acquisition or self-operation, the game channel must be there, must be strong, this is the lesson of history.
Promotion channels for domestic games
According to relevant information, in 1999, in Redmond, Washington, former Microsoft executive Rick Thompson booked a ticket to Redwood City in the United States. This was where EA's headquarters were located at the time. Microsoft was planning to acquire EA, only to passively see EA CEO John Richtiello taunted: "I've talked to people at Microsoft more than once, but I've never seen you... You guys don't even know how to be a host..."
Thompson, who had a gray nose, bought another ticket to Kyoto, Japan, the headquarters of Nintendo. Microsoft is also planning to acquire Nintendo. As a result, after seven communications between the two sides, they were finally rejected by Nintendo's then-head Yamauchi, saying that Microsoft lacked understanding of the game industry.
It doesn't matter whether Microsoft today is "ignorant of the game industry" because Microsoft is now richer. EA, who was not convinced 22 years ago, also fell under the US dollar bill.
The same is true of the application of this case to the game channel - the game CP's understanding of the content itself may be more than a little better than the channel providers.
But channel merchants can buy bones with only one grasp:
Channels know how to monetize, but the talented game CPs don't necessarily know.
*References
vgtime "Community Creators Have Sold $350 Million Mod"
"Analysis of Super Buyer Game Manufacturers: Low Valuation, Cross-Platform, Channel Decline"
21 Finance and Economics "Privacy policy tightening, data mining and financing is becoming difficult, where is digital marketing going?" 》
Beijing Evening News "Large-scale removal of domestic applications Apple App Store is questioned by monopoly"
Steam bot "Why Use Origin – Those PC Games Monopolized by EA"
Huge Engine 2021 "Chinajoy Speech: Entertainment Imagination Side by Side"
Wisdom Line "How Hardcore Buying Helps [Original God] Dominate the World"
vgtime "1999, when Microsoft went to buy Nintendo"