Wen 丨 BlueStacks Overseas Research Institute
On the afternoon of February 14, the Indian government banned 54 Chinese-related apps for security reasons. According to foreign media, India's electronic information technology department issued an order citing the provisions of Section 69a of the IT Act 2000.
Among the 54 banned apps, the hottest is Garena's FreeFire, a chicken-eating mobile game developed by SEA's Garena and considered to be one of the hottest mobile games in the world. It has been removed from the Google Play Store and App Store in India. Starting in 2020, this is already the fifth batch of domestic apps banned in India on the grounds of "security", with a total of 56 games banned.
In fact, several bans have transformed the Indian market from an instant high download volume and long-term investment in high-growth areas into an overseas region where dispensables, costs and energy are too high, and there is no benefit for game practitioners on both sides, but for the game markets on both sides, it may not be the domestic market that is more affected.
FreeFire was banned, and the stock price plummeted but had little impact
According to Sensor Tower, India had previously become the largest download market for Free Fire, with Free Fire and Free Fire Max downloaded more than 238 million times in India before the ban was imposed. In 2021, the game will be downloaded 55 million times on the Indian App Store and Google Play stores, contributing a total of $34.3 million.
According to AppAnnie, 40 million of Free Fire's 75 million monthly active users in January were from India. As of Q3 2021, it has been ranked first in India's mobile game revenue for four consecutive quarters. NikoPartner analyst Daniel also believes that "Free Fire" is the number one mobile battle royale game in India in terms of download volume and revenue in 2021, and the ban means a huge blow.
Free Fire has over 250 million lifetime downloads and generates over $5 million a month in Revenue in India. And there's a large professional esports ecosystem and strong local marketing that will have a similar impact when PUBGM and Arena of Valor were banned.
However, JPMorgan analyst Ranjan Sharma believes that Free Fire India may account for less than 10% of Sea's gaming revenue, lowering its stock price target by about 40% to $250. "A potential ban on Free Fire could further increase tension about Sea's game franchises." But given that Asian countries will account for 2.6 percent of Sea's overall net mobile game sales in 2021, the ban won't have a serious impact on the company.
Even so, SE's stock price fell 18.4% on the evening of the 14th, and the market value evaporated by $16 billion. LightStream Research analyst Oshadhi Kumarasiri believes that the "Free Fire" ban could have a revenue impact of $78 million to $104 million per quarter.
SEA Group was founded in Singapore in 2009 by Li Xiaodong, a Singaporean chinese, with its headquarters also located in Singapore, and listed on the New York Stock Exchange (NYSE) in 2017. Invested by Tencent in the early days, Tencent announced on January 4 this year that it would reduce its stake in SEA to 18.7%, and Tencent's voting rights in Sea are expected to be reduced to less than 10%.
FreeFire is not a domestic game, developed by Garena Shanghai team is the only connection between the game and China. However, some insiders believe that FreeFire's Chinese genes are too strong, which may be a reason for the ban.
In addition to "FreeFire", the games that were also banned this time include Lilith's "Awakening of All Nations", NetEase's "Decisive Battle of Ping An Jing", "Yin and Yang Division Wisdom Chess", "Star Wars Eve: Emberless Galaxy", and NetEase UU Accelerator and other domestic applications.
The need for the Indian market is decreasing
In fact, this is the fifth batch of bans on MeitY since June 2020, and 56 domestically produced related games (domestic self-developed/published or affiliated) have been banned from India. Including Mu Hitomi's "Mobile Legends", Tencent's "Arena of Valor", "PUBG MOBILE", "Game of Sultans", Lilith's "Art of Conquest", "Warpath", "AFK Arena", "Mafia City", NetEase's "A Dream", "Knives Out", NetDragon's "Heroes Evolved", etc. cover SLG, placement, Popular overseas games in various fields such as MMO, MOBA, and FPS.
From PUBG to FreeFire, the ban determines the local living space of popular games.
Prior to the September 2020 ban, PUBG was the most popular game in the Indian mobile game market, with over 50 million Indian players and more than 150 million downloads in India, accounting for 24% of the world's downloads. But with PUBG's departure, FreeFire came to the fore.
In the four days since India banned PUBG, Free Fire has been downloaded 2.1 million times in India, and in October 2020, it became the number one mobile game in the Indian mobile game market by revenue. And since then, it has completely gained a foothold in the Indian market.
But with the new ban, there is no longer a situation such as the opening of the door that FreeFire originally faced, but the space in the Indian market has completely shrunk. According to Niko Parter's report, the size of PC+ mobile game revenue in the Indian market in 2021 is only $530 million. The ARPU in the Indian market is the lowest among the 10 regions in Asia, and it is also outside the top ten regions of China's mobile game overseas revenue.
(The ten regions are Taipei, India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.) ）
Similarly, after PUBG Mobile was removed from the shelves in 2020, it did not prevent the game from becoming the winner of mobile game revenue by making $2.6 billion in 2020.
In 2021 statistics, PUBGM also earned $2.8 billion in revenue, and FreeFire was $1.1 billion.
That is to say, the change from India's first to India's zero revenue has not affected PUBG's global revenue. Over the past 30 days, 29% of FreeFire downloads have come from India, but revenue from India is much less than 3%, which seems less important than Malaysia, Mexico and Brazil.
The Indian market accounts for 12% of global mobile game downloads, but the overall revenue size and revenue contribution to individual games are extremely large. Then there are only two reasons for the layout of this area - the number of user downloads, and the long-term investment as a high-growth region.
But the attitude of the current Indian market is predictable:
1. It is difficult to have domestic games banned because of competitors, and the Indian market has received a substantial increase in downloads, because the scope of bans on domestic games or domestic related games has gradually expanded.
2. The Indian market contributes very little to the rollover of PUBGM and FreeFire, and does not affect the global revenue growth of the game
Well, the significance of the Indian market as a long-term investment has disappeared.
If you need downloads, it's still valid to dive from South America and other Asian regions, and the revenue rewards will be even greater.
Considering the cost of running a game locally in India, such as building servers, optimizing the local language, and even lobbying, even if the game is still running, the cost may only get higher and higher under the continuous impact of the ban. For domestic games, the Indian market can not be immediately returned, but it is tasteless and discarded.
For "Original God", "Lords Mobile", "Top War" and other games that are still operating in India, it may be necessary to consider changing the main body or other ways to protect their rights, but it should also be noted that even if one day is banned, the loss of the Indian market is not a big problem for these games that have achieved high flow in other markets.
On the contrary, for the Indian game industry, which is in a period of rapid growth, the ban will only make other regions more careful about this market. In October 2020, India earned the top 10 games, more than half of which were related to Chinese game companies. In The Indian best-seller list in January this year, there are also 5 domestic games.
Whether it is a practitioner in charge of India's sea trip at home or a local game practitioner in India, the ban is not a good thing. But for both markets, without high-quality games to drive the market's hardware upgrades, and consumption habits, India's local self-developed "FAU: G" to replace "PUBG" and the like are far away, and from the perspective of SEA's stock price recovery, perhaps the more serious loss is not the domestic side.