The stock price has not stopped falling, and 37 Mutual Entertainment is still trapped in the "buy volume".
On February 22, 37 Interactive Entertainment disclosed its 2021 annual report forecast. According to the financial report, in 2021, the net profit of Sanqi Interactive Entertainment was 2.8 billion yuan - 2.850 billion yuan, up 1.41% -3.23% year-on-year, of which the net profit in the fourth quarter will reach 1.08 billion yuan - 1.13 billion yuan, an increase of 116% -126% year-on-year.
However, although the performance forecast has increased significantly, the stock price of 37 Mutual Entertainment has not risen and rebounded in recent days, and the trend is quite strange.
According to statistics, on the trading day before the announcement was disclosed, the stock price of 37 Mutual Entertainment fell sharply by 6.46%, and on the day of the announcement disclosure, the stock price of 37 Mutual Entertainment fell directly to a halt, and the trend was very tragic. As of the close of trading on February 24, the stock price of 37 Interactive Entertainment only closed at 20.91 yuan, which has fallen by 18.13% in just 4 trading days; and if compared with the highest point of 50.43 yuan, the stock price of 37 Mutual Entertainment has now been cut, and the market value has evaporated by 65.4 billion.
As one of the leading enterprises in the domestic game industry, 37 Interactive Entertainment has also had a brilliant performance, with a market value of more than 100 billion yuan in 2020; however, as the Internet dividend is no longer available, the "buying mode" of 37 Interactive Entertainment has gradually encountered bottlenecks, and the stock price has entered the downward channel, falling and falling.
From the current stock price performance, although it has been a year and a half since the highest point of the stock price, 37 Mutual Entertainment has obviously not found a good way to break through the "buy volume" dilemma, and this former game leader is still struggling.
Starting from a small bungalow, to a hundred billion "page game" leader
As a domestic game leader, behind 37 Mutual Entertainment is the story of a "Internet addicted teenager" starting from scratch.
In the winter of 1977, Li Yifei (also known as Li Weiwei), the founder of Sanqi Interactive Entertainment, was born into an ordinary family in Guangyuan, Sichuan. Like most post-70s, when he was still very young, Li Yifei began to indulge in games, from single-player games in junior high school and high school to online games in college, Li Yifei slowly became an "Internet addicted teenager" in the eyes of most people.
However, Li Yifei was not affected by other people's ideas, but slowly played his own ideas in the game: "I hope to make a game product that belongs to the Chinese and influence players around the world", which has always been with him.
Time to 2007, with the vigorous development of the Internet industry, online games also began to slowly improve, before the Internet company has been working hard for 6 or 7 years Li Yifei decided to quit his job and take a few colleagues to enter the game industry.
However, Li Yifei's entrepreneurial road was not smooth, because of lack of experience, Li Yifei repeatedly ran into a wall at the beginning.
"At the beginning, the idea was simple, I felt that I had played games for more than ten years, and as a veteran player, it would not be difficult to make a game. But in fact, after more than a year of experimentation, it was found that there is a big difference between liking to play games and running a game. Li Yifei said in an interview.
After trying for more than a year and still having no results, Li Yifei decided to leave Sichuan and come to Guangzhou, Guangdong Province, to make a "last attempt", and the place where he came was Keyun Road in Guangzhou, a gathering place for game manufacturers, including Baidu Guangzhou Branch, 4399, Happy Times, UCweb, multi-game and other companies that started from here, which may also mean that Li Yifei's game dream is also destined to succeed.
After renting a small bungalow on Keyun Road, Li Yifei continued his dream of gaming entrepreneurship. Because of the lack of funds, Li Yifei gave up the self-developed products that most game manufacturers would choose at that time, and instead started a game agency operation, just when the entire game industry was in the stage of transformation from a client game to a web game, the game agency operation was on fire, and Li Yifei did not expect Li Yifei to be successful.
With the fire of the game operated by the agent, more and more companies ran to the door and sought cooperation with 37 Interactive Entertainment, and 37 Interactive Entertainment also moved from a small bungalow at that time to a 6-story building near Keyun Road in Guangzhou, and the company was developing rapidly at a speed visible to the naked eye.
In 2014, the then 37 Mutual Entertainment was established in just a few short years, and it successfully landed in the A-share market through backdoor Shunrong shares, becoming one of the few game listed companies in A-shares at that time; in 2020, with the continuous rise in stock prices, the market value of 37 Interactive Entertainment once reached 111.9 billion, and Li Yifei's game dream of that year was also successful.
Success also buys the amount, and defeat also buys the amount
The reason why 37 Interactive Entertainment was able to achieve rapid success was not only because it stepped on the big wind outlet of the end tour to the page game, but also inseparable from its unique "buy volume rolling service" business model.
So, what is "buying a roll-on garment"? Here we need to understand what is "buying volume".
"Buying volume" is actually a conventional means of operation for most game companies, which serves advertisements on traffic platforms (such as Douyin, Weibo, etc.), and then guides players into the game for consumption.
The "buy volume of rolling service" of 37 Interactive Entertainment is a relatively unique business model, which is simply to guide players into the game through the traffic platform, after entering the game, it will attract players to pay by continuously improving the attributes, and "rolling service" is to constantly develop new servers, so that players can constantly recharge through one new server after another.
The advantages of such a business model are very obvious - as long as the player's money is enough and the speed of opening new services is fast enough, 37 Mutual Entertainment can make more money; but the disadvantage is also obvious, that is, the cycle of the game is short, the player will leave after being "lighted", and in order to have enough players, 37 Mutual Entertainment has to continue to buy.
Before 2019, the Internet dividend is still there, the price of traffic is relatively cheap, and 37 Interactive Entertainment has been very successful with this "buy volume rolling service" model. From the financial report, in 2015, the revenue of 37 Interactive Entertainment was only 4.657 billion, and in 2020, 5 years later, the revenue of 37 Interactive Entertainment increased to 14.4 billion, and the revenue doubled 3 times in 5 years.
However, with the peak of the Internet dividend in 2020 and the rising cost of buying, the "buy volume rolling service" model of 37 Mutual Entertainment began to fail, and it also fell to the altar.
Heavy marketing and light research and development, 37 Interactive Entertainment urgently needs to be transformed
In fact, looking back at the success of 37 Interactive Entertainment in recent years, there is some "trick" component.
When everyone is spending money on terminal games and development, 37 Interactive Entertainment has chosen a relatively simple road of page games and game agency operations; and when Tencent, NetEase and other head game companies have focused their energy on research and development, the focus of 37 Interactive Entertainment has been placed on how to make money through "buying and rolling clothes".
According to the data of the third quarter report of last year, as of the third quarter of last year, under the background of the total operating cost of 10.43 billion, the sales expenses of 37 Mutual Entertainment reached 7.273 billion, the proportion of marketing expenses reached 69.73%, the research and development expenses were 991.5 million, and the proportion of research and development expenses was only 13.63%, and the signs of "heavy marketing and light research and development" of 37 Interactive Entertainment were obvious.
Of course, it is undeniable that Sanqi Mutual Entertainment has successfully won a market value of 100 billion yuan by relying on such a method, but when the tide recedes, Sanqi Mutual Entertainment, which has achieved success by "cleverness", will naturally fall off the altar.
At present, as more and more head companies enter the game industry, the quality of game products has become the top priority, the current game industry has clearly shown a trend of "content is king", the example of "Awakening of All Nations" and "Original God" tells us that enough high-quality content can ignore the channel, and "buying and rolling clothes" has become a backward business model in the industry.
For 37 Interactive Entertainment, with the continuous soaring traffic prices, it is imperative to change the model of "buying and rolling clothes"; however, compared with Companies such as Tencent and NetEase, for 37 Interactive Entertainment, which lacks product thinking, it may take a long time to successfully transform.