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The plunge in market capitalization of 84% has not stopped Station B from investing in games. Recently, Tianyancha data shows that from March 10 to March 17, in just eight days, Bilibili (hereinafter referred to as "B Station") has invested in 4 game companies. Counting the 3 previously invested, Station B has invested in 7 game companies so far this year.
The 4 companies newly invested by Station B involve two-dimensional mobile game agents and self-development, web games, console games and other tracks, and the core purpose of their large-scale layout in the game field is to consolidate this core business source.
Although the game business has always been a very important source of revenue for Station B, under the background of the suspension of the version number, the short video platform has taken away a large number of users and traffic, and a large number of self-developed games and agency products have been delayed, the proportion of game revenue of Station B in 2021 has fallen to 26% of the total revenue.
In order to reverse the decline, Station B has made a series of attempts on the game business: on the one hand, it is seeking to represent the next explosive product like "Destiny - Crown Designation (FGO)" and "Blue Route"; on the other hand, it has also increased its investment in self-developed games; in addition, it has also tried to enter a new track and lay out in the field of console games.
01 Multi-track layout game business
The four newly invested game companies in Station B are all R&D teams, namely: Xinyuan Interactive (wholly acquired), Dragon Fist Storm (increased holdings), Roaming Valley (Game Valley affiliates) and Rocket Fist (Beijing) Technology. Among them, the first two are two-dimensional mobile game research and development companies, Roaming Valley is a web game developer, and Rocket Fist is a host independent game developer.
Specifically, the four game developers have different characteristics. Among them: Xinyuan Interactive pledged 100% of its equity to Station B on March 10. The developer has not yet officially launched the product, the development of the "Town Soul Street: The World is King" (the eponymous national comic IP adaptation, commissioned by the mobile game and responsible for distribution) and "SS15" (Japanese comic "Death" IP adaptation, ByteDance commissioned development) are waiting for the official release of the version number. However, the merger of Station B does not involve these two products, because before the merger, they had been divided under its wholly-owned subsidiary Arcane Network and wholly sold to the listed company Mingchen Health in October last year. Through this investment, the main assets obtained by Station B are only the self-research team, as well as the property rights of the two-dimensional mecha ARPG "Baby Bee: Angel of the Abyss" adapted by the Xinyuan Interactive brand and the IP of the same name.
Another R&D firm that has received investment is Beijing Dragon Fist Storm. The company's first investment in Station B was on February 21 this year, and the capital increase occurred on March 15, and the shareholding ratio of Station B increased from 4% to 9.76%. Dragon Fist Storm's main products include "Fist Soul Awakening: King of Fighters All-Stars" (King of Fighters IP mobile game) and "Dream Link" (two-dimensional mobile game) and so on. Judging from the several products that have been issued so far, the team has a certain research and development strength, but the Dragon Fist Storm has exploded equity disputes and crises such as the team's senior management leaving to start a business.
In addition, Beijing Roaming Valley, with web games such as "Seven Heroes" and "Magic Continent" as the main products, was originally a wholly-owned subsidiary of A-share listed company Bo Rui Communication. Brilliant Communication disclosed that Station B, as a strategic investor, invested in the shares and increased its capital by 30 million, accounting for 11.11% of the total shares. According to previous news, the e-sports business of Station B has also reached a certain cooperation with Bo Rui Communication.
Among the four newly invested companies, Station B's investment in Rocket Fist Technology is the most noteworthy, because the company's research and development direction is not the traditional focus of Station B's business: mobile games, but console independent games. According to the enterprise investigation, rocket fist (Beijing) Technology Co., Ltd., the first phase of sony China Star program, underwent industrial and commercial changes on March 15, adding Shanghai Phantom Electric Information Technology Co., Ltd., an affiliate of Station B, with a shareholding ratio of about 12.5%, becoming the second largest shareholder of the company. In September last year, the Galaxy-like Castlevania game "Shadow Torch City" released by Station B was also selected as a product of Sony's China Star Program.
At present, in addition to actively signing new agency products with potential, Station B is also continuing to increase investment in self-developed games. In August 2021, Chen Rui revealed that the scale of the B station game self-development team has exceeded 1,000 people, and several projects are being developed in parallel and will be launched in the next few years. At the game new product conference that month, Station B announced 16 new games in one go, of which six belonged to self-developed products.
In addition, the B-stop game is also laying out towards multiple tracks. Since 2018, B station games have gradually and consciously accessed console game works and small and medium-sized boutique game development teams with weaker commercial attributes and more emphasis on artistic expression. Although the contribution of independent games to the publishing business revenue of b-station games will not be too large, B-station still fully demonstrates the positive mentality in this field, and has successively issued a number of independent games from developers at home and abroad, which is not only for the consideration of diversified layout, but also in line with the potential trend of the overall game market towards boutique.
For example, "Mystery Pursuit" and "Only Big Adventure" cooperated with Next Studio, a boutique game research and development studio under Tencent, "Driving a Train Together" with overseas veteran console game publisher Daedalic Entertainment, and "Demon Cutting" and "Warm Snow" cooperated with small and medium-sized teams in China.
02 How to break through the "bottleneck" of game business?
Station B's vigorous investment in the game business directly reflects the strategic adjustment of Station B.
In the past year, Station B's life has not been good, the stock price has fallen by 84% from the high, and the market value has been less than ten billion US dollars. The video site has been losing money for 11 consecutive years. The unaudited annual financial report of 2021 shows that the net loss of Station B further expanded from 3.054 billion yuan in 2020 to 6.809 billion yuan in 2021.
The poor performance in the capital market has forced Station B to rely on the game business again. Over the past few years, under the continuous loss of the business, the mentality of station B for the game business is quite contradictory: on the one hand, station B hopes to get rid of the single hat of the commercial model, and has to rely on the income brought by the game business; on the other hand, the game business of station B is also facing multiple pressures, and there is a risk of weak growth.
The financial report data reflects the decline in the proportion of revenue of the game business of Station B. In 2018, up to 83.4% of the revenue of Station B was supported by the mobile game business. However, with the gradual adjustment of the B station business, by 2021, the proportion of game revenue of the B station has dropped to 26%, the value-added business income has surpassed the game, and the advertising revenue is slowly approaching it. Although "de-gamification" was once the direction of B station's efforts to get rid of the single business model, the lack of game business growth and the overall revenue pressure of B station obviously made the game field an important position that B station could not give up.
Station B has begun to adjust its strategy, advocating open source and throttling, and putting some of its focus back on the game business. But for the B station game, there are also many challenges.
Although the cooperation model of the game business of Station B includes a variety of ways such as joint publishing, agency distribution, cooperative research and development, and investment, at present, Station B games are still highly dependent on publishing agents. In 2021, most of the revenue revenue of B station games will come from the three agency products that have been operating for a long time, "Destiny - Crown Designation (FGO)", "Princess Link Re: Dive" and "Blue Route". In the context of the decline in the revenue capacity of the main products year by year, the product line of Station B seems to be somewhat "green and yellow", and the newly signed products are not enough to pick up the burden.
What makes the sense of crisis of Station B even worse is the impact brought about by the rapid rise of short video platforms such as Douyin and Kuaishou. For a long time, Station B has taken the exposure channel close to the user attributes as its exclusive advantage, but under the rapid user growth of short video platforms such as Douyin and Kuaishou, the attractiveness of Station B's independence and intermodal transportation has gradually declined.
At the same time, changes in the external game publishing environment have also brought a lot of pressure to the game growth of Station B. Eight months after the suspension of the game version number, the domestic version number policy continues to shrink, resulting in a significant reduction in the supply of games, many products that are expected to be launched can not obtain revenue on time, and the game business of Station B has been greatly impacted. For example, in the first half of 2021, the game "Pretty Derby" developed by Japanese manufacturer Cygames became popular, and Station B quickly got the national service, but because of the delay in getting the version number, it watched the heat of the game fade.
Station B's frequent investment in the field of games can also be regarded as a direct response to the current dilemma and challenges, but in the face of fierce market competition and complex external environment in the future, Station B games still need to continue to find their own real winning cards.
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