Author | Hu Shu Editor| Luo Lijuan
Cheng Xing's company is fighting for the overseas distribution rights of a certain game project, and this project has also received an olive branch from Tencent and Station B.
In the past six months, overseas distribution rights of games competing with big manufacturers have become the norm, which has caused Cheng Xing a huge headache. "They are willing to throw money, and they have larger platforms and more users at home and abroad, and the advantages are very obvious." Cheng Xing told 24/7 Technology.
This also makes small and medium-sized game publishers have to increase the royalties paid to game companies, or give the game development team more permissions and share profits. If the game does not run well overseas, the publisher will also take more risk.
A year ago, the overseas game distribution market was not like this. Li Fan, a senior practitioner in the game industry, told All-Weather Technology: "Many small and medium-sized game companies, such as Mu Hitomi, FunPlus Fun Plus, etc., used to be able to achieve a large share of the overseas market only by eating one region overseas. "At that time, the overseas market was still a blue ocean.
The turning point came on July 22, 2021, when the State Press and Publication Administration suspended the update after announcing the approval information for the current period of domestic online games, and it was 244 days until March 23, 2022.
The "players" in the industry are waiting for the version number to open, "a small team spends hundreds of thousands, millions a month, if you don't go overseas, everyone can't afford it." Cheng Xing said.
With the head games that have been released, although the big manufacturers can also have a stable flow, the performance growth is gradually weak.
Station B's 2021 financial report shows that the growth of its game business is the lowest among all business segments, with revenue of 5.1 billion yuan, an increase of 6% year-on-year, and its share of total revenue has dropped to 26.3%. Station B said that while strengthening the operation of existing domestic games, it is focusing on independent game research and development and overseas game release.
Tencent's financial report released on March 23 disclosed that in 2021, the game revenue in the local market was 128.8 billion yuan, an increase of only 6%,000 yuan; the game revenue in the international market increased rapidly, growing by 31% to 45.5 billion yuan for the whole year.
Source: Screenshot of Tencent's 2021 Q4 and full-year financial reports
Since last year, big manufacturers have listed going to sea as the focus of their business. In the past, small and medium-sized game companies still had room to survive overseas, but with the increase of large manufacturers, this space is being squeezed.
The waves of the game out to sea have been rolled higher and higher.
01 small factory: a blocked way out
In fact, this is not the first time that the domestic game version number has pressed the pause button. In the eight months from March to December 2018, the approval of game version numbers was also suspended in China.
At that time, sensitive game industry practitioners had sensed changes in the industry. "The industry has gone through a time when a hundred flowers are blooming, and the future management will only become more and more stringent." Li Fan said.
But the game industry is also brewing a new outlet. Li Fan, a veteran game publisher who has worked for several years in NetEase and Tencent, originally left the big factory to start his own business, but he smelled the opportunity of casual games and returned to Tencent again.
"At that time, not being able to get the version number actually affected commercialization, such as setting up recharge and malls in the game, so in the case of less commercialization, casual games have opportunities." Li Fan said.
The so-called casual games, that is, mainly based on WeChat Mini Programs, H5, etc. as the carrier, the gameplay is simple, do not set the recharge function, but require players to watch advertisements of small games, such as the popular "Synthetic Big Watermelon", "Snake War" and so on. Between 2018 and 2019, mini-games such as Tencent and ByteDance have swept across social networks.
Screenshot of the Snake Wars game
The commercialization of such games relies on advertising drainage, and in the era of traffic explosion, "the head of those small games can reach tens of millions of flows in a month." Li Fan said.
But this little vent didn't last long. Just half a year later, policies such as minors' restrictions, real-name system, platform restrictions on advertising pop-up time, player sharing times and other rules have made the popularity of small games cool down rapidly, and players have gradually become "immune" to such games.
After that, Li Fan left the game industry again. The "players" who still insist on the game industry have set their sights on the game to go to sea.
On the one hand, domestic game technology, art, gameplay, etc., have led the world; on the other hand, overseas local games pay more attention to gameplay, and commercialization is not mature in China.
For many Chinese game companies, there are still many opportunities in overseas markets.
Taking Mu Hitomi Technology, which was acquired by Byte, as an example, its main market is in Southeast Asia, and the "Mobile Legends: Bang Bang" released is similar to "Glory of the King", and it has also been saddled with a lawsuit with Tencent.
Mobile Legends: Bang Bang is a huge seller overseas, becoming one of the most popular MOBA mobile games in the world (excluding Chinese mainland) in 2017, ranking 15th in the overseas revenue list and 4th in the overseas download list as of February 2021, with an MAU of 90 million.
Not only Mu Hitomi, but also Lilith, FunPlus Funga, Eagle Horn and so on.
After the first round of the winter, many small and medium-sized game developers have turned their attention to overseas markets, but at this time, most of them do not have the ability to publish overseas independently.
"The overseas market is a test of the strength of the operation team, if you have no experience to do it from scratch, you will encounter a lot of pitfalls." Cheng Xing said. And these pits include how to localize, how long to prepare a project, how to calculate the return cycle, how to analyze the competitors in the same period, which traffic channels to use, and so on.
Enterprises that specialize in overseas issuance have ushered in a wave of opportunities. At the end of 2019, Cheng Xing felt that the time was ripe, so he started a business with several friends and founded an overseas distribution company, which is currently focused on the Japanese and Korean markets. In the past two years, several games published by Cheng Xing Company can also rank in the top 10 in the Korean market.
However, starting from the second half of 2021, after the suspension of the new round of game versions, Cheng Xing obviously felt the pressure.
"In the past, big manufacturers still focused on developing the domestic market, because domestic users accepted a higher degree of payment. But now they all regard overseas as a way out. Cheng Xing said. The shift of large factories has made the competition in overseas markets gradually fierce.
Up to now, the major overseas game lists have stood on the games issued by Chinese companies. "The situation is different in different regions, but like the Korean market, 30% of the top 30 downloaded games are chinese companies." Cheng Xing said.
According to Sensor Tower's "2021 Annual Inventory of Chinese Mobile Games Abroad", 42 mobile games have earned more than $100 million in overseas revenue.
"In fact, the overseas game market has also become a battlefield for Chinese gamers to roll in." Li Fan added.
This kind of "inner volume" first affects the price of overseas market traffic, and the promotion cost is becoming higher and higher. Cheng Xing told All-Weather Technology that when their agent products are going online, they must do comprehensive market research and need to know whether there are competitors in the games that are online at the same time, and whether the competitors are represented by large manufacturers.
"When you go online at the same time as a competitive product, the cost of buying a bill may directly double." Cheng Xing said. When they know the exact launch time of the products of the big factories, they will also stagger the release time.
However, the game release itself has a first-mover advantage, the first-to-line game can "harvest" users faster, and the post-released game, unless the quality and experience are better than the former, it is difficult to catch up later.
In addition, with the intensification of competition in overseas markets and the increase in the number of games, the cycle of game return is also lengthening.
According to Cheng Xing, the current overseas return cycle of SLG (simulation games) has become 24 months; MMORPG (massively multiplayer online role playing) has also become 12 months, and the card category is 6 months, both of which are much longer than in previous years. This requires game companies to plan for a longer line.
Whether it is "affordable" has become an important test for small and medium-sized manufacturers.
02 Big Factory: From "whale swallowing" to closing the door
As the earliest practitioner engaged in overseas game distribution in China, Cheng Xing experienced the era of Warcraft, StarCraft, Japan and South Korea games dominating the domestic market around 2006, and also caught up with the hundred flowers of domestic mobile games after 2015.
"At that time, all the capital was blindly investing in games, as long as it was a business to do mobile games, you could get financing with a demo." Cheng Xing recalled. At present, many well-developed game manufacturers, such as Lilith, Eagle Horn, Mihayou, etc., also grew up in that era.
In 2018, after the first edition was discontinued, capital quickly receded. According to the data of Tianyancha, in the 8 months that the version number was discontinued in 2018, there were 8306 game companies that were cancelled nationwide. In 2019, this number increased to 15,987.
The industry earthquake continues, but to a certain extent, it also gives large manufacturers the opportunity to acquire mergers and acquisitions. According to Gamma data, Tencent invested more than 40 billion yuan in game investment in 2020 and 2021.
Image from "Gamma Data"
According to Ene Niu data, in 2021, Station B participated in a total of 15 related investments in the field of domestic games, and from 2016 to 2020, Station B invested only 12 in game companies, and in 2021, it has exceeded the sum of the past 5 years.
ByteDance launched a number of large mergers and acquisitions in 2021, such as the $4 billion acquisition of Mutong Technology, and a wholly-owned 9 billion yuan stake in VR hardware manufacturer Pico (Bird Look).
"In the first two years, Tencent, NetEase and Byte all acquired some game development teams at a high price." A practitioner close to Tencent Games told All-Weather Technology, "Because of the addition of bytes, the price of some projects has actually increased." ”
"But the policy has not been relaxed, it is still being tightened step by step, which is not a good thing for the big manufacturers," the above-mentioned person revealed that some projects Tencent had originally negotiated at the beginning of the year, but now they are all called to stop, "At present, all parties are waiting for the policy to be introduced, and the version number is updated." ”
Since last year, Tencent's other direction has been to accelerate its going to sea. Among The four major studio groups under Tencent, Tianmei and Photon have already laid out overseas, and on December 8, 2021, Tencent Games announced the launch of the overseas brand Level Infinite.
Level Infinite's products include Legends Showdown, Famine: New Home, Edge of Rebirth, etc., and has won the overseas agent of the open world game "Magic Tower" developed by Perfect World, which will be launched globally in April this year. According to the above-mentioned person, the brand has also won the agency rights of a number of blockbuster game products, all of which will be launched this year.
In contrast, the situation of Station B seems to be much more embarrassing. On the one hand, it is a poor performance, on the other hand, it is trapped in the "second dimension".
Wang Qiao, who has worked in a game manufacturer for many years and has been promoted to the management of a large factory, told All-Weather Technology, "The advantage of Station B has always been two-dimensional, and it has stable two-dimensional users, which also allows it to eat everything in the two-dimensional game." ”
However, two-dimensional games have market limitations, and are currently relatively popular in the domestic, Japanese and Korean markets, but it is difficult to open up the European and American markets. Moreover, the overseas users of the platform of Station B are limited, which also makes it difficult for Station B to turn into an overseas market.
In terms of game play, "Station B used to use the 'wide open blind box', it will sign a lot of game products, spread the battle line more widely, and then try which product is more profitable." Wang Qiao said. And the overall running down, the flow of water is higher, but there are not many game products that do the head.
And under the restriction of the version number, the "wide open blind box" is doomed to be unworkable. These are all problems that have yet to be solved by Station B.
In the conference call after the release of the 2021 financial report, Chen Rui, CEO of Station B, mentioned: "Control expenditure, reduce costs and increase efficiency, control the money that should not be spent, and at the same time, the efficiency of the money that should be spent is higher."
Recently, some netizens revealed on the pulse that Station B recently cut the subsidy of 1,000 yuan in the salary of employees. All-weather technology asked the game business staff of Station B about this news, which was confirmed.
Sources revealed that this year, Station B's investment in games has also been reduced. According to tianyancha data, in March this year, Station B invested in 5 companies, 4 of which were involved in game development business. However, the above-mentioned person revealed: "These projects were finalized years ago, and this year's overall investment will be reduced compared with last year." ”
Not only Tencent and Station B have slowed down the pace, but since the end of 2021, many game manufacturers have also reported layoffs.
At the beginning of this year, the heartbeat network reported a third of the layoffs. Heartwarming replied to the game media that it is indeed adjusting some team positions, but the proportion of the number of people is not "one-size-fits-all", the proportion is significantly less than 1/3, and the company's headcount will also dynamically increase or decrease according to actual business needs.
In addition to the heartbeat, many game companies such as Perfect World and Electric Soul Network have also reported layoffs.
03 In the midst of loss, looking for new directions
In the 8 months that the version number was discontinued, various rumors circulated on social networks.
There are rumors that Japanese two-dimensional and cyberpunk games will be banned. A game industry analyst told All-Weather Technology: "Many two-dimensional games have soft pornography components, it is possible to be restricted, and it will encourage national style in the future." ”
At the beginning of March, some netizens broke the news that a new batch of game versions may be issued in April, the number of which is about 30; in addition, an adult anti-addiction system will be implemented, and each game will need to rest for 30 minutes for two hours; and the number of cards drawn will also be limited.
The relevant personnel of the Game Working Committee said that this news was untrue, but the news caused an uproar in the game industry.
"Before, I couldn't see the head, but now everyone is confident, and I think that I will not issue a version number in April, and I will also send it in May." Wang Qiao said.
As for the restrictions on the content of the game, Wang Qiao revealed that the game company he is in is indeed changing the gameplay of the card drawing game, but there is no better answer at present. Before the specific guidance, in fact, everyone did not dare to change the content and direction of the game.
In terms of plate reserves, many large factories also tend to "leave a hand" and still have surplus grain in their hands.
The picture comes from the WeChat public account "Jingnuo"
One noticeable change over the past year has been that big players have become more cautious about setting up new games. Wang Qiao said: "In the past, a new way of playing or a good idea, they would set up a project to make a new game. But in this half year, it is more about putting these new ways of playing on the old game, and the internal iteration is on it. ”
After the version number is limited, a good trend is to promote the quality of the game to a certain extent.
Before the suspension of the 2018 version number, the game industry was flooded with a large number of shoddy products, disrupting the normal order of the game market. After the version number is adjusted, the limited version number makes the game company have to make a choice to launch a high-quality game that can better impress the market. In recent years, domestic games have been greatly improved in art, gameplay, distribution and promotion.
In the past three years, there has also been no shortage of high-quality games in the market, such as Eagle Point's launch of "Ark of Tomorrow" in 2019, and Mihayou's "Original God" launched in September 2020.
Such a trend has also made the big factories feel the crisis. For a period of time, rumors about Tencent and NetEase have been digging people and setting up projects, and big manufacturers want to regain the manufacturing rights of the next blockbuster.
On the other hand, high-quality games are also dragging down small and medium-sized game manufacturers.
The emergence of games such as "Ark of Tomorrow" and "Original God" has raised the threshold of new games in disguise. "At present, capital is not optimistic about the game industry, if especially small factories want to get financing, capital will only see if he can achieve the level of "Original God", otherwise the market will not pay more and more." Li Fan said.
The blossoming of the game industry has long passed, whether it is domestic or overseas, the "head effect" will continue to intensify. When Cheng Xing communicated with the small and medium-sized game research and development team, he found that more and more practitioners seemed to be confused and had not yet found a new direction.
In the small enterprises that insist on sticking to and not embracing large factories, many have changed their direction from mobile games and terminal games to make independent games.
However, according to the industry's criteria of "whether to recover the input cost" to determine the survival of independent games, in 2021, the death rate of independent games on the Steam platform is as high as 97.1%.
"In my understanding, making indie games is more or less generating electricity for love." Wang Qiao said.
Although Li Fan has left the game industry to start a business again, he is still paying close attention to the dynamics of the industry.
If the market and timing are right, Li Fan still wants to return to the game industry. Now he, like most people, was still waiting for Godot.