After a long drought, the frozen 263-day game industry ushered in a new version

Image source @ Visual China

Text | Game dimension

After 8 months of freezing, the approval of the game version number was finally restored.

On the evening of April 11, the official website of the State Press and Publication Administration announced the approval of domestic online games in April 2022, and 45 new domestic games received version numbers, and the approval time for payment was April 8. This is the first time since July 22, 2021, that the State Press and Publication Administration has approved and released a new round of game version numbers.

The approval of game version numbers has always been the focus of industry attention, before in March, there were rumors in the market that this year may not issue version numbers, but the relevant person in charge of the Game Working Committee of the Music and Data Association has debunked the rumors. This new round of version number releases also makes the market pessimistic about the game industry self-defeating.

Compared with the number of editions in July 2021, the 45 games are nearly half less than the 87 games at that time. The first approved game projects in 2022 include 45 games such as "Dream Voyage" by 37 Interactive Entertainment, "Heart of the Party" by Heartbeat Games, and "Tower Hunter" by Thunder Interactive Entertainment. Among them, there are 39 mobile games, 5 terminal games, and 1 console game. Affected by the thaw of the version number, the Chinese stock game sector rose sharply after the opening of the US stock market. As of the close, Bilibili rose more than 7%, NetEase and Douyu rose more than 2%, Huya rose more than 1%, and Tencent Holdings rose slightly.

01 The game industry thaws

Similar to the previous game version approval stagnation, the interval between the suspension of the version number and the interval between the release of the 2018 version number is close to the interval between the release of the game version number in early 2018 for 265 days, and it was not restored until December 2018. This time, from July 2021 to the present, it has been suspended for 263 days.

In these 263 days, the game industry has also undergone major changes.

From the perspective of growth rate, the growth rate of China's game industry in 2021 has dropped significantly. According to the data of the China Audio-Visual and Digital Publishing Association's "2021 China Game Industry Report", in 2021, the actual sales revenue of China's game market was 296.513 billion yuan, an increase of 17.826 billion yuan over last year, an increase of 6.4% year-on-year, and an increase of nearly 15% compared with last year.

From the perspective of business layout, whether it is a large game manufacturer or a small studio, the business line of game manufacturers has changed to a certain extent. In 2020, when the version number is normally issued, the number of game companies will be cancelled for the whole year to 18,000. The suspension of game version numbers has also accelerated the reshuffle of the industry, and for companies with sufficient cash reserves and game research and development capabilities, they have begun to deploy more business layouts in the overseas game market. For small and medium-sized game enterprises, with the more severe market competition environment, coupled with the restrictions of development capital, channel promotion and other factors, the living space of small and medium-sized enterprises has been further squeezed. According to Tianyancha data, from July 2021 to April 11, 2022, 22,000 game-related companies were deregistered, and 51.5% of the registered capital was below 10 million yuan.

But in the final analysis, the version number was resumed, and the signal released made the industry rejoice. After the version number approval was restored, many relevant responsible persons of game companies also celebrated the beginning of the industry on social media to unfreeze. Huang Yimeng, CEO of Heartbeat Network, posted on the social platform: "The domestic version number has finally opened the floodgates, and the tears are running. The approved executives of Dreamworld used "fireworks" expressions in the circle of friends to celebrate.

Although Tencent and NetEase do not appear in the list of approved games, the re-launch of the version number approval means a good start, marking the normalization of the domestic game regulatory environment. Under such a trend, it is only a matter of time before Tencent, NetEase and other first-line game manufacturers return to the approval list of version numbers. In addition, even if Tencent and NetEase did not obtain the new game version number in April, as the leading game manufacturers in China, they also assume the role of online game distribution and intermodal transportation, and when game manufacturers carry out intermodal transportation and distribution through the channels of Tencent and NetEase, it also means that the industry's acceleration is thawed.

02 The market needs the game industry

During the 8 months of the suspension of the version number, the development of the industry was greatly affected, and the discussion of the game version number in the industry was endless, during which there were repeated rumors that the game version number would no longer be issued, which once caused market turmoil.

Many industry insiders speculate that the suspension of the game version number is closely related to the "double reduction policy" in August 2021 and "preventing minors from addicting to games". On August 30, 2021, the State Administration of Press and Publication issued the Notice on Further Strict Management and Effectively Preventing Minors from Addicting to Online Games, which requires strict restrictions on the time available to minors for online game services, and online game companies can only provide 1 hour of online game services to minors from Friday to Sunday and from 20:00 to 21:00 on statutory holidays, and must not provide online game services to minors in any form at other times.

Under the influence of this so-called "strictest anti-addiction policy in history", many game companies have also launched many anti-addiction policies for minors. Taking Tencent as an example, according to Tencent's latest release of the fourth quarter of 2021 and the annual financial report data, during the fourth quarter of 2021, the proportion of domestic minors' game time fell to 0.9%, the total length fell by 88% year-on-year, the proportion of game turnover fell to 1.5%, and the total flow fell by 73% year-on-year.

Since then, the approval of game version numbers has stagnated for more than 200 days. While strengthening the implementation of national policies, the game industry actively accelerates the sea on the one hand, and on the other hand, it continues to call for the resumption of version number issuance. The thawing of the version approval this time has released a positive signal and a hint of warmth - the market needs the game industry, and the same is true at the policy level.

From the perspective of economic driving role, according to the "2021 China Game Industry Report" released by the China Audiovisual and Digital Publishing Association, China's domestic game users reached 666 million in 2021, and the sales revenue of the game market was 296.5 billion yuan, of which the revenue of independently developed games reached 256 billion yuan, and the sales revenue in overseas markets reached 18 billion US dollars. Although the game industry's share of overall GDP is not significant, a number of derivative areas, including hardware, software, tools, front-end applications, and e-sports, can receive a positive impact on the added value of games.

From the perspective of technology leadership, the development of games and technology is also a "two-way rush" process. On the one hand, the advancement of technology promotes the updating and iteration of the game experience; on the other hand, the increasing demand for experience by users and games will also drive the development of technology. New technologies such as AI, cloud computing, VR, and meta-universe will also be applied in the field of games, and these technologies have begun to improve and empower the real economy in recent years.

From the perspective of cultural output, with the strategic playing style of game companies updated to "walk on two legs", overseas business has naturally become one of the key sectors of game companies, and games going to sea can also help Chinese culture to effectively export. Taking the games such as "QQ Speeding Car Mobile Game", "Glory of the King", and "Original God" launched by the head game manufacturer as an example, through the combination of the game with traditional Chinese cultural elements Dunhuang and the Great Wall, it can further stimulate overseas attention and interest in traditional Chinese culture.

03 The development of the game industry is moving towards a new stage

Since 2018, the approval of game version numbers has undergone two suspensions, what does this mean for the game industry?

Perhaps the most important enlightenment left to the industry comes from the regulatory level for the game industry to become a boutique and go to sea. On March 29, 2018, the former State Administration of Radio, Film and Television issued the Notice on Important Matters Concerning the Approval of Game Declarations, indicating that due to institutional reform, the progress of game approval work will be affected. Until the restart of distribution in December of that year, the approval of version numbers was more stringent, and the number of approved game versions was significantly reduced compared with before the suspension. This time, it is to implement the control and protection of minors and strengthen the management of minors' game time and game content.

It is foreseeable that in the industry environment of stricter supervision, the development of the game industry will also move towards a new stage.

First of all, as the preciousness of the version number becomes more and more prominent, the product quality of the game market will become the focus of enterprise pursuit. With the development of the game industry and the improvement of user demand, the market needs higher quality products, game manufacturers began to think: what kind of game products meet the habits of users, how to innovate new products? How to break through the old products? Otherwise, even if the version number is approved, the game can only be under the tepid positioning, and only the version number can not be successful regardless of the content, gameplay, and innovation. When arranging the version number resources, the game company will pay more attention to the quality of the game itself, bid farewell to the previous extensive development model, and help encourage game companies to develop more high-quality games, and the explosive products under such an approval system will also promote the recovery of the industry.

Secondly, the standardization of the game industry will also be further improved. According to the "2018 China Game Industry Report" jointly released by the Game Working Committee (GPC) and Gamma Data (CNG) of the China Music and Digital Association, the growth rate of the game industry in the overall revenue in 2018 slowed down significantly in the environment of the freezing of the game industry version number and the total amount of regulation. Among the 51 game companies listed on the domestic A-share market in the first three quarters of 2018, a total of 21 companies experienced a decline in net profit, accounting for 42%. The same is true of the slowdown in the growth rate of the game industry. It is not difficult to see that with the development of the game industry, supervision should also be matched with the development of the industry, in such a trend, whether the version number is suspended or resumed, in the final analysis, it is a purification of the market environment of the game industry, so as to further standardize the subsequent development direction.

Finally, the importance of the game going to sea in the new stage will continue to increase. During the period when the version number was discontinued, going to sea became the standard self-help action of domestic small and medium-sized game manufacturers, and the overall revenue scale of domestic games increased rapidly. Taking Tencent as an example, since the third quarter of 2021, Tencent has begun to separately disclose the revenue of overseas markets in the game business, and the importance of overseas game markets is self-evident. In the fourth quarter, Tencent's game business recorded a revenue increase of more than 34% in overseas markets, and Tencent also mentioned in the financial report that it will further improve the construction and operation of overseas game brands and studios. NetEase is the same reason, in the fourth quarter of 2021 performance conference of NetEase, NetEase CEO Ding Lei said that NetEase will focus on the development of foreign markets, and launch adaptation games for host platforms such as Xbox and PS.

In the final analysis, after 8 months of ice, the game industry began to show a scene of earth rejuvenation, and the recovery and growth of the game industry will become inevitable.