263 days after July 2021, according to the official website of the State Press and Publication Administration, the latest batch of 45 domestic game version numbers was approved by public announcement on April 11, 2022. The approval details show that the specific approval time of this batch of games is April 8, which is consistent with the time shown in the previous online game publication number issuance form circulating on the Internet.
It is worth noting that the two major game giants of Tencent and NetEase are not in the first batch of lists that have passed the review.
So, will the restart of the game version number be similar to the impact of the review changes at the end of 2018? Since yesterday evening, the trend of game stocks in the three major markets of the United States and Hong Kong has diverged, is there a difference in the investment logic behind it?
The suspension of the edition number is based on history, and manufacturers have re-pledged overseas
At the annual summit of China's digital entertainment industry at the end of December 2016, Zhang Huaihai, then director of the Network Publishing Supervision Department of the Digital Publishing Department of the former State Administration of Press, Publication, Radio, Film and Television, gave a speech to name the phenomenon that the domestic game industry at that time emphasized quantity over quality, and the frequent appearance of skinned products.
However, the industry chaos has not been quickly contained. According to the relevant data of the Approval of Game Editions of the State Press and Publication Administration, from 2014 to 2021, the number of game editions approved each year was 219, 360, 3730, 9369, 2003, 1570, 1316 and 755 respectively.
It is not difficult to see that after the industry conference in 2016, the game industry instead produced a quantitative reverse explosion. Judging from the reality of the industry before 2017, the triple jump in the number of game version numbers is indeed related to the release of a large number of assembly line games, which may have buried some hidden dangers for the tightening of the industry.
After March 2018, the official website of the State Administration of Press, Publication, Radio, Film and Television stopped updating the approval information of the game version number, and the first version number was suspended for 8 months. It is worth mentioning that in March 2018, the State Council carried out institutional reform, and the original state administration of press, publication, radio, film and television was assigned to the central propaganda department, and the central propaganda department hung the state press and publication administration (national copyright administration) brand, which reflects the policy emphasis on the benign development and prosperity of cultural content such as games.
At the annual meeting of China's game industry at the end of December 2018, Feng Shixin, then deputy director of the Publishing Bureau of the Central Propaganda Department, announced: "The first batch of some games have completed the review of version numbers, and we are stepping up the issuance of version numbers." "The game version number begins to recover. At the same time, he also stressed that the game industry should take the initiative to control the number and abandon the idea of quick success and short-term profit. Therefore, it can be seen that since 2018, the number of game version numbers issued has decreased year by year.
After July 2021, the release of game version numbers pressed the pause button again, and on August 30, the State Press and Publication Administration issued the "Notice on Further Strict Management and Effectively Preventing Minors from Addicting to Online Games", requiring all online game companies to provide 1 hour of service to minors from 20:00 to 21:00 every day from Friday to Sunday and statutory holidays. It can be seen that this incident may be related to the anti-addiction of minors' games.
At the annual meeting of China's game industry in mid-December 2021, Sun Shoushan, chairman of the China Audiovisual and Digital Publishing Association, said at the conference that the game industry is still in a historical transformation period from high-speed growth to high-quality development. Only by comprehensively advancing the work of protecting minors and implementing the primary task of preventing addiction can we talk about development and efficiency.
In this context, the main countermeasures of the game industry include the increase of overseas quota of high-quality games, etc., to offset the conflict of interest suspended by new games in the domestic market. Yang Fang, deputy director of the Publishing Bureau of the Central Propaganda Department, also mentioned in her speech at the 2021 China Game Industry Annual Conference that anti-addiction work is the top priority of online game management, and the game industry should focus on expanding overseas markets.
According to the Game Working Committee of the China Music and Digital Association, the sales revenue of mainland self-developed games in overseas markets increased from 3.076 billion yuan in 2014 to 18.013 billion yuan in 2021. In 2018, the suspension of game version numbers has promoted more game companies to go to sea, and from 2018 to 2021, the sales revenue of games going to the sea has doubled.
According to the Sensor Tower store intelligence platform, in March 2022, 38 Chinese manufacturers were shortlisted in the global mobile game publisher revenue list TOP100, with a total revenue of more than 2.22 billion US dollars, accounting for nearly 40.2% of the global TOP100 mobile game publisher revenue. In terms of the single market, 30 Chinese mobile games were shortlisted for the Japanese best-seller list in 2021, with a total revenue of about 3.46 billion US dollars, accounting for 25.9% of the total revenue of the Top100.
On February 17 this year, The Heart Company's new self-developed fighting game "Flash Party" has been on the top of the Japanese IOS free list for several consecutive days since its launch. In March this year, Tencent, NetEase, Mihayou and Funga Funflus ranked in the top 4 in the revenue rankings of Chinese mobile game publishers. Overall, going to sea has brought manufacturers a large space for profit imagination.
CITIC Securities also pointed out in the report on April 12 that the restart of the version number represents the affirmation of the rectification effect of the industry in the past 8 months, and the specific orientation is still concentrated on four levels: the protection of minors, the content and gameplay attach importance to correct guidance, the approval of high-quality games, and the encouragement of excellent content to go to sea.
The first batch of giants did not affect the plate repair, and the trend of game stocks diverged
Judging from the list of editions, 37 Interactive Entertainment's "Dream Voyage", Heartbeat Company's "Party Star" (i.e. Flash Party), Gigabit subsidiary Thunder Network's "Tower Hunter" and "Box Fission", Youzu Network's "Junior Three Kingdoms: Pocket Battle", 4399 "Above All Things: Awakening", Xishanju's "Sword Net 3: Origins", Lilith's "Life Party" and so on are all on the list. Huang Yimeng, CEO of Heartbeat Company, and other industry insiders have also issued dynamic confirmations.
Similar to the 2018 version number when the release was resumed, the two giants of Tencent and NetEase were not in the first list. Some relevant people said that this may be due to the consideration of the actual situation of the industry: giants often have more game reserves, as well as stronger hematopoietic capabilities, so they will give priority to other companies with more urgent demand for version numbers in the audit.
The same is true from the content reserves that game manufacturers have announced in 2022, tencent games "League of Legends e-sports manager", NetEase games "Diablo: Immortal", Gigabit "Obid Island" and other major companies' key projects have obtained version numbers in the early stage and will be released this year.
Judging from the impact of this version restart on the secondary market, many game stocks have already risen significantly. On the evening of April 11, the US stock NetEase closed up 2.12%, Tencent ADR opened high and fell back to close up 0.51%, and Station B closed up 7.23%. On April 12, game stocks such as Hong Kong Stock Heartbeat Company, Station B, and Dreamland all fell back after opening sharply higher. As of press time, Tencent rose 3.22%, NetEase rose 4.28%, Heartbeat Company rose 3.16%, Station B rose 9.36%, and Dreamworld rose 1.2%. A-share game stocks replicate the trend of Hong Kong stocks opening high and falling, the difference is that today's A-share market fluctuations affect the trend of individual stocks, as of press time, gigabits rose 1.7%, while 37 Mutual Entertainment fell 4.27%.
Soochow Securities and other institutions commented that the valuation of the game sector has continued to decline in the past few months, and the mainstream companies as a whole are in the historical low range, and the restart of this edition will help the double repair of manufacturers' performance and valuation. For game companies that produce premium content, business confidence has also been enhanced. At the same time, Goldman Sachs released a research report pointing out that this action may indicate that the entire mainland online game industry has met the compliance requirements for game content protection and cleanup, and believes that restarting online game licensing can revitalize the industry's investment and research and development of new games, which is good for the game and advertising industry.
In addition, some market views believe that as a heartwarming company and B station that has both successful self-research cases and the double logic of important distribution channels, it is expected to win more benefits after the recovery of the game industry. For example, at the same time as the domestic commercialization of the heartbeat company "Flash Party" is launched, the advertising demand of game manufacturers on the Taptap channel is also expected to increase.
At the same time, companies such as Yuwen Group are also hidden targets for game version numbers because they hold IP. In 2021, the game "Douluo Continent: Soul Master Showdown" under 37 Interactive Entertainment has a monthly turnover of more than 700 million, and the copyright IP is coming from Reading Group. Its reserve game IP also includes "Qing Yu Nian" (launched in 2022), "Snow Knife Line" and so on.
At present, although the number of the first 45 game versions is much lower than the first 80 restored in 2018, it is also lower than the average of about 80 in Q1 2021. However, on the whole, 2021, as a rare year of change and innovation in the game industry, has passed, and the restart of the version number represents the end of industry supervision. The Hong Kong Stock Research Agency believes that with the increasing ability of game manufacturers to develop high-quality products and go global, the game industry will steadily enter a new stage of healthy development.