Wen | Wang Yuchan
Editor| Qiao Qian
Chinese game practitioners walking in the dark finally saw the light of day.
On the afternoon of the 11th, the official website of the State Press and Publication Administration announced the approval list of domestic online games in April 2022, and a total of 45 games obtained the version number, including 5 client games, 39 mobile games and 1 Switch game console product.
Prior to this, the State Press and Publications Administration had not released a new game version number for nearly 9 months, nor had it issued any official explanation for the suspension. For many gamers, the good news of April 11 was completely unexpected. According to 36Kr, in March this year, there were also a number of head game companies that made a plan to "not issue a version number for a whole year".
After a long drought in Ganlin, Huang Yimeng, chairman of the Heartbeat Network, spoke in the circle of friends, saying, "Finally there is a version number, and I cry with joy." The company's game Party Star is on the first list. The "Sword Net 3 Origins" on the same list is generously taking out a 10,000 yuan cash draw on the development team's Weibo to celebrate with the players.
The image is a screenshot of the Weibo page
In the list of game versions reviewed this time, there are "Dream Voyage" operated by A-share listed company 37 Interactive Entertainment, "Tower Hunter" operated by Gigabit, "Young Three Kingdoms: Pocket Battle" operated by Youzu Network, "Legend of dragon teng" and "The Way Forward" under Kaiying Network, as well as "Careful Fire Candle" of Hong Kong listed company Dream World, "Party Star" of Heartbeat Company, and "Pottery Master" created by small studios. But there are no games from the two major game giants, Tencent and NetEase.
Compared to the previous edition release, 87 games were reviewed in July 2021, and this time there were only 45 games. As the industry has speculated, the review criteria will be more stringent after the version number is restarted.
In 2018, the State Press and Publication Administration also suspended the issuance of version numbers for a full 9 months, and the number of games reviewed after the restart was greatly reduced compared with before. 1570 games were reviewed in 2019, down to 1405 in 2020, compared to just 755 in 2021. Future versions may remain a scarce resource.
For the game industry, although the version restart has a repair effect on market sentiment, it is not the end of a difficult period of rectification, but the beginning of strict censorship for a longer period of time in the future.
Image source: Everbright Securities
The long wait with death before dawn
On December 25, 2021, independent game producer @AZGames released a video on Station B called "477 Days Without Game Version Number, Can't Stop". The video tells the story of his game Master pottery, which lasted 477 days and garnered 1.344 million views on Station B.
Luckily, after another three and a half months of waiting, Master pottery managed to be among the first games to be reviewed in April.
"Come and pinch me personally, not in a dream..." @AZGames wrote on the B dynamic: "Thank you for your support and companionship, it took nearly two years to finally get the version number!" ”
The picture is a screenshot of the page of Station B
But Master Potter is just one of the rare luckies, with a large number of small game studios dying before dawn. 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. In contrast, in 2020, when the version number was issued normally, the number of game companies was cancelled for 18,000 in the whole year.
Although the game company with a little financial resources will not completely close its doors, it is also common to cut projects and lay off employees. In February this year, according to the Red Star Capital Bureau, insiders confirmed that netease, Lilith, IGG and other game companies have cut self-developed projects or lay off employees.
After the cold winter, the concentration of the industry will inevitably increase, the lack of new living water, the version of the large inventory of the head game company "Strong Hengqiang". From 2019 to 2021, Tencent won 32/16/9 version numbers respectively, and in the 9 reviewed games in 2021, 7 are imported and generally well-known, such as "League of Legends Mobile Game" and "Doraemon Ranch Story", and there are only 2 domestic native games. The situation at NetEase is similar.
Tencent/NetEase stock game version number situation
When a game company is in a state where "the old game is already online and the new game is still in development", the suspension of the version number is almost a good thing, because it can be separated and greatly extend the life cycle of the game. In the past few months, Tencent's "Glory of the King" and "Peace Elite", NetEase's "Fantasy Journey to the West" and "Yin and Yang Division" series have all supported the company's basic disk through continuous operation.
In 2021, we didn't see a new hit that would shake up the status of old games. The top three games in the global mobile game market for in-app purchase revenue are all from Chinese companies, and they are all old games that have been released for more than a year - respectively, Tencent's "PUBG mobile" (combined with "Peace Elite" revenue), "Glory of the King" and Mihayou's "Original God".
Of course, there are eggs under the nest. Although the anti-risk ability of game manufacturers is relatively stronger, profits have also been hit hard. For the full year of 2021, Tencent's net profit (Non-IFRS) increased by only 1% year-on-year, the lowest increase in the company's net profit in nearly a decade. The decline in net profit margin is directly related to the contraction of the two major businesses of games and advertising. In the fourth quarter, the revenue of low-profit fintech and corporate services business surpassed Tencent's high-profit online game sector for the first time.
Going to sea will remain an inevitable trend
Affected by the tightening of the issuance of domestic game version numbers, since the second half of last year, the urgency of game companies going to sea has risen sharply.
Tencent upgraded the overseas version of Arena of Valor to an important strategic project, and the investment budget has also doubled. The Tianmei Studio Group and the Photonic Studio Group have also set up new self-research studios in many overseas places. Tencent's goal is to account for 50% of the total revenue of the game in overseas markets.
NetEase CEO Ding Lei issued a "summons order" to collect global game talents and accelerate the development of overseas markets. ByteDance has spent nearly 5 billion yuan to acquire Mu Hitomi Technology, the latter's Mobile Legends has been suppressing the overseas version of "Glory of kings" in the Southeast Asian market.
According to the report of the Game Working Committee of the China Music and Digital Association, in 2021, the scale of China's self-developed mobile games going to sea was 18 billion US dollars, an increase of 16.6% year-on-year, and in the first half of 2021, 23.4% of overseas TOP 2000 mobile game publishers came from China, an increase of 3.6% year-on-year.
Although the release of the version number has been reopened, concerns about the tightening of future review standards remain. Analysts at a number of brokerages believe that the general trend of Chinese game companies going overseas will not change.
In addition, policy factors are only one of the reasons for the large-scale overseas of game companies. From the market level, the domestic mobile game market has also faced fierce competition in the Red Sea and is in urgent need of new traffic pools.
To put it simply, the game user dividend in the domestic market has basically touched the ceiling. According to the Data of the Game Working Committee, in 2021, the penetration rate of mobile game users in China will be close to 100%. Last year, the number of game users in China reached 666 million, an increase of only 0.22% year-on-year. In the past few years, although the growth of users has been slow, the user scale has mostly increased by tens of millions of dollars per year, and the increase in last year has not changed much compared with 2020.
The size and growth rate of Chinese game users
At the same time, the revenue growth rate of overseas games last year (16.6%) was much higher than the overall level of the country (6.51%). From the demand side, the overseas mobile game market space is twice the size of the domestic mobile game market, compared with the level of 70% penetration rate of Chinese mobile game players, the penetration rate of mobile game players in the main markets in Europe and the United States in 2021 is only about 40-50%, and there is still a lot of room for improvement in overseas mobile game penetration and payment.
The actual sales revenue and growth rate of China's independently developed games in the domestic market
In short, the version restart is a life-saving fresh air for domestic game companies that have been suffocating for a long time, but its oxygen content is also very thin. In the future, it is not surprising that more games will be born entirely designed and built for overseas markets, and a new battle will unfold in exotic markets.