Source of this article: Times Finance Author: Xie Silin
Screenshot of the game "Jump a Jump"
At the beginning of 2018, a small program game called "Jump a Jump" was popular in the circle of friends. At that time, almost all touch-net users were playing this national game, refreshing the score of the leaderboard over and over again. According to Quest Mobile data, only 3 months after its launch, this 4MB H5 mini-game has accumulated 390 million players.
The popularity of "Jump a Jump" and the entry of the giant WeChat have rekindled the hope of becoming the fourth largest game outside of terminal games, page games and mobile games.
At the end of the same year, Chen Shuyi, founder of Egret Technology, announced at the 2018 Global Traffic Conference that in China, 70% of the head H5 games are developed by the egret engine, and 53% of the head games also rely on the egret engine to run. Overseas, Egret Technology has covered more than 2 million users in one region of Japan in one year, creating a turnover of 35 million yuan. In addition, they have more than 250,000 active developers worldwide and more than 1 billion radiation devices.
At this time, everything looks prosperous and the future is bright. However, thanks to each other, four years later, Chen Shuyi, who is standing on the brink of bankruptcy and liquidation, traces back to the moment when the crisis originated, and also remembers this year.
In an internal letter widely circulated in the game circle recently, he wrote that since 2018, the industry has been deteriorating day by day, and in the stage of version number suspension, many backdoor listed game companies have thundered, and many game people who have befriended him have been forced to go bankrupt, run away or go to prison.
Over the past three years, he has mortgaged his property, sold his car and all his shares, and raised nearly 40 million yuan from banks and external friends to try to save the company that had been running hard for more than 10 years.
"In the harsh environment, Egret Technology has been struggling, seeking transformation and breakthroughs. In the middle, it also negotiated with Tencent and ByteDance, from investment, retreat to mergers and acquisitions, and then to take over the bailout. ”
But all this did not stop the fall of Egret Technology. In the context of the wave of domestic game boutiques, the story of Egret Technology is like an incision, reflecting the loneliness of H5 games. Some relevant practitioners believe that the H5 game with low cost, little retention and rough production has passed the peak, but the downhill road is far from the end.
In October last year, the old shareholders who could not continue to wait suddenly attacked, froze all the assets of Egret Technology and Chen Shuyi, and sued the court to demand divestment, which became the last straw that crushed Egret Technology.
After the hilarity, "Jump a Jump" did not save the H5 game after all, nor did it save the Egret Technology.
Egret Technology Blood Loss Game Cold Winter
To some extent, it is also Egret Technology that has opened the prelude to the domestic H5 game market.
Since 2012, domestic HTML5 technology has begun to enter the exploration stage. But it will not be out of the circle until two years later.
In 2014, an H5 game called "Surround the Nerve Cat" came out, sweeping the WeChat circle of friends with its relaxed and interesting gameplay and magical funny drawing style. Public reports show that the game has created a social game myth of more than 5 million users and more than 100 million visits in just 3 days of launch.
Screenshot of the game "Surround the Neural Cat", image source network
The game engine behind it, the Egret engine, also broke into the public eye. It is rumored that Chen Shuyi and Lei Jun, chairman of Shunwei Capital, only met once, and the A round investment of tens of millions of dollars was immediately finalized after 15 minutes.
The market also saw the potential of H5 games at this time. In 2015, Egret Technology cooperated with Microsoft, Xiaomi, Cheetah, Firefox and other enterprises to build an H5 mobile game ecosystem, and in the following period of time, the company's explosive products were frequent. Among them, the flow of "Yugong Moving Mountain" easily exceeded one million, and "Legendary World H5" completed the industry miracle of 30 million yuan in the first month.
In March 2016, Egret Technology quickly debuted on the New Third Board as the "first share of H5 mobile technology and services", issuing 75 million shares, with a par value of 1 yuan per share and a total valuation of up to 2.5 billion yuan, which became the highlight of the company's history.
Unfortunately, the highlights didn't last long. The Egret Technology, which hopes to attract game developers through free engines and tools, continue to grow the H5 game ecosystem, and harvest from game streams, is obviously too idealistic.
This business model has two prerequisites, one is that Egret Technology needs to dominate the industry, so that most game developers fall into their own camp; Second, the market share of H5 games should be large enough.
Under the pinch of Touch Technology's Cocos engine and Soyou Network Technology's Layabox engine, Egret Technology, which relies on large-scale money-burning, briefly occupied the leading position, but behind this was a huge loss. The financial report data disclosed that in the first half of 2013-2017, the total revenue growth rate of Egret Technology slowed down significantly, with a cumulative loss of 116 million yuan in 4 and a half years.
Egret Technology, which is unable to make blood, must constantly raise funds to maintain its operations. However, the liquidity of the New Third Board is difficult to meet the huge capital demand, in early 2017 hastily introduced IDG Capital, Tianxing Capital, Hanhua Investment and Rongxi Venture Capital a total of 68 million yuan of private placement financing 8 months later, Egret Technology took the initiative to apply for delisting.
Delisting was supposed to be about finding better financing opportunities. At that time, no one could have imagined that 2018 would open for up to 8 months of game version number suspension.
Fading H5 game
However, it is not only Egret Technology that has not run out of a successful business model, but also the entire H5 game industry is still exploring from a broader perspective. H5 games that are simple, fast and easy to share out of the circle are now becoming heavier and more marginalized, and gradually disappearing from the public's vision.
Back in the beginning, "Surround the Neural Cat" shocked the industry not only with more than 100 million visits, but also with a very low development threshold behind the game, requiring only 1 programmer, 1 artist, and 1 and a half days. H5 games that can be played without downloading and installing, and therefore have powerful shareable attributes. Fission can happen from here, and with a very low investment, it is possible to exchange it for huge returns.
However, this method of profitability is difficult to sustain. As the industry continued to grow, the drawbacks of H5 games began to appear. H5 game practitioner Xiao Hao told Times Finance that although the current development cycle of H5 games is very short, it can generally be listed in 2-4 weeks and see the benefits. But correspondingly, the retention time of H5 game users who are short and fast and easy to aesthetic fatigue is also very short.
According to the research data of the research report, the average next-day retention rate of H5 games is 13.2%, only 3.8% of the 7-day retention, and the 30-day retention is almost 0, which is far lower than that of traditional mobile games.
"Even if a popular game, the survival cycle may be 1-2 months, can not do word of mouth, let alone long-term operation."
At the same time, due to the lack of a fixed traffic entrance, many H5 mini games have no exposure at all after they are listed, no one comes in to play, and game manufacturers have to prepare a large budget to WeChat, QQ, Byte (Douyin, today's headlines) and other channels to spend money to buy in order to ensure that their games are seen.
"But the investment in advertising may end up being higher than the return."
Zheng Yingxiong, founder of Qiuzhi fish game academy and former entrepreneur of H5 games, also pointed out to Times Finance that after 2018, due to the limited version number, H5 games cannot be recharged, and it is difficult to realize the monetization method of props purchased in mobile games and terminal games, and more can only rely on a large number of advertising pop-up windows to achieve profitability in the case of extremely affecting user experience.
Too short retention time, limited monetization channels, and poor user experience, the three pull each other, undoubtedly make the industry fall into a vicious circle. In order to solve this problem, Xiao Hao, who is still in the industry, told Times Finance that in order to make money, the H5 game industry has begun to transform to a medium and heavy H5 game with deeper addiction and more sophisticated production.
Unfortunately, the medium and heavy H5 games that experienced too much and retained too low have never run out of the hits such as "Surround the Nerve Cat" and "Jump a Jump". They are deeply cultivating their own acres and three-point land in the gradually smaller and smaller market, but they are also far less and farther away from the mainstream end games and mobile games.
According to the "2021 China Game Industry Report" jointly released by the Game Working Committee of the China Music and Digital Association and the China Game Industry Research Institute, the actual sales revenue of the web game market has been sluggish since 2016, with negative growth for 6 consecutive years. In 2021, the actual sales revenue of the web game market was only 6.03 billion yuan, accounting for 2.03% of the total revenue of the game market, down 67.8% from 18.71 billion yuan in 2016. The actual sales revenue of the client game market in the same period of 2021 was 58.8 billion yuan, which is about 9.8 times the revenue of web games.
Perhaps, even without sudden supervision, Egret Technology still cannot reach the other side of expectations. Unlike Chen Shuyi's vision for the future, the development of H5 games has never been able to create a new system.