In the previous article, we listed the comparison of the basic data of Gigabit and other major listed game companies (excluding the non-A-share listed Tencent and NetEase), which raised a new question - why is Gigabit's long-term performance better than others? Frankly speaking, it is indeed not easy to answer this question, because for the entire game industry, gigabit is really a bit inconspicuous, accounting for only 1.56% of the domestic market share in 2021, and where can the theoretical status of the jianghu go.
However, although the status of the jianghu is not prominent, but the profitability is beyond the reach of many big coffee, from the following table, we can see that the net interest rate and gross profit margin of Gigabit are obviously stronger than the main market competitors such as Perfect World, 37 Interactive Entertainment, Century Huatong, Palm Fun Technology, Giant Network, so why is this? You have to know how much better than the big guys than the game, if it is really your game to do the top, why the market share does not appear (the market share is not high means that there are not many players).
On this point, I think the reason may lie in the following points: 1, the game business inherent gross profit is high, but the focus of some individuals in the above companies is scattered, such as Perfect World has a film and television business, Century Huatong and 37 Interactive Entertainment have been involved in auto parts, these low gross profit business will drag the overall gross profit hind legs, obviously Gigabit does not have such a problem.
2. In the early years, the company's game products accounted for a relatively high proportion of authorized operations, as the main source of revenue and profits of the "Q Dao" game, the use of authorized operation model, while in the same period many game companies are mainly independent operation. Generally speaking, in the autonomous operation mode, because the game operator is responsible for setting up servers, leasing bandwidth, promoting games, maintaining player relationships, etc., the cost and expense are relatively high, and the revenue recognition is generally based on the total amount method (that is, the total income from game operation), so the profit margin indicator may be relatively low, but the revenue scale is larger. Under the authorized operation model, because the costs and expenses borne by the game developer are relatively small, the revenue recognition is generally carried out according to the net method (that is, the income from the game share), and the profit margin indicator is higher than that of the operator, but the revenue scale is correspondingly small. In recent years, the company's gross profit margin has shown a slow downward trend, largely because with the enrichment of the game variety matrix, the proportion of relatively low gross profit margin models such as independent operation and joint operation is gradually increasing, which is also the root cause of the company's revenue growth rate in recent years is significantly faster than the net profit growth rate.
3, the difference in accounting treatment of companies in the same industry is also one of the reasons for the gross profit margin, such as Palm Fun Technology will be the marketing cost into the operating costs, which makes the company's gross profit margin much lower. Of course, even if you consider the difference in cost structure, if you look at the net interest rate in the end, the palm interest is still much weaker.
4. There is a paragraph in the company's prospectus - "The company's revenue mainly comes from the "Ask", "Ask The Question", "Dou Xian" online games." From 2013 to January to June 2016, the revenue of the three games accounted for 95.25%, 93.15%, 88.63% and 96.48% of the operating income of the current period, respectively; Among them, the revenue of "Qingdao" accounted for 87.86%, 67.55%, 72.80% and 21.77% of the operating income in the same period, respectively, and the proportion of "Qingdao Mobile Game" in the current operating income from January to June 2016 was 71.39%. Although the passage of time has passed, the proportion of "Q Dao" will inevitably decline, but it is still one of the important pillars of the company's revenue source, which should be no doubt. As an old game that has been in operation for more than 16 years, the production of updates is nothing more than a small repair, and its cost probability can be marginally reduced, I think that the relative products are many and miscellaneous and frequently updated companies, which may also be one of the reasons why Gigabit can maintain a higher gross profit.
After solving the high-margin puzzle, we can easily draw it into the key topic of this article, since the profitability is strong and the performance is better than others, what is the core competitive advantage of the company based on the industry. According to the company's own words, its core competitive advantage is to re-develop effective, excellent game operation capabilities, a large user base, an experienced management team, data mining capabilities and market response capabilities, focus on the good experience of players and so on. Of course, such a statement cannot be said to be wrong, but changing a game company, the probability will also say so, it is really not how different, the really valuable logic may need to be further refined on the basis of understanding.
As a post-80s who is close to the age of 40, I have long been out of the trendy crowd of gamers, but some of the experiences and memories of my youth can still let me find some feelings and understanding of the game. Remember just went to college that meeting, NetEase produced an MMORPG game "Big Talk West Journey Online", strictly speaking, even at the level at that time, "Big Talk West Journey Online" is very rough, compared with many Korean game masterpieces, no matter the picture, playability is not a little bit and a half, but the place of the bull fork is that it is enduring, life and death from miracles, Heaven 2 to the Tower of Eternity and other generations of works far more exquisite than it.
Why such a miracle, I personally think that first of all, because it is simple and rough, it does not eat configuration, so the advantage is to absorb the largest range of players, any kind of machine can play.
Secondly, it is its own child, the developer is also the operator, attaches great importance to its own brand and reputation, attaches great importance to maintaining the user experience in the operation process, and does not exhaust the fish; And those foreign masterpieces are basically agents doing, the agent's playing rules are a bit monkey to break the meaning of corn, eat one and lose one, rub fresh to make fast money over-mining (plug-ins, private clothes flying all over the sky, all kinds of gold-sucking means that destroy the experience emerge in an endless stream), and then change to a new game to continue to repeat. In contrast to the two approaches, the former is naturally enduring, while the latter is easily overdrawn quickly, and the active cycle is extremely short.
Its three MMORPG games themselves are more unique in attributes, no more than competitive and single-player games, it actually shapes a small simulated society, playing for a long time, the achievements you have achieved in it (such as level, equipment, guild status) and social circles (will produce many player friends and even emotional sustenance) are very difficult to give up. Take myself as Aside, I was once addicted to Paradise 2 for 3 years, once unable to extricate myself, and to this day I still think of or miss the good times in the game, and finally choose to leave because the plug-in has lost its vitality, and the other is the change of the working and living environment, which basically belongs to a helpless passive choice. I think that if the operator can operate with care, create a good user experience environment, this kind of game is inherently very customer sticky.
Back to the main topic, Gigabit's signature product "Ask" is also an MMORPG game, it can last for more than 16 years after the public beta, continue to print money at full horsepower, basically means that it and "Journey to the West Online" is a successful routine, but also as the company itself said to take the boutique route, carefully operate and maintain a good game ecological environment (strictly crack down on plug-ins, do not engage in excessive exhaustion and fishing gold), pay attention to user experience and long-term interests, with the help of MMORPG game innate attribute advantages , small steps and slow steps to achieve the final grand blueprint. I think that's probably the real answer. (To be continued)
(Risk Warning: The views mentioned in this article only represent personal opinions, and the subject matter involved is not recommended, and trading accordingly is at your own risk.) ）