Source of this article: Times Finance Author: Xie Silin
Image source: Pixabay
In 2022, when the revenue and user scale of China's game industry have both declined, the life of game people is not good. The news of attrition spread from the beginning of the year to the end of the year, whether it was a head manufacturer such as Tencent and NetEase, or a number of game upstarts such as Xindong and Paperpaper, all of them were spared.
Since most companies avoid talking about downsizing, the actual situation is unknown. Recently, with the disclosure of annual reports by a number of listed game companies, the outside world has finally been able to glimpse the real survival situation of the game industry and related practitioners in the past year.
Cartography: Times Finance
Among the 17 Hong Kong-listed game companies that disclosed changes in the number of employees according to Times Finance, 10 game companies had reduced staff. Among them, 6 companies have reduced their staff by more than 10%, and Blue Port Interaction, which has the highest reduction ratio, cut nearly one-third of its employees within a year.
Among the 7 game companies expanding, only two companies, Dust Technology and Celadon Games, have just gone public, and they are still in the stage of rapid development, and the company's personnel has increased by more than 10%. The expansion ratio of Boyaa Interactive and Kingsoft did not exceed 1%.
Excluding Tencent, which has an unknown change in game business personnel, the remaining 16 Hong Kong-listed game companies have reduced their positions by a total of 1,911, which is about three times the number of 687 people expanded in the same period.
The performance of game companies is not good, nearly 60% recorded losses
Behind the downsizing in the game industry, the performance of most listed companies is not good.
Among the 17 Hong Kong-listed game companies, 10 recorded losses, among which 4 game companies such as IGG, CMGE, and Kingsoft turned from profits to losses year-on-year. In addition, the profits of four game companies, including Tencent, NetDragon, Friendship Time, and Wangchen Technology, declined year-on-year.
Cartography: Times Finance
For the reasons for the loss, some game companies mentioned the impact of asset impairment. Due to the decline in both revenue and user scale, the operating performance of many subsidiaries or investment companies of listed game companies is not as good as expected, which in turn affects their valuation and leads to a decline in the performance of listed companies.
For example, the loss increased significantly from $156 million in 2021 to 25. 900 million yuan of Dream World, explained in its financial report that the expansion of losses was due to the company's game business focusing on the distribution and self-research of boutique games, terminating some products that did not conform to the strategic direction, resulting in an impairment loss of 752 million yuan in intangible assets; in addition, due to the impact of the epidemic and other reasons, the industry ecology changed, and the solvency of partners was insufficient, resulting in a financial asset impairment loss of 361 million yuan.
Kingsoft, which suffered a huge loss of 6 billion yuan, also pointed out that the main reason for the loss was the impairment of investment provisions caused by the continuous downturn in Kingsoft Cloud's stock price, as well as the loss of associated companies; CMGE also emphasized that the main reason for the company's turnaround from profit to loss was that some of the invested enterprises had poor operating performance in 2022, resulting in the impairment of the corresponding investment of 193 million yuan and the impairment of non-operating financial and contract of 137 million yuan.
However, asset impairment is only a direct factor affecting the books of listed companies, and the real reason for the loss of most of the manufacturers last year is still under the influence of the epidemic and the version policy, the R&D and launch rhythm of a large number of game companies' new games have been affected, and the performance of the products that have been launched is not as expected.
For example, IGG, which suffered its first loss since its listing in 2013, pointed out in its financial report that under the background of the overall slump in the industry, the market performance of game products launched by certain associates and joint ventures in 2022 did not meet expectations, or new games could not be launched as scheduled due to version release restrictions, or the R&D cycle was extended due to the impact of the epidemic, and sufficient cash flow could not be generated through operating games or external financing, and its operating performance declined.
Zulong Entertainment, whose loss widened from 300 million yuan in 2021 to 700 million yuan in 2022, stressed that a new game released by the company in Chinese mainland in the first half of 2022 did not perform as expected; A game scheduled for release in 2022 failed to obtain a game version number as scheduled, resulting in a delay in the release of the game; Some games that have been online for a long time have reduced revenue.
When open source is affected, throttling will become the primary choice, and cost reduction and efficiency improvement have become the keywords in financial reports. According to the "2022-2023 China Game Enterprise R&D Competitiveness Report" released by Gamma Data, the two most important costs reduced in the process of reducing the cost of game companies are the cost of enterprise decision-making (project approval is more stringent) and the cost of employment.
The reduction of employment costs is nothing more than layoffs, salary cuts, and year-end bonuses. In 2022, almost every gamer faces these problems to a greater or lesser extent. With the stricter approval of game projects, the demand for game talent recruitment in 2022 has also decreased significantly.
The above report pointed out that in the past year, the recruitment demand for four types of positions, game operation, game program, game planning, and game art, all declined, of which the number of game operation positions decreased by nearly 30% year-on-year.
Gaming industry hiring is still not picking up
Looking forward to 2023, with the adjustment of epidemic policies, the recovery of the economy, and the normalization of version distribution, game companies are more or less showing positive emotions in earnings reports and conference calls.
For example, Tencent President Martin Lau said in response to investors' questions that the entire game industry is in a steady recovery. For example, the game version number has resumed normal distribution since the second half of last year, including Tencent has also obtained the version number. With the launch of more new games across the industry and the gradual recovery of the macroeconomy, the game industry is expected to usher in a rebound.
CICC's recent research report also pointed out that in 2023, with the normalization of the issuance of edition numbers, boosting the activity of the supply side of the industry, and the improvement of the external environment on the demand side, driving users' willingness to pay to recover, the game industry has shown a recovery trend.
However, this upward trend has not affected the job market. Arwen, who works in content operations at a leading game company, recently cancelled his annual leave travel arrangements and intended to extend his working hours every day. "I heard that there may be layoffs again, so I think it is important to keep my job first." Arwen said to Times Finance.
In addition, Arwen receives more than a dozen "internal push" private messages on the pulse every week, and out of sympathy, he will help send internal push codes. Among them, there are many job seekers with experience in large factories and high-quality project resumes, and even so, less than one-tenth of them can survive the initial screening of resumes. Another factory where his friend works silently adjusted its recruitment requirements, except for school recruitment, only recruiting senior employees with more than 5 years of experience. The employment situation in the gaming industry remains grim.
Behind this, a number of game companies are still cautious and continue to promote various actions to reduce costs and increase efficiency.
For example, IGG said in its financial report that entering 2023, the economic outlook is still uncertain, and the group maintains a strong sense of crisis, continues to optimize various resources, and reduces expenditure; Xindong also pointed out that through a series of measures to reduce costs and increase efficiency in 2022, it has controlled costs and reduced losses. In 2023, we will continue to continue to control costs to achieve the goal of further reducing losses.
Senior game headhunter Youyou told Times Finance that after a dismal 2022, even though the release of version numbers began at the end of last year has gradually returned to normal, the confidence of many game companies has not recovered immediately, and product projects are still extremely cautious. In the absence of new projects, there will naturally be no large-scale recruitment demand.
In Yoyo's view, only when the new game projects accumulated by game companies are successfully launched and achieve certain results, can the game industry truly restore confidence. The recruitment market will pick up at the earliest, after June this year.
(At the request of interviewees, Arwen and Yoyo are pseudonyms)