Author丨Cai Shuyue, Wu Liyang
Editor丨Zhu Weijing
Figure source丨Figure worm
The time has come to the first day of December, and ByteDance's decision to retreat from the game business is still the center of discussion in the industry.
To this day, when it comes to ByteDance and Sundance Lightyear, it has repeatedly acquired game assets at high premiums, poached game talents with salaries far exceeding the average level of the industry, and given a large amount of platform traffic resource support to its self-developed games - all of the above are in line with the outside world's perception and perception of ByteDance, an Internet giant, entering the game business.
However, the withdrawal of the giants was as decisive as the retreat from Dunkirk. In the sixth year of ByteDance's involvement in gaming, it has presented a dramatic turn of the game industry at the end of 2023.
On November 27, ByteDance officially announced that it would carry out a large-scale business contraction of its game business. Specifically, games that are already live and performing well will seek to divest while maintaining operations. However, for projects that have not yet been launched, except for a small number of innovative projects and related technology projects, they will be shut down.
From the perspective of a bystander, it seems that Chaoxi Lightyear is finally "on the right track" this year: first, a "Crystal Nucleus" entered the top five of the best-selling list, and then "Planet: Restart" also entered the top ten on the second day of its launch, and it has been in operation for less than half a month. In overseas markets, there are also products distributed by agents such as "Marvel Snap".
Behind ByteDance's ups and downs in the game business, perhaps it should be more from the perspective of the company itself and calmly examine the real factors behind the implementation of this decision.
cut the Gordian knot
"I also saw the news before I knew that there was going to be a big layoff. An internal ByteDance employee told 21 reporters. The employee's business unit belongs to the platform's content operations department, but according to him, he describes that he rarely has the opportunity to interact with employees in his daily work, and "basically does not interact with each other." ”
In fact, after the news of ByteDance's game business layoffs quickly fermented on the Internet platform, as predicted by people familiar with the matter, ByteDance confirmed the relevant rumors the next day.
Judging from the response of Chaoxi Lightyear, ByteDance does not want to "cut the grass and eradicate the roots" of all its subordinate departments. Previously, the relevant person in charge of Chaoxi Lightyear mentioned in response to reporters that there will indeed be business direction and organizational adjustments, and more emphasis will be placed on the exploration of some innovative games and related technologies.
A person familiar with the matter also revealed to reporters that the research projects that have not yet been officially launched are all within the scope of reduction, and the compensation plan will be negotiated separately with each project team. However, some projects, such as UGC platforms and AIGC-related, are still retained. "The projects carried out around these two directions meet the criteria of 'more basic, more innovative and more imaginative' in the eyes of the executives. "As for the other products that have been suspended, they are all attributed to the low degree of coupling with Byte's main business.
On the same day, Chaoxi Lightyear's products "Crystal Nucleus", "Planet: Restart" and "Flower and Mountain Heart Moon" issued announcements one after another, saying that the company's adjustment and arrangement of the game business will have limited impact on the project and team, and the product will continue to maintain stable operation.
After ByteDance officially announced the divestment of the game business, Mutong Technology, which was rumored to be sold in half a month, also announced late at night that it would continue to operate independently. The relevant person in charge of Mu Tong also responded that at present, all of the company's business, including the national service, are being promoted normally.
"As the most high-quality game asset in ByteDance's hands, the decision to sell Mu Tong also shows that its intention to retreat from the game industry has been very firm. A senior industry insider in Shanghai, who is based in Shanghai, told reporters.
Previously, three months after the acquisition of Mu Tong by Chaoxi Lightyear, Yan Zhu, the head of ByteDance's game business, distilled the common points between the two in an internal speech, which are long-term patience, teamwork and globalization by nature.
Looking back at Mu Tong's game business, globalization is indeed its key background. According to public information, Mu Tong was founded in 2014, and at the beginning of its establishment, Mu Tong chose to push the game business overseas. Mobile Legend: BangBang (hereinafter referred to as "MLBB"), which was officially launched in 2016, has gradually grown into a "national mobile game" in Southeast Asia since its launch, and MAU has exceeded 100 million people in 2021.
Its overseas event operations are also in full swing. According to the relevant person in charge, a total of 16 teams participated in the 4th MLBB World Championship, covering 13 countries and regions.
It is worth mentioning that after the response was released, Yuan Jing, CEO of Mutong, also showed a sensual side in his circle of friends, saying, "After getting along for so long, I like Yan Zhi and my friends day and night."
But for ByteDance, which has lost patience, the sale of Mutong is like the large-scale layoffs of Pico before, and it has inevitably become a part of its rapid divestment of the game business.
The process of fading enthusiasm
Looking back at ByteDance's major moves in the game industry, it is not difficult to find that in the process of getting familiar with the game industry, ByteDance's game product matrix has also experienced a development process from distribution to self-development, from lightweight to heavy, and from focusing on the domestic market to promoting globalization overseas.
(ByteDance's game assets are sorted out.) The 21st Century Business Herald reporter is incomplete based on public information)
Among them, 2021 is a year in which ByteDance vigorously rolls out the game business. From March to April of this year alone, its Chaoxi Lightyear successively acquired three companies, Mutong Technology, Youai Mutual Entertainment and Linzi Mutual Entertainment, all of which were 100% shareholding.
This year, ByteDance's game business also experienced a number of "firsts":
In April 2021, the MMORPG "One Piece: Bloody Route" released by Chaoxi Lightyear was officially open beta. The game is also regarded as ByteDance's first product to make a breakthrough in the domestic medium and heavy mobile game publishing business, and helped ByteDance drop to the 14th place in the revenue list of Chinese mobile game publishers in May 2021.
In the same year, Lightyear also made its first attempt to release products overseas, launching Ragnarok: The Birth of a New Generation (commonly known as "ROX" in the industry) and "Marvel Snap" in June and October respectively, the latter of which is still a frequent visitor to the overseas charts of major games.
In November, Sunrise Lightyear's first self-developed game "The Moon of the Heart of the Flower and the Mountain" was also officially launched.
It is worth mentioning that also in 2021, the 8-month "Edition Number Winter" has officially begun. While a large number of companies are choosing to lay off employees in order to reduce costs and increase efficiency, ByteDance has also chosen to take action against Ohayoo, a casual game publishing and self-developed platform. In November 2021, Ohayoo announced that it had adjusted some positions and personnel due to business changes, involving a total of 79 employees.
Under the influence of multiple factors, ByteDance's enthusiasm for the game business waned the following year. In September 2022, it was rumored that a large-scale personnel and project layoff had been initiated by the dawn of more than 3,000 people at that time. It is reported that among its four self-developed studios, Shanghai 101 Studio was disbanded, and 20% of the employees of Beijing Oasis Studio and Hangzhou Jiangnan Studio were laid off.
The two major projects of "Planet: Reboot" (Jiangnan Studio) and "Crystal Nucleus" (Oasis Studio) have become ByteDance's last ditch in the medium and heavy game self-development business.
On July 14, 2023, Chaoxi Lightyear's self-developed ARPG "Crystal Nucleus" was launched, and on the first day after the game's open beta, "Crystal Nucleus" became a new product on the iOS best-selling list, second only to "League of Legends Mobile Game", and surpassed "Fantasy Westward Journey Mobile Game", ranking 7th, and subsequently repeatedly rushed into the top 5 on the list, and the turnover exceeded 100 million yuan in many weeks.
Qimai data shows that "Planet: Restart", which has been online for only half a month, has also created a revenue of more than 49 million yuan so far.
But these two products have not restored ByteDance's confidence in the game business. DataEye-ADX data shows that the recent purchase of "Crystal Nucleus" and "Planet Restart" has been greatly reduced. In mid-November, both products underwent a round of large-scale buying. However, after ByteDance announced the divestment of its game business, the number of creative materials from November 24 to 27 was significantly reduced to about 1,500 sets, down more than 60% from the peak.
Difficult economic accounts
From a macro perspective, ByteDance's retreat in the game field is also a microcosm of the cold investment and financing in the global game industry.
Recently, PitchBook released its third quarter game venture capital market report, which shows that venture capital companies completed a total of 113 game industry transactions during the reporting period, with a transaction value of 857 million US dollars (about 6.106 billion yuan). Among them, the number of transactions decreased by 10% month-on-month and 50% year-on-year, and the transaction value fell sharply by 35% month-on-month and 68% year-on-year.
Looking back at 2023 as a whole, the downward trend of game investment is even more obvious. According to the report, in the first three quarters of this year, the total transaction value of the game venture capital market (US$3.1 billion, about 22.1 billion yuan) fell by 76%, and the number of transactions fell by 54%.
From the perspective of specific projects, it is becoming more and more difficult for traditional games to win the favor of investors. According to the Q3 report on the global game industry released by Konvoy, the world's top 10 game technology and platform-related investments and the top 10 game R&D investments during the reporting period, blockchain ecosystem-related startups dominated, and the proportion of investment received by traditional game companies decreased significantly.
"Generally speaking, as a component of digital entertainment, the revenue growth of the game industry is mainly based on three aspects: audience size, player engagement and monetization ability, which are typically represented by the increase in the number of gamers caused by the epidemic, the popularization of smartphones, and the replacement of the in-app payment system with the point card payment system. A senior game industry practitioner based in Beijing pointed out in an exchange with reporters that the iteration of individual popular products and even categories in the game industry is a natural phenomenon, but if the above three basic elements do not make fundamental progress, the growth of the entire industry will naturally slow down.
Reflected in the field of game investment, although AI is regarded as an important way for the industry as a whole to reduce costs and increase efficiency, and improve the player experience, the current application of AI is obviously not fully mature, and when the overall return on investment of the industry is not fully advantageous, coupled with the high uncertainty of the success of game products, its attractiveness to investment will naturally decline.
As one of the Internet giants, in addition to direct capital investment in the development of game business, the more important thing is to invest in traffic based on its own strong business in short video and other fields. For example, "Crystal Nucleus" has received millions of traffic support from Douyin. Two days before the official launch of the product, the "Crystal Nucleus" project team joined the "Douyin Game Publisher Program", and the number of videos and the total number of views within a month exceeded 31,000 and 140 million respectively.
What the bright data can't intuitively show is that platforms such as Douyin have given "Crystal Nucleus" the focus on traffic quality and other aspects. A Shanghai game industry practitioner who did not want to be named said that before and after the launch of "Crystal Nucleus", the high-quality traffic on the Douyin platform that meets the user characteristics of the product was significantly inclined to it, and Byte's support for "Crystal Nucleus" is obvious to all. An industry insider who understands Douyin's advertising process also told reporters that Byte does have internal discounts for advertising most of its game products.
However, as a content platform, high-quality traffic resources are the core products of apps such as Douyin for advertisers, and the support for "Crystal Nucleus" means that the advertising revenue of other manufacturers and even the overall advertising revenue will decline. In addition, on the one hand, the bias of the traffic pool in the platform towards its own products will inevitably cause dissatisfaction with other game manufacturers, and on the other hand, self-developed games also have to bear the risk of product success, which is obviously not as safe as sitting on the Douyin platform to sell traffic directly to other manufacturers.
"When you have a money printing machine at home, you think that other appliances are power-hungry. A user on the NGA platform commented on ByteDance's view of its game business.
While it is impossible to accurately estimate the actual value of this investment, the decision to divest the gaming business also shows that Byte's internal calculations have found that this investment is not cost-effective. The above-mentioned Beijing game practitioners said that the reason why Tencent can use the strength of WeChat and QQ to drive the game business is because social software can also provide social chains to drive new users and maintain the community in addition to traffic, while Douyin is almost a pure traffic sales model, which is in natural contradiction with the content realization required by the game.
"Even if we talk about content ecology and empowerment, the distance from the Internet to games is actually not closer than the distance to new energy vehicles. Perhaps this is the most helpless footnote to the exit of Byte Games.
SFC
Editor: Li Yutong, intern: Song Jiayao