Recently, listed game companies have successively announced their 2023 annual performance reports. On the whole, the development of listed game companies has improved compared with last year, but they are still under great pressure to survive. Based on this, they are also seeking new opportunities, such as laying out new tracks for mini games, researching the practical application of AI, and exploring emerging markets in the Middle East and North Africa.
So, in the past year, what is the layout of the new track and new market of the major listed companies? What other information have they revealed in the financial report? Recently, the game gyro has re-examined the financial reports and performance meetings of listed companies, and sorted out the product flow, mini games, AIGC, and Middle East and North Africa market information mentioned by some enterprises, in order to let everyone see the business status of enterprises more clearly.
Product flow: 16 games have an annual revenue of more than 100 million yuan, the SLG category has strong gold absorption, and the MMO has a stable long-term term
Among the listed game companies that have announced their 2023 results, we have compiled the turnover data of 22 major games from 8 companies, including Celadon Games, Shenzhou Taiyue, and IGG. Among them, there are 16 games with an annual revenue of more than 100 million, and most of the top earners are familiar faces, such as Shenzhou Taiyue's "City of the Rising Sun", "War and Order", IGG's "Lords Mobile", NetDragon's "Demon Domain", Celadon Games' "The Strongest Snail", etc.
Some of these games are of excellent quality and have been continuously optimized and updated for several years to maintain user retention, such as "City of the Rising Sun", and some have been online for a short time, but rely on high-quality and strong marketing to capture high popularity and high income, such as "In the Name of Shining".
From the perspective of revenue, most manufacturers still rely on old products to win the world. In terms of category, SLG is still the most stable and gold-absorbing category, with 16 products with annual revenue of more than 100 million yuan, SLG occupies half of the country.
Among them, the annual revenue of "Age of Origins" launched by Shenzhou Taiyue's Shell Games reached 3.1 billion yuan. Since its launch in 2018, the game has been firmly at the top of the annual overseas revenue rankings. According to the news revealed by Shenzhou Taiyue, the quarterly turnover of the game "City of the Rising Sun" has increased from 738 million yuan in the first quarter of 2023 to 926 million yuan in the fourth quarter, and the turnover is currently growing steadily. Another SLG game "War and Order" has been online for 8 years, and the turnover is still in the high range, achieving a revenue of 1.135 billion yuan. These two games also make it easy for Shenzhou Taiyue to "lie down and win" without new products being launched.
Similarly, IGG's SLG game Lords Mobile also earned HK$3.1 billion (about 2.873 billion yuan) last year. It has been 8 years since the game was launched, and it has contributed more than HK$30 billion in revenue. After this game, IGG also released two SLG games, "Doomsday: Last Survivors" and "Viking Rise", and launched them on a large scale. At present, the annual revenue of these two games is HK$700 million (about 627 million yuan) and HK$400 million (378 million yuan) respectively.
IGG mentioned in its financial report that "Doomsday: Last Survivors" has captured 33 million user fans since its launch in August 2021, and the monthly turnover exceeded HK$82 million at the beginning of 2023, and the monthly turnover climbed to HK$100 million in March 2024. Viking Rise is also on the rise, and these two games may be expected to grow into a new pillar of IGG's revenue.
It should be noted that Zhixingtong's two SLG games have also performed very well, and the annual revenue of the "Clash of Kings (COK)" game developed by Tencent is 473 million yuan. The self-developed and operated SLG game "The Walking Dead: Survivors" surpassed "Clash of Kings" in terms of monthly active users last year, and became the new main revenue force, with an annual turnover of 538 million yuan.
In addition to SLG, the output of MMO products is also very stable, with Celadon Games' "The Legend of Sword and Fairy: Sword Swinging Love", NetDragon's Demon Domain (terminal game), and Electric Soul Network's "Dream Three Kingdoms" series of terminal games with annual revenues of more than 100 million. At the same time, we also found that classic terminal game products have picked up. In the annual report, Kingsoft, NetDragon, and Electric Soul Network all mentioned the high revenue of terminal game products.
Kingsoft achieved a net profit of 480 million yuan last year, one of the reasons for which was the increase in revenue of the terminal game "Sword Network 3". NetDragon's Demon Domain series also saw significant growth last year. The revenue of the mobile game "Demon Domain" increased by 14% year-on-year to 2.9 billion yuan, and in the interoperable mobile game version, both monthly active users and game time increased by 50.4%. Electric Soul Network said in the financial report that the operating income of the "Dream Three Kingdoms" series of terminal games still accounts for 65.07% of the total operating income (about 440 million yuan).
In our view, relying on high-level content iteration, the life cycle and revenue generation capacity of classic PC games are strong. This year, major companies have accelerated the layout of multi-terminal interaction in games, and the trend of terminal games is obvious, and this may be one of the directions for manufacturers to make efforts.
Mini games: Tencent's turnover growth rate is 50%, CMGE Games has a net profit of 600 million, and Gigabit is testing the water
There is no doubt that mini games have become a track for game manufacturers to compete in, and this track has indeed made many companies make money. Among the game manufacturers that have announced their 2023 results, more than 10 have mentioned the layout of the mini game track. Some manufacturers have been deeply involved and have achieved good results, such as Tencent, CMGE, and Palmfun Technology, while others are actively deploying or testing the waters, such as Celadon Games, Junhai Games, Perfect World, FriendTimes, XD, Gigabit, etc.
Tencent mentioned in its annual report that the total turnover of Mini Games has increased by more than 50%, and WeChat Mini Games has become the leading casual game platform in China. In the conference call, Tencent's management also said that it has not seen any encroachment between Mini Games and APP games, and only a single-digit percentage of APP game paying users are Mini Game paying users. Recently, the WeChat mini game platform has also expanded its user scale and continues to hand olive branches to manufacturers.
CMGE is one of the few manufacturers that directly gives specific revenue for mini games, and it said in its financial report that the company's mini game business revenue will exceed 600 million yuan in 2023, mainly from products such as "The Legend of Kyushu Fairy Sword" and "National Gun God: Border King", and mini games have become a new business growth point for CMGE.
CMGE believes that Mini Games has expanded the number of light gamers and increased the scale of new and active users, adding about 92.9 million new registered users in 2023, bringing the cumulative number of registered users to 700 million. This year, CMGE plans to launch more than 10 mini-game products, including "Country Love: Business Life", "The Legend of New Sword and Fairy: Sword Swinging Love" and "Naruto: Konoha Master".
Palmfun Technology, Perfect World, Celadon Games, Junhai Games, and FriendTimes have all indicated that they are actively deploying. Palmfun Technology mentioned that its mini game product "Great Sage Resists" has achieved good turnover performance after its launch, and new mini game products will be gradually launched in the future. Perfect World said at the earnings meeting that on the one hand, the company is to produce original lightweight mini games, and on the other hand, it will adapt existing games that meet the characteristics of mini games and increase the version of mini games.
Celadon Games is expected to launch mini-program versions of existing games such as "The Strongest Snail", "The Legend of New Sword and Fairy: Sword Swinging Love", "Card Girl Sakura: Memory Key", "Time Travel Agency" and other existing games, as well as a number of self-developed mini-games such as "Bullet Army", "Legend of the Lord", "Three Kingdoms" and "Project P95".
FriendTimes also mentioned in its financial report that a number of mini games have exceeded 10 million per month, and plans to convert the released APP games into H5 mini games. Wolong Real Estate, the parent company of Junhai Games, directly stated that the company will increase the development of mini-game products and enter the mini-game track.
Some people are bold enough to enter the game, and some people are waiting, such as Xinding and Gigabit. Gigabit CEO Lu Hongyan bluntly said at the financial results meeting that the company still maintains an attitude of suggesting that producers try mini games, mainly because the team does not have much experience in this field, and the company's strategic direction is still inclined to make global products. Lu Hongyan also said at the performance meeting that he would remind producers to pay attention to the mini-game platform, and "The Brave and Equipment" will also give priority to the launch of the mini-game version. However, the competition in the mini-game track is very fierce, and it may be difficult for them to make this product achieve particularly good results in the mini-game track.
In past financial reports, the performance of Mini Games has rarely been highlighted. However, this year, major companies have invariably included mini games in their reports, and have talked about their strategic layout at the performance meeting. It can be seen that the status of mini games in the minds of manufacturers, and at the same time, we also believe that this year, mini games will help some game companies rise rapidly.
AIGC: R&D efficiency improvement by 40%, art cost reduction by 40%, and labor cost saving by 300% in the cycle
Similar to the mini game track, AI is also the track that game manufacturers are currently focusing on. Game Gyro once posted a month ago that Tencent, NetEase, Sanqi Mutual Entertainment, Giant Network, Century Huatong, Perfect World and other game companies are deploying AIGC, and have certain actual combat results.
Giant Network once revealed to Game Gyro that through the large model of the company's internal CodeBrain code layer, combined with its own data and self-developed compiler plug-ins, it provides efficient code generation assistants for internal developers, and improves the R&D efficiency of this area by 30%-40%. Youzu Network also mentioned that the use of AIGC capabilities can save 20%-40% of art production costs, and the company's overall operation and maintenance costs decreased by 20% last year compared with 2022.
In the 2023 performance report of the game company, CMGE, XD Network, iDreamSky, Wangchen Technology, NetDragon, Shenzhou Taiyue, etc., all clearly mentioned that AIGC technology has been applied to R&D, reducing costs and improving efficiency.
At the same time, the game team continues to "feed" data resources with the characteristics of Shellwood games to AI software, and through continuous training and iteration, AI models with the characteristics of Shellwood games are trained to accelerate the creation progress of games and improve the user experience of game products.
NetDragon mentioned in its financial report that AI has been applied to all aspects of the company's game development and operation. From Q1 to Q4 2023, NetDragon's AI usage rate has increased from 14% to 58%. At the same time, benefiting from the training of AI large language models, NetDragon's labor hours saved with AI in the fourth quarter of 2023 increased by 300% compared with the first quarter of 2023. NetDragon said that the use of AI companionship has improved the experience of new MOBA games, increasing the retention rate of new users by 6.6% the next day.
Wangchen Technology bluntly said in the financial report that its new game "Codename: Operation Rugby" will continue to use the upgraded version of motion capture and human motion engine, artificial intelligence AI technology, and real audience rendering technology to maximize the restoration of the next-generation basketball experience. The company is also accelerating the application and R&D breakthroughs of AI-generated content technology and developing the layout of casual games.
iDreamSky has applied AI to the content and experience of the Fanbook community, and said in its financial report that in terms of content creation tools, we have integrated an all-in-one AI tool suite to provide strong support for creators. In the past year, we have successfully held a number of AI creation activities, attracting the active participation of more than 300,000 creators, and generating a total of more than 1 million excellent AI works.
From the actual AI combat situation revealed in the external exchanges and financial reports of the above-mentioned manufacturers, we can clearly see that the application of AI in the game field is increasing day by day. However, considering the huge investment in AI technology, we believe that before the advent of mature AI commercial tools, the integration of their games and AIGC by most manufacturers will still stay in the R&D and application stage of internal projects, and the large-scale application of AI will take a long time to ferment.
Middle East and North Africa: A new fertile ground for the development of game manufacturers, and Chuangmeng, NetDragon, and Pure City have received dividends
In addition to mini games and AIGC, the expansion of new markets is also the key to increasing revenue for game manufacturers. In this financial report and performance meeting, NetDragon, iDreamSky, and Childtown Technology all mentioned emerging markets - the Middle East and North Africa.
NetDragon entered the Middle East market in 2009 with its mobile game Conquest, which was once the most popular online game in the Middle East market and still brought tens of millions of dollars to NetDragon every month until 2015. Today, Conquest still has a significant market share in the Middle East in all language versions. NetDragon's 2023 financial report shows that the turnover of "Conquest" in Egypt, the overseas core market, increased by 12% year-on-year, and still maintains good progress.
Like NetDragon, iDreamSky also focused on the Middle East market at this year's earnings conference, and iDreamSky CEO Chen Xiangyu believes that this is a market with great potential. In March this year, iDreamSky took the lead in entering the Middle East, not only showcasing the game "Calabichu" at the LEAP Technology Show, but also signing a contract with the Saudi Cloud Computing Company (SCCC) to integrate the technology and resources of both parties to promote the development of the game and esports industry in the Middle East.
Unlike iDreamSky, which focuses on games as an entry point, Childtown Technology focuses on "social" in the Middle East, and the company has risen rapidly since 2015 after cutting into the direction of social applications going overseas, and has developed into one of the social giants in the Middle East and North Africa. Its "TopTop", "Mico", "SUGO Lite", "Dodo Chat" and so on have performed well in the Middle East market. According to the 2023 financial report, the performance scale of Childtown Technology in the Middle East and North Africa region increased by 30% year-on-year. At present, Childtown Technology is also trying live-action interactive skits in the Middle East market.
In addition to the above-mentioned manufacturers in the Middle East market directly mentioned in the financial report and performance meeting, Tencent, NetEase, miHoYo, Diandian Interactive, Lilith, Shellwood Games, etc. have all entered the Middle East. In February this year, Tencent's overseas game brand Level Infinite officially announced that "Honor Of Kings (overseas version of Honor Of Kings)" has landed in the Middle East, North Africa, Turkey, the CIS and South Asia. In March, NetEase officially announced that it would cooperate with Sandsft Games to establish a new company called Stellar Gate Games in the Middle East to introduce and publish more games for the Middle East.
Earlier, Dragon Simple's SLG war mobile game "Sultan's Revenge" and Diandian Interactive's "Whiteout Survival" were both successful in the Middle East. At present, some game manufacturers are trying to integrate social and voice elements into board games in the Middle East market to strengthen social attributes.
In their view, the Middle East game market has demographic dividends, market dividends and payment advantages, and is the highlight of the global mobile game market.
The "Research on the Culture and Game Localization of Eight Countries in the Middle East" released by the Gyro Research Institute also shows that by the end of 2022, the total population of the Middle East will be about 452.7 million, of which the average age of the population is about 25 years old, and the trend of younger people is obvious.
According to the report, the mobile Internet in the Middle East is growing rapidly, with Turkey, Saudi Arabia and the United Arab Emirates accounting for 80% of the market share of mobile app revenue in the Middle East. The mobile gaming market in Saudi Arabia, Egypt, and the UAE is expected to grow from $1.8 billion in 2022 to $2.8 billion in 2026, at a five-year compound annual growth rate (CAGR) of 10%.
Sensor Tower data also shows that the mobile gaming market in the Middle East grew by 7% in the first half of 2023, outpacing other major markets. Among the six Gulf countries, Saudi Arabia and the United Arab Emirates lead the rest of the country in terms of revenue, especially Saudi Arabia, with the world's highest average revenue per paying user (ARPPU) of $270.
Based on this market potential, Chuangmeng, NetDragon, and Chizicheng have all worked hard in it, and have also achieved good business growth. We believe that in the future, more and more listed companies will regard the Middle East and North Africa as an important region for going overseas.
Of course, in addition to the above-mentioned product flows, mini games, AIGC, and the Middle East and North Africa, there are many smaller details hidden in the 2023 financial reports and performance meetings of major listed game companies, such as multi-terminal interoperability, Hongmeng ecological mining, etc. What is reflected behind these details is that at a time of fierce market traffic and competition, major manufacturers are trying their best to tap more stock space and potential markets.