Three ups and downs in 12 years, daring to change the rudder is a survival trick.
Text: "Chinese Entrepreneur" reporter Tao Tao
Editor|Li Wei
Header image source: Respondents
"I just hope that there is a field where I can ask out the girl who often stays at home. Recalling the opportunity to open the first offline secret room in 2012, Xu Aolin, the founder of the House of Mysteries, said frankly.
Because of this "careful thinking", Xu Aolin, who graduated from Beijing University of Foreign Chinese, and three friends who graduated from Tsinghua University, Renmin University, and Beijing University of Foreign Chinese and University together pooled 15,000 yuan, designed several puzzle-solving games, and rented a basement to do a side job. Unexpectedly, the secret room is getting bigger and bigger, and these four "scholars" who have decent jobs in the law firm decided to leave their jobs and make their side hustle their main business. They became the first batch of escape room designers in the country. That girl later became Xu Aolin's wife.
In the first interview with "Chinese Entrepreneur", Xu Olin was a little reserved, sitting upright at his desk, and the stacked paper on the computer with the lid closed in front of him was the container for his creative ideas to store his rushing thoughts. But when the conversation turned to the challenges encountered in the development of the game "Mountains and Rivers", this technophile who was not good at words suddenly opened the conversation, chatting and scribbling on the white paper that outsiders can't understand, as well as the twists and turns inside. His state of stumbling during research and development immediately has a sense of picture.
Mystic Home is a domestic designer of real-life creative puzzle games and real-life entertainment content, and the main body of the company is Beijing Zhenyu Soaring Cultural and Creative Co., Ltd. From offline escape rooms, offline VR spaces, puzzle books, to online games, this company has broken through in these entertainment fields that can be loaded into the core of puzzle reasoning.
The largest shareholder of the House of Secrets is miHoYo, with a 23% stake. miHoYo invested in Orbid House twice in 2019 and 2021. Among them, in 2019, the A2 round of financing of 40 million yuan was led by miHoYo. In March 2021, miHoYo once again invested in the House of Mysteries.
No matter how it transforms, Mystic House has excellent product strength, which is the reason why miHoYo, which has always been stingy with throwing an olive branch to content companies, has invested in it for two consecutive rounds.
But the House of Mysteries also has its own weaknesses. The four partners, who love mystery games and graduated from the law department, are logical and good at delving into puzzles, but they are not good enough at business models. Over the past 12 years, this company has experienced three ups and downs.
Around 2017, the House of Secrets operated more than 50 global chains. After the peak, due to the ceiling of single-store customer flow, heavy assets, difficulty in standardization, and high content iteration rate, the secret room business of the House of Mystery declined. Since then, the House of Mysteries has transformed into a VR experience space, a puzzle book and an online game.
Although the VR escape room experience space has reduced the cost of soft decoration and reduced the rental area, the model has still failed to be certified - the rigid demand of offline entertainment is not content, but socialization. "In the VR world, players can't see each other, and how can they socialize. Xu Aolin's tone raised, regretting that he should have clarified the core of offline entertainment earlier.
Although books that solve puzzles in real scenes such as subways solve the problem of asset lightweighting, the design, production, and inventory turnover of the books themselves have once again become challenges for operating publications.
After reviewing the two transformations, Xu Olin decided to let the team that is good at making content remove the non-content factors that may restrict revenue as much as possible when creating products, and focus more on monetizing through content.
So, in 2020, the House of Mysteries left all entities behind and played all online. Now, the second game of the House of Mysteries, "Mountains and Rivers", has achieved sales of more than 200,000 units on Steam, and Xu Olin feels that he has finally made the right move this time.
Fan paintings in the office of the House of Mysteries urge the game "Mountains and Rivers Traveler" to be launched. Photo: Tao Tao
In the past 4 years, offline entertainment has been in full swing, and many of the traders behind the secret rooms have left the market. Although Xu Aolin once rushed to explore the commercialization path of reasoning content, he was the one who knew how to turn the rudder, and the House of Mysteries anchored his own way.
The following is Xu Aolin's own statement:
Fall from the peak
In 2012, I played a particularly old offline escape room in China, and I felt that the quality was not good, so I wanted to build one on my own with a few friends on a whim.
At that time, I got together with three friends from Renmin University, Tsinghua University, and Beijing University of Foreign Chinese, and the four of us made a decision, designed a few puzzle games, rented a basement, and started the entrepreneurial process.
We both graduated in law and were working as lawyers at the time. At first, the start-up capital of our first store was only 15,000 yuan, the rent was more than 4,000 yuan, and the soft decoration was more than 10,000 yuan.
In the beginning, we used this humble secret room as a place to make extra money, and it was also a meeting point for a few buddies to hang out with friends. I clearly remember that our turnover in the first weekend was more than 700 yuan, and several founders were very happy to go to Haidilao and spend all the money, which was quite happy.
At that time, the secret room was also related to our love chances. I asked out a girl from a house in the secret room, and then I chased her, and now she is my wife.
Later, more and more companies at home and abroad made secret rooms, and our company's directly operated stores and franchise stores continued to expand. In 2012~2013, the cost of a single store of our escape room was about 500,000 yuan, and it could be repaid in about half a year.
Around 2017, the number of directly operated and franchised stores in China has reached 40, and more than a dozen overseas, covering New York, San Francisco, Toronto, London, Paris, Phuket, Melbourne and other places. For franchise stores, we only charge a brand franchise fee and a one-time content licensing fee, and the continuous revenue comes from directly operated stores.
The node of industry change comes from 2018. At that time, the offline secret room market was growing at an average annual rate of 60%, and the competition was becoming more and more fierce. The iteration of the secret room has also changed from the traditional secret room to the mechanical sound and light room, to the NPC (real role playing) secret room, and the immersive secret room (in which the player also needs to play a role and search for evidence).
The cost of the four stages is rising one after another. The input cost of a single store in a secret room has soared from 500,000 yuan to about 3 million yuan. However, consumers' spending power could not increase year-on-year, and our pricing rose from 80 yuan to 150 yuan, but later adjusted back to 120 yuan in order to increase customer flow. The efficiency of the single store continued to decrease, and we realized that the dividends of the secret room were fading.
In addition to the rising cost of a single store, the high content iteration rate is also a continuous dilemma faced by escape rooms. Due to the fact that the secret room reasoning has the characteristics of no repurchase, the theme content of the secret room needs to be redesigned every six months, and the soft decoration is also replaced simultaneously. This is another financial pressure for enterprises.
From the perspective of content, offline secret rooms also have the problem of difficulty in copying content standards. For the same theme, content adjustments may be made in different spatial areas, so the franchise model is not just a batch copy.
In addition, as a content creator, I especially hope that the games I design can be experienced by more players, but due to the geographical location of the offline secret room, I "whisper" to make a theme, which may have a maximum of tens of thousands of customers, and lack a sense of achievement. The biggest limitation of the content of the offline secret room is that the scope of radiation is too small.
Stop loss and stop loss
In 2017, the secret room is still a pig on the tuyere, but the competition in the industry has become more and more fierce.
At that time, several of our partners heard that there was a large VR offline experience brand in the United States, the Void, and they also received investment from Disney. The logic of this offline entertainment experience is to move the gameplay in "Ready Player One" to the VR experience store, the offline space required is smaller than the secret room, the store assets are light, and the content distribution and iteration have nothing to do with the site structure, which is easy to standardize.
A VR experience store only needs 6×6 square meters of space, the decoration is almost zero cost, and the only hardware is to prepare a computer backpack device, a pair of VR glasses, and a pair of handles for each player. These seem to be "perfect" solutions to the commercial bottleneck of traditional secret rooms. We were all moved and started to build a VR experience store business from 0.
In 2017, when the cost of a single store in the secret room rose to more than 2 million yuan, the cost of our VR experience store could also be controlled at 500,000~1 million yuan. At the beginning of its opening, the revenue of a VR experience store in just 3 months was worth a whole year of a secret room. As a result, we quickly expanded our stores to 10 stores, and even began to develop VR full-link product sensors, handles, etc.
Unfortunately, the good times were short-lived. Half a year later, the customer flow of the VR experience store began to fall off a cliff. At that time, before one store could be renovated, the other had already closed due to losses, and had to pay liquidated damages to the landlord.
After some research, we realized that the need for offline entertainment lies in social networking, not content. When you are young, why do you brush A and B rooms? Some people really like secret rooms, but more players want to experience the restless youth, in order to have a party and social field with friends. For example, if we don't go to the secret room, we will also go to KTV and play script killing.
Looking back at the problems of the VR space, we know that its biggest flaw is that it blocks social attributes. Today's VR products struggle to do facial capture, hoping to return the blocked social scene to the player. This is theoretically possible, but the current skeletal drive, demeanor capture, and human interaction are still far from being human-acted. Players playing games in offline VR experience stores are not much different from playing VR online at home. In addition, when a girl takes off her helmet, her makeup will be spent, and she will not be able to maintain her beautiful appearance in front of people.
When these problems came up one after another, we were hesitant to close the VR experience store business. But when one of our partners visited the Void and found that its experience was no more than that, he cut the business even more determinedly.
God has closed a door for me and will always open a window for me. After the short-lived VR experience store model, we did a lot of reviews and decided to re-examine the offline content industry and look for a better product form.
At that time, our answer was - puzzle book. The puzzle book was inspired by the fact that when I was riding the subway in Tokyo, I saw a lot of people looking around in the subway, and then I learned that it was a game called "Subway Escape" that solves puzzles in a real-life subway based on prop clues.
The puzzle book has zero assets offline, and this product once again makes me see hope when I am stuck in the product form. Since then, we have also developed relevant books, and at the same time developed an online APP, so that players who cannot collect evidence on the spot can also restore the scene online to play, and the business model is that the book is paid and the APP is free.
The mystery book business of the House of Mysteries has gone much farther than the VR experience store, and it is also the revenue engine of the House of Mysteries, with the revenue of the three books in the Forbidden City "Mystery Palace" series alone reaching 150 million yuan, and the revenue of other puzzle books has also reached more than 10 million yuan a year. In 2020~2022, we will gradually shut down offline secret rooms, and the revenue of puzzle books will account for seventy or eighty percent of the company.
However, the puzzle book also has its own business model bottleneck - the peripheral attributes of the puzzle book product are too strong, and in its cost proportion, a large part of the money has to be spent on IP licensing fees, appearance packaging, binding technology, etc., and there is very little part of the price that reflects the value of content design.
For example, a copy of "Subway Escape" needs to be handed over to the printing house for production, and the cash flow is quickly gone, and the output of books is not easy to estimate, and some publications are still piled up in warehouses.
This is also the reason why we do product crowdfunding in advance - we can predict the sales of the product to a certain extent according to the fundraising, but the prediction may also be biased.
All in游戏，内容为王
After two business transformations, Orbi House seems to be getting closer to the business model that suits us, but it still fails to find the best path.
Coincidentally, in 2019, I had a meal with Big Viagra (Liu Wei, co-founder and chairman of miHoYo). He heard about the ups and downs our company has encountered along the way, felt that he had a lot in common with miHoYo, and learned about the different forms of reasoning product content we have been doing, so he hit it off, invested in us, and encouraged us to do online transformation.
miHoYo's funds, product strategic planning, operations, and distribution, as well as the various supports provided to the House of Mysteries, have become the foundation of our All in online games.
At the beginning of 2021, we launched our first reasoning game, Mimo, which took six months to build, and received a high score of 9.4 on TapTap. On January 31 this year, it took 3 years to create a detective game "Mountains and Rivers Detective" set in the Qing Dynasty, which was first launched on the computer Steam platform, sold more than 200,000 sets, and won a reputation of 9.7 points.
Source: Screenshot of the game "Mountains and Rivers Travel".
The business logic of independent games is relatively simple, the revenue is mainly C-side payment, and the expenditure is development and publicity costs. In addition, steam's platform revenue method is 30% of the game's commission, and there is no need to do streaming, and TapTap can do streaming, but the cost of indie games on this platform is generally not high.
This also means that the distribution and operation of games is relatively easier than offline entertainment business and publishing business. For those of us who are better at making content, today's Mystery House, all fixed assets, inventory turnover, store standardization and other issues no longer exist, we only need to focus on content. This time, I feel like the company is finally on the right track.
At present, the revenue of "Mountain and River Travel" can also prove this. The cost of our game business is about 15 million ~ 20 million yuan, according to the domestic release price of 58 yuan and overseas about 100 yuan, minus the 30% commission of the steam platform, about 300,000 ~ 400,000 copies of the game can be repaid.
Looking back on the past 12 years, the house has always had a good reputation, the main advantage is that the four of us are lawyers, we are all very rigorous, and we have been deeply engaged in the content, and our creative enthusiasm has never been reduced.
For example, we have a resident development team of about 16 people, including me, more than 10 planners, several programmers, and a history consultant and a forensic consultant to ensure that the plot of the game is plausible.
During the development period, I got up at 4 a.m. every day, went to bed at 10 p.m., studied history when my mind was exhausted, flipped through a lot of mystery books and materials, and summarized the differences between the product form of mystery games and mystery novels - mystery novels can share information with readers without difference, as long as there is a shocking ending, while online mystery games need to be fair to players' information, all clues are completely laid out, and the logic must be particularly rigorous. Only by grasping the logic of product content can we do a good job of the product.
But in terms of business model, we still have some detours.
It takes courage for a strong man to break his wrist, and for me, the most wrong decision I made was to let everyone have something to do, and I made a decision that I thought would save everyone's job but was actually wrong.
For example, the revenue of the VR experience store has declined dramatically in half a year, but I am still throwing money into it, and it will not be closed until one and a half years. But fortunately, we were able to stop the car in the end, and with the blood transfusion of external funds, we survived to this day.
At the beginning of the establishment of the company, at the age of 24, I wanted to "stand up" and rely on the self-reliance of the company I founded, and now, at the age of 36, I began to think about "not confused", and I know more than ever the corporate positioning of the House of Secrets: not to do bells and whistles, focus on doing a good job of content.