Text/Wang Xinxi
Apple's 30% tax (30% of the transaction for any virtual goods in the app must be given to Apple) has been controversial and is considered to be too high, but the tax on mobile games on domestic mobile phones is 50%. As the revenue of the game is getting higher and higher, and more and more people are being divided, Tencent has begun to rebel.
On June 19, the operation team of "Dungeons & Warriors: Origins" issued an announcement saying that due to the expiration of the contract, DNF mobile games will no longer be available on some Android app stores from June 20.
The "part of the Android platform app store" in the announcement refers to the official app stores of mobile phone manufacturers including OPPO, vivo, Honor, Lenovo, Coolpad, Nubia, Meizu, Huawei, etc., which is called the "hardcore alliance" in the game industry, which was established in 2014 and is mainly divided between game companies and mobile phone manufacturers, with a ratio of 5:5.
The hard-core alliance won 60%+ of the domestic application distribution channels, and at the same time controlled the mobile phone hardware, Tencent NetEase had to grit its teeth and pay a 50% share ratio.
However, 50% of the channel share is only for the game to be put on the app store, and the channel side does not guarantee additional exposure and traffic tilt. Game manufacturers often have to pay additional promotion fees to app stores if they want more users to download.
In other words, the 50% percentage directly divides half of the revenue of the game manufacturer, but it does not include other channel operating expenses, which means that the money earned by the game manufacturer is more than 50% of the mobile app store channel.
Apple's 30% commission has encountered many controversies and lawsuits around the world, but the Apple tax and Google tax (30%, which can be avoided through other payment channels) are insignificant in the face of the domestic mobile phone tax. The sales revenue of the domestic game market in 2023 will be as high as 302.9 billion, and the vast majority of them will be mobile games, which means that last year's commission of the hardcore alliance may have reached 80 billion ~ 90 billion.
Unlike Apple's tax, the hardcore alliance is only for games, while Tencent accounts for almost half of the domestic game market, and NetEase Games ranks second, accounting for more than 86%. This hardcore alliance is almost aimed at Tencent and NetEase.
Everyone is complaining that "the world has suffered from the 'Apple tax' and 'Android tax' for a long time", but Tencent NetEase has been suffering from the domestic mobile phone tax for a long time.
The DNF mobile game earned US$140 million (about 1 billion yuan) in the first week, making it Tencent's most profitable mobile game product in recent times. According to data from Sensor Tower, in the last 11 days of May, the revenue of DNF mobile games in the domestic iOS market has surpassed the revenue of "Honor of Kings" and "Peace Elite" combined, making Tencent Games' mobile revenue increase by 12% in May.
The hardcore alliance occupies more than 60% of the domestic channels, which means that the game will be divided by the hardcore alliance with 300 million yuan in revenue in the first week.
Game manufacturers are often the ones who don't get sympathy, especially game giants like Tencent. But to be honest, this share ratio is indeed too high, and this is still under the premise of Apple's 30% commission balance.
In 2020, miHoYo's "Genshin Impact" and Lilith's "Awakening of Kingdoms" gave up the traditional Android channel at the beginning of their launch and achieved good commercial results. Previously, NetEase CEO Ding Lei bombarded on the earnings call, "China's Android share market is the most expensive, as high as 50%, which makes no sense." ”
I didn't make a mobile phone in person, I'm afraid it will become a pity for Tencent
Today's situation is unexpected by Tencent, if Tencent knows that there is today, will it reconsider making mobile phones in person?
Around 2012, the domestic mobile phone industry chain has matured, in addition to Lei Jun, LeTV, 360 and other Internet companies have made mobile phones.
Tencent has QQ and WeChat, two major social weapons, and has a large amount of game cash flow, and later there are phenomenal hit games such as Glory of Kings, which have great advantages in making mobile phones and can build a strong hardware moat for their software empire.
Therefore, for a long time, many people have suggested that Tencent should make mobile phones, thinking that Tencent should make mobile phones. And Ma Huateng later responded to the outside world why he didn't make mobile phones, he said that Xiaomi is very successful in making mobile phones, and making mobile phones is not Tencent's specialty, Tencent is more focused on the service in the mobile phone, how to use hardware equipment to play its unique experience.
However, Ma Huateng did not expect that hardware is the first entrance, and controlling the power of software distribution can hinder the software ecology.
It is precisely because of the lack of mobile phones that the number one app store in Tencent's hand - App Treasure has also been lost.
In 2013, Baidu acquired NetDragon's subsidiary 91 Wireless for $1.9 billion, becoming the largest acquisition of China's Internet at that time. But Baidu didn't do it, and Tencent App Treasure became the largest app store in China in 2015. The position of the first channel of the app store is very important to Tencent.
Because this ensures that Tencent does not have to be constrained and taken by other app store channels, Tencent has a large number of APPs, and is the first game giant and the first social giant, maintaining its position as the first channel of the app store, which is equivalent to ensuring that its profits are not divided on a large scale.
However, with the fixation of the pattern of domestic head mobile phone manufacturers, mobile phone manufacturers make their own app stores and control user application download channels, and third-party app stores, including App Treasure and 360 mobile phone assistant, have lost the soil for survival at the hardware level, which is basically equivalent to being blocked. After all, hardware is the first entrance, and the app stores of mobile phone manufacturers control the dominance of APP downloads and game operations.
Before 2016, software manufacturers had more say than hardware manufacturers, and at that time, Tencent's cards were suitable for mobile phones: Glory of Kings, WeChat, QQ and App Treasure, a big killer. At that time, many people imagined that if Tencent bought a mobile phone and sent various members + price war model, it would occupy a place in the Chinese mobile phone market.
If Tencent can occupy a place in China's mobile phone market, then other manufacturers may not dare to take a 50% share, Tencent's financial report shows that in 2023, local game revenue will be 126.7 billion yuan. 60% of the channel share and 50% of the share mean that Tencent may be divided by the hardcore alliance 38 billion a year.
Who doesn't feel pain in this exchange? The huge income that is taken away every year, even if half of it is taken out, is 19 billion per year, which is used to invest in making mobile phones, and the probability of success will be very large. Whether it is a price war, or investing in hardware research and development, building factories, and doing supply chains, it is enough. At that time, Tencent was at least much stronger than Xiaomi in terms of financial strength and resources in hand. It is incomparable with general mobile phone manufacturers.
If Tencent is willing to invest heavily in costs, personally build mobile phones, and control the hardware entrance and mobile phone store entrance, once it succeeds, Tencent will have the capital to compete with other mobile phone manufacturers, and may be able to reduce the percentage of at least 20%, and the profit and revenue will be greatly increased by a step.
In the past 10 years, Tencent's software has always been in demand, with a strong right to speak, placed 7~8 years ago, if Tencent's software can not be downloaded in the hardcore alliance app store, and Tencent's own mobile phone can be downloaded, then this is likely to lead to the sales of other mobile phone hardware affected.
Therefore, if Tencent has a higher strategic vision at the beginning, there is a possibility of success in making mobile phones, sending members to various software privileges, etc., Tencent has a large number of means to do high sales of its own mobile phone hardware, but unfortunately, Tencent is too late to regret it now, the mobile phone market has been finalized, and now it is not a matter of throwing money to succeed, judging from the current situation, it is not a big regret for Tencent to make a mobile phone in person, or a major strategic mistake of Tencent. Thinking that 300 to 40 billion profits per year are divided by the hardcore alliance, Tencent may now regret not making mobile phones more than anyone else.
Author: Wang Xinxi, Senior Reviewer of TMT This article is not reproduced without permission