Tencent Games in the past two years: there are many layouts, but there are few victories

Text: Eye Entertainment

Tencent Games in 2023 wants to make a difference.

This change was clearly stated by Ma Xiaoyi, senior vice president of Tencent Games, at the press conference of Tencent Games in the same year: "Tencent Games is transforming from a platform company to a product-based company. ”

From the product layout and market strategy of Tencent Games in the past two years, we can observe several important changes.

First, Tencent Games' sensitivity to market competition has increased significantly.

Tencent, which is known for its "learning and transcendence" strategy, has obviously strengthened its capture and response to the dynamics of competing products after missing the opportunity of the two-dimensional game market in 2020, especially in those game segments with huge potential.

Take NetEase's "Egg Boy Party" as an example, this game, which was initially rated only "U-rated", quickly attracted Tencent's attention after attracting a large number of post-00s players and showing strong social potential. Tencent responded quickly, gathered a lot of resources, and quickly launched its core product "Yuanmeng Star" at the end of 2023.

"Egg Boy Party" has achieved a significant increase in turnover since October 2022, and has made a qualitative leap by the first quarter of 2023. If we regard this time period as a period of discovery of market opportunities, and extrapolate Tencent's entire timeline from game decision-making, R&D to final launch, Tencent has undoubtedly demonstrated extremely high execution and market sensitivity.

Second, Tencent Games' layout in the game field is becoming increasingly diversified and intensive.

This all-encompassing strategy for game category coverage is different from the previous strategy of diversifying game publishing by relying on a wide range of affiliate businesses.

Now, Tencent Games is paying more attention to filling the gaps in its own game categories, and even trying to invest in some niche markets, showing a strategic posture of casting a wide net.

This strategy has already brought some unexpected success to Tencent Games. For example, the "Dark Zone Breakout" in the open beta in July 2022, a game similar to the "Escape from Tarkov" style, was originally a niche in FPS games due to its high difficulty and unique "gold + withdrawal" gameplay, and the initial audience was limited. However, in 2023, the gameplay has gradually gained popularity through channels such as live streaming, and the number of registered users has reached a staggering 80 million in 2023.

Third, Tencent Games has shown a more cautious attitude towards its commercialization strategy.

Especially when entering new areas of the highly competitive market, Tencent pays more attention to whether it can stabilize its market position and occupy a certain market share than short-term game revenue.

For example, "World of Taris", which was launched on June 12 this year, as an MMO game, does not rely on point card fees, nor does it sell any numerical goods in the game. Tencent has even invested in subsidizing the head of the team to promote the rapid formation of social relationships in the game and improve the familiarity of the dungeon gameplay.

More recently, in July, Tencent Northern Light Studio launched "World Qiyuan", which had a big impact on the price system of the SLG game market. On the basis of the price reduction of Station B's "Three Kingdoms Plotting the World", "World Qiyuan" intensified the price war on the SLG track through a more favorable pricing strategy.

According to official data, the five-in-a-row gacha of "World Qiyuan" only costs 388 gold coins (equivalent to 38.8 yuan), and the probability of gacha for five-star characters is as high as 6.66%, and the guarantee mechanism is also more player-friendly, only 20 draws. In contrast, the price of traditional top SLG games is usually maintained at about 95 yuan, the probability of five-star characters is 5%-6%, and the number of guaranteed card draws is as high as 30 or even 40 times.

In terms of results, Tencent's strategic transformation has indeed paid off. In overseas markets, which also pursue long-termism, Tencent's international game business revenue increased by 14% in 2023 to 53.2 billion yuan, accounting for 30% of Tencent's total game revenue, becoming a new driving force for Tencent's game development. This growth trend continues in 2024, with sustained growth in the first two quarters.

However, in the domestic market, Tencent's performance has not been satisfactory. In 2024, if it were not for the sudden rise of "DNF Mobile Game", the overall performance of its domestic game business may decline. Previously, most of Tencent's game products in multiple tracks have also encountered varying degrees of difficulties.

Let's start reviewing Tencent's game layout from 2023:

In February 2023, Tencent launched the large-scale apocalypse-themed SOC game "Dawn Awakening: Vitality" developed by Photon Studios. Developed over several years by a team of more than 300 people, the product is the largest game Photon Studios has ever revealed.

It targets the doomsday-themed SOC segment, competing with NetEase's 2018 launch of The Day After Tomorrow. Although the product life cycle of this market segment is long, such as "The Day After Tomorrow" after 5 years of operation, the turnover in February this year can still be among the TOP50 list. But "Dawn Awakening: Vitality"

Only after reaching the peak of turnover in March after the open beta, it began to decline gradually. Starting from June 2023, its turnover has gradually lost to its competitors on the same track.

In the two-dimensional track, Tencent's previously laid out two-dimensional game products have also ushered in a centralized launch period, including "White Night Aurora", "Singing Tide", "Back to the Future: 1999" and many other works.

In order to attract players, "White Night Aurora" adopted a low-price strategy and reduced the price of a single draw to 2 yuan. This strategy led to the top of the iOS free charts on the first day of launch, and the number one hit on platforms such as TapTap and bilibili. However, the game's performance then descended into mediocrity.

In contrast, Back to the Future: 1999 was initially questioned by players for its quality due to its similar charging model to Genshin Impact. However, with the excellent performance of multiple versions, the game has achieved a stable income of more than 100 million monthly turnover in May 2024. Still, in the highly competitive two-dimensional game market, "Back to the Future: 1999" is still not enough to help Tencent gain a foothold in the field until 2024, when Kuro's "Singing Tide" appears.

At the end of 2023, Tencent launched "Dream Star", which competed fiercely with "Egg Boy Party", which has already taken the lead in the party game market. In this "Netteng War", although both sides invested a lot of publicity resources, in the end, "Yuan Dream Star" failed to seize the party game market with the post-00s and post-05s as the core target users. According to the analysis of Eye Yujun, in this kind of social game with young users as the main body, the first-mover advantage is crucial to the success of the game, because the game itself can precipitate and develop more social relationships. After missing out on this core player group, Tencent's carefully crafted "Yuanmeng Star" fell into the dilemma of missing target users.

Entering 2024, Tencent's performance in the two major game genres of MMO and SLG is still unclear. Although Tencent is no stranger to these two types of games, past products often lack a strategy for long-term operations. The MMO game "World of Taris" and the SLG game "World Qiyuan" launched this year have restrained their business models, but the market performance has not yet met expectations.

Specifically, "Taris World" came into being after the success of NetEase's "Against the Cold" mobile game, with the original intention of creating a multi-terminal interoperable MMO game that does not sell values and focuses on the game experience. The timing of its release is also quite clever, coinciding with the breakup of Blizzard and NetEase, with the intention of competing in the Western fantasy MMO market with the Eastern martial arts MMO market represented by "Against the Cold". However, the open beta unexpectedly coincided with Blizzard's return to the market, resulting in its July turnover falling short of expectations.

Affected by the success of Station B's "Three Kingdoms Conquers the World", the recently released "World Qiyuan" has greatly reduced the in-game payment and time-consuming requirements during the open beta, intensifying the competition of SLG games in terms of cost performance. However, due to the close proximity to the open beta time of "Three Kingdoms", and the latter has already occupied the market dividend as a pioneer of reform, the preferential measures of "World Qiyuan" have not attracted much attention among the player group.

Tencent's key layout of games from 2023 to the present has failed to achieve the expected results due to many reasons. Although the specific situation may vary from game to game, there are still some common factors from the perspective of the domestic market environment and Tencent's market strategy.

In the past, Tencent Games had an advantage over its competitors mainly due to two aspects:

First, Tencent Games is able to keenly grasp the upcoming popular gameplay, and quickly iterate the game to improve the user experience with strong execution and optimization capabilities, thus forming a gap with competing products.

The second is to empower the game through its huge traffic resources, push the niche game category to a broader market, and then create a hit.

This strategy is especially effective in areas where the gameplay is outstanding, but the market size has not yet been formed. For example, Tencent used the popular IP "League of Legends" to develop the auto-chess game "Battle of the Golden Shovel", and with the popularity of the auto-chess game on mobile, the number of users of the game has surged, exceeding 10 million daily active users in the first quarter of 2023 and growing to 15 million in the second quarter.

However, in more gaming areas, this strategy is currently not working. The primary reason is a change in the traffic environment. According to the 2024 Mobile Game Market Report released by data.ai, global mobile game consumer spending will decline by 2% year-on-year to US$107.3 billion in 2023, marking the second consecutive year of decline.

The game choice of veteran players is no longer only affected by platform recommendations, they will comprehensively consider multi-dimensional information such as game ratings, player evaluations and blogger evaluations. This leads to a gradual decrease in the value of traffic and channels. The previous breakup of Tencent and the Android channel also reflected this trend, that is, when the channel could not provide the value of the past, the channel sharing fee became the focus of conflict between the two parties.

It is worth noting that Tencent, as one of the largest traffic sources in China, has also been seriously affected in its game publishing capabilities. What's even more tricky is that the player base has formed a certain stereotype of Tencent games. This kind of problem is common among large game companies such as Tencent and NetEase, resulting in more explanation costs for them in the transformation process of the past two years. Under Tencent's extensive marketing strategy, this stereotype from players makes Tencent Games have strong promotional traffic, but it lacks a matching conversion rate.

At the same time, Tencent Games' advantage on the other hand, that is, the ability to quickly optimize games brought about by strong execution, is now also facing challenges. With the continuous improvement of players' requirements for game quality, compared with two or three years ago, the innovation of most game genres in gameplay has approached the limit of the current framework, making it difficult for Tencent Games' late-mover advantage to achieve a significant breakthrough in player experience. Taking the dark horse games that have emerged in recent years as an example, in addition to products that fill the gap in the mobile market such as "Dark Zone Breakout" and "Egg Boy Party", only games like "Against the Cold Water" and "Three Kingdoms" that have achieved subversive innovation in the original MMO and SLG categories can win the favor of the market and win new market share.

It is not easy for an elephant to turn around, and the larger it is, the more sensitive it becomes. For Tencent Games, although there are no obvious limitations in terms of resources and capabilities, it still needs more time and close cooperation from goal setting to distribution system to give birth to truly breakthrough and innovative game products.

At least in the domestic market, there is still a longer waiting period for the results of Tencent's game transformation.