This article is from WeChat official account:Bonan Finance (ID: daxiongfan)< span class = "text-remarks">, author: Wong Chi Kin, the original title: “The Internet giant” original spirit “battle”
Author / Wang Zijian Source / Benban Finance (ID: daxiongfan)
“The Original God” set off the “arms race” of Dachang.
On the evening of March 14, Century Huatong issued an announcement that Tencent has invested 2.795 billion yuan in A-share game giant Century Huatong, which is in line with its frequent mention of “3A open world” at the Tencent Game Developers Conference in 2020; A day later, the producer of Netease’s 3A masterpiece “Codename: Twilight of the Gods” stated in an interview with foreign media that the game will support cross-platform connections between mobile phones, PCs, and consoles, and the mobile terminal will be the primary platform. This is the same as when “Original God” was launched. The configuration is the same; on March 13, the perfect world mobile game “Phantom Tower” action optimization PV was released. Within two weeks, the broadcast volume of station B was as high as 815,000, which was regarded by some industry insiders as the most completed “Original God” competition.
The popularity of “Yuan Shen” has proved the possibility of making new explosive mobile games for Dachang. Accumulating talents and technical advantages, creating 3A-level game explosions, and mastering the release of the next “Original God” is a new stage of strategy for game manufacturers.
According to SensorTower data, in February, Miha’s “Yuan Shen” mobile terminal attracted more than 117 million U.S. dollars in overseas funds. Since its launch in September 2020, “Yuan Shen” has won the top spot in overseas revenue for 5 consecutive months.
Compared with Mihayou, the two established players, NetEase and Tencent, have fallen into a growth bottleneck. According to the “China Game Industry Report 2020” jointly issued by the Game Working Committee and the Research Institute, Tencent and NetEase have 37.42%, 33.44%, 38.24%, and 1% of the game market share from 2017 to 2020, respectively.4.46%, 14.90%, 14.43%, the growth rate of both is less than 1%. The emergence of “Original God” provides a reference path for big companies to seek game territory expansion.
Can Yuanshen’s business model be replicated? Can it solve the growth anxiety of big companies? What changes will it bring to the game layout of major manufacturers?
01 Channel blocking
On February 3, 2021, “Yuan Shen” was launched on the Xiaomi App Store with a 7:3 share ratio, which was the same as the share ratio of “Yuan Shen” when it was first launched on iOS, Google, and Station B channels. In a market environment where domestic manufacturers and channel vendors are generally divided into five to five, some insiders interpret it as a concession of channel vendors.
The contradiction between channel business and R&D business is due to the control of traffic by traditional channels.
On August 1, 2014, Wanka Media teamed up with domestic first-line smartphone manufacturers: OPPO, vivo, Coolpad, Gionee, Lenovo, Huawei, Meizu, and Nubia to form a hard-core alliance, mainly for game development companies One-time access to omni-channel packaged functions.
The advantage of this intermodal distribution model is that mobile phone manufacturers control Internet access and have a lot of habits that have been cultivated and vertical traffic. Compared with traditional channel providers, mobile phone manufacturers can simultaneously cover multiple interfaces such as stores, desktops, lock screens, and browsers. At the same time, the high cost of mobile phone replacement can guarantee the number and loyalty of users to a certain extent. Coupled with the joint control of market share by the major mobile phone giants, the Hardcore Alliance has single-handedly formulated an industry standard of 50-50.
According to the “2019 Hardcore Alliance White Paper” released by Wanka in 2020, the penetration rate of the hardcore alliance among game users has maintained a steady increase, from 64.6% in 2018 to 65.7% in 2019. According to statistics from the Hardcore Alliance, as of October 2019, the total number of users of the App Store/Game Center under the Alliance has reached 715 million.
Resource barriers and high shares are the core of the contradiction between game manufacturers and channel vendors. Even large companies with integrated R&D and operations, when private domain traffic peaks, they have to turn to cooperating with hardcore alliances and look for increments in new traffic pools.
On New Year’s Day of 2021, Huawei Game Center issued an announcement stating that due to unilaterally significant changes in cooperation between the two parties by Tencent Games, Huawei will suspend related cooperation and remove Tencent Games from Huawei Mall.
Analyzed by industry insiders, Tencent hopes to increase the product share from 50% to 70%, and started negotiations with Android channels on this issue, but Huawei, as a member of the hardcore alliance, rejected Tencent’s proposal and still maintained a 55 share, which eventually led to Huawei delisting Tencent games.
This dispute finally ended with Tencent’s compromise. 18 hours later, Huawei once again listed Tencent games.
The same story happened in the gaming giant NetEase. At the end of February 2021, NetEase announced its 2020 Q4 and fiscal year 2020 results. In the subsequent conference call, Ding Lei said that China’s Android share is the most expensive in the world, up to 50%, and NetEase has several phenomenal games of 30%. %, such as “Fantasy Westward Journey”.
He believes that the current sharing ecology is unhealthy, which is very detrimental to the industrial ecology. He hopes that in the future, the Android market will be able to keep up with international standards in game sharing and maintain a 30% sharing ratio.
At the same time, NetEase CFO Yang Zhaoxuan revealed that the proportion of NetEase games from iOS channels can reach 50%, the proportion from Android channels can reach one-third, and the rest comes from the company’s official channels.
According to NetEase’s latest financial report data, in 2020, NetEase’s online game service revenue reached 54.61 billion yuan, accounting for 74% of total revenue. Operating expenses were 24.44 billion yuan, an increase of 37.6% over the previous year. This was mainly due to the increase in online game services and Youdao marketing expenses, as well as the increase in R&D investment and personnel costs.
As an Internet giant with the gaming industry as its main cash cow, the decline in channel sharing costs will give NetEase more room for maneuvering.
When mobile phone giants control most of the Android traffic resources, “buying” has become a common method for large companies to bypass channel sharing. The purchase distribution model, that is, the advertising of game companies for games, has the advantage of spending less money to obtain stable and high-value users from channels other than the app store.
But with the intensification of buying competition, this advantage is constantly being weakened.
According to the “2020 Mobile Game Annual Purchase White Paper” released by DataEye, the average daily online delivery volume in 2019 was 42,812 groups, and in 2020 it was 84,145 groups. The material delivery volume increased by 96.55% year-on-year. Among them, NetEase and Ali , Tencent dominates the top three positions of buying companies.
At the same time, according to AppsFlyer statistics, the customer acquisition cost of mobile game users in the Asia-Pacific region is the highest in the world, reaching $12.8 billion in 2019. Among them, China Mobile has the highest advertising cost, and the customer acquisition cost of game applications in 2019 is at least 50Billion US dollars, accounting for nearly half of the entire regional market. Head effect and fierce competition have become two major trends in the buying volume market.
The number of games and materials placed in the buying market has surged, and the competition for traffic by giants has further pushed up the cost of buying, which means that the buying market has gradually become a red sea. With the increase in purchase costs, “increasing revenue without increasing profits” has become a problem that plagues game manufacturers. Except for the official website, TapTap and Apple channels, the purchase distribution cost has even been equal to the intermodal distribution cost.
Generally speaking, the buying cycle uses LTV (total life cycle value) as the reference data. Such channel delivery is only valuable when the user’s LTV> new player imports the cost.
But with the decrease of incremental users, the revenue from purchases continues to decline. In the long run, the model of high-price purchase and distribution is unsustainable. How to find a third way to acquire customers, reduce the cost of acquiring customers, and tap the potential of users in depth are the answers that major game manufacturers are looking for urgently.
On September 15, 2020, the two-terminal game “Yuan Shen” was launched, providing a new solution for game manufacturers.
02 a completely different flow strategy
On March 13, a linkage between “Yuan Shen” and KFC was unexpectedly popular. It appeared on Weibo and Zhihu’s hot search list several times in a short period of time, and was even regarded as a positive case of cultural output. On the Reddit forum, some foreign netizens said that it was only through this joint activity that they knew that the epidemic in China had been brought under control.
According toBaidu Index shows that the popularity of linkage activities reached a climax on March 13th. Yuanshen related keywords have a popularity index of 94547 on PC and mobile terminals. At station B, which is more in line with Yuanshen’s two-dimensional attributes, related videos continue to dominate. Listed in the living area, and is close to the top ten in the whole station.
A linkage has undoubtedly revealed the enthusiasm and activity of the “Original God” game circle.
Usually, for classic mobile games such as Honor of Kings, social software binding + purchase volume + omni-channel operation is a common way to introduce users. What’s interesting is that behind Yuanshen’s frequent breaks, he did not see the shadow of excessive purchases and intermodal transportation.
According to the “2020 Mobile Game Annual Buying Volume White Paper” released by DataEye, the name of Mihayou did not appear in the TOP50 list of buying companies in September, but the name of Mihayou “September mobile game network popularity index TOP10”, Yuanshen popularity ranked seventh. As of today, “Yuan Shen” has not been launched by any operator of the hard core alliance, and its channel side only includes the B server that went online on September 28 and the recently launched Xiaomi server.
As the only channel that went online in the same month as the official server, Station B has always been the traffic center of “Yuan Shen”.
As of March 22, 2021, the number of followers of “Yuan Shen” on Baidu Tieba, bilibili, and Weibo were 950,000+, 5.34 million+, and 1.11 million+, respectively. Due to the rich story background of “Yuan Shen”, its secondary creations dominate the game area all year round, and multiple KOL single videos have more than 1 million views, which is very popular.
Obtaining core users through game quality, spreading influence through secondary creation, and breaking the circle with the help of public opinion is the core flow of Mihayou. Among them, accurate, highly sticky users and rich secondary creation environment are the main reasons why Mihayou loves station B.
On the one hand, compared with traffic platforms such as Toutiao, the users of station B are relatively vertical, with many young people, high stickiness, and mostly two-dimensional audiences, which are consistent with the main audience of “Yuan Shen”. Public data shows that the proportion of generation Z users at station B exceeds 80%, with an average monthly active user of 92.8 million and a user stay time of up to 78 minutes. The history of the establishment of the two-dimensional community has brought together a large number of ACG(animations, animation, games) people at station B. Although the atmosphere of the two-dimensional community has been diluted with the breaking of the circle of station B, ACG is still The basic disk of station B, which provides the soil for the core users of “Yuan Shen” development.
On the other hand, the video content community of Station B provides an environment for the secondary creation of “Yuan Shen”, plus “Yuan Shen” itself has a certain degree of content extension. A large number of secondary creation videos can not only provideTo increase the popularity and player activity of “The Original God”, you can also feed back the created content such as videos and emoticons that have been verified as high-quality products to the entire network. Through the community dissemination of station B, it is promoted to all users on the network to achieve the effect of breaking the circle.
Take the brand linkage of KFC x Yuanshen as an example. From the perspective of Mihayou, the essence of this brand linkage is the exchange of the reputation of the two parties, and complete the communication of higher influence at a lower cost; Yuanshen The reason for choosing KFC is not only the popularity of KFC, but the popular brand of catering is more conducive to “Yuan Shen” breaking the circle from the niche area of the second dimension.
Station B is the catalyst for breaking the circle.
On March 7th, the official announcement of the linkage of “Yuan Shen” on Weibo. Players purchase the designated package and say to the shop staff that “encounter in different worlds, enjoy the deliciousness” in order to obtain the linkage badge. This is extremely shameful. Gao’s password has directly become the best material for up masters to make complaints and pictures. Since the warm-up of the event, a large number of event videos with more than one million views have appeared at station B, and the boutique works have also been synchronized to other communities such as Weibo and Tieba.
Aside from the profitability of Yuanshen, the low purchase cost brought by high natural traffic and activity has made “Yuanshen” the target of capital competition.
03 Dachang genetic disease
But the road to copy the original god is destined to be difficult.
“As we started to make this product, including the gradual exposure to open-world game design, I found that we were stuck in a quagmire, getting deeper and deeper.” In 2019, Liu Wei, founder of Mihayou, was interviewed Memories.
Return the time back to January 2017. At that time, Yuanshen just started the project with an open game and set benchmarks for 3A masterpieces such as “The Witcher 3” and “The Elder Scrolls”. The initial R&D team is 100-150 people. , Which is twice the number of developers in “Benghuai 3”, to Liu Wei’s surprise, This number exceeded 400 people two years later, and the difficulty of making “Original God” has repeatedly exceeded expectations.
A disclosed technical detail is that an optimized change of the terrain system of “Original God” will disrupt the layout of other ground systems, greatly increasing the difficulty of the test. Open world production is like many precise gears, and every change of gear will cause a chain reaction.
In addition, unlike European and American game studios that have been immersed in the industry for more than 30 years and have rich experience in 3A game development, the Yuanshen team lacks open world development experience, which largely depends on the scarcity of domestic host platform development talents.
A set of data can be seen. According to public data, the total cost of the “Yuan Shen” project is about 100 million U.S. dollars, with a R&D team of more than 400 people, which lasted 3 years. Generally speaking, the average total cost of a 3A masterpiece in Europe and the United States is about 30-50 million US dollars. The investment in “Original God” is much higher than the total cost of the 3A masterpiece “The Witcher 3” is 80 million US dollars. The lack of research and development experience has led to developers The quantity and cost are much higher than expected.
For Mihayou, the cost of the development and distribution of “Original God” is already close to the total profit from 2014 to 2017. All-or-nothing is the methodology of Mihayou’s success, but it is inconsistent with the horse racing mechanism of major game companies.
The horse racing system is the mechanism by which big companies select popular games in competition. Generally speaking, due to the unpredictability of hot games, manufacturers usually adopt a strategy of decentralized betting and let go of the competition restrictions of multiple teams on the same track, in order to increase the probability of catching hot games, but this will also encourage various players. The studio focuses on short-term gains, as well as the inheritance and inheritance of old popular works.
As far as Tencent is concerned, according to the “China Mobile Game Research Report 2020” released by iResearch, in the best-selling list of China’s mobile game products in 2019, Tencent’s King Glory, Peace Elite, Happy Xiaoxiaole, etc. The 10 mobile games ranked in the TOP20, all of which are more capable of attracting gold and more oriented to the public, or similar to the old explosive game modes such as PlayerUnknown’s Battlegrounds. As for focusing on the niche areas of the second dimension and developing 3A-level open world mobile games, major game companies such as Tencent have never involved.
In fact, before the launch of “Yuan Shen”, 3A-level open world games did not have a channel in China.
Take the most industrialized open world game “Gu Jian Qi Tan 3” as an example. According to public data, the project cost a total of 40 million yuan, and it took more than 3 years to develop and complete by more than 50 people. steam 85% is very positive. But at the sales level, the game sold only about 600,000 copies within two months of its first release., The sales volume exceeded 1.36 million 600 days after the launch. After deducting the platform share, the game team’s profit was less than 100 million. This also led to the collective resignation of the core creators of “Gu Jian Qi Tan 3”.
The pursuit of stability and popularization is the key to maintaining the leading position of the company in the market, and it is also the root cause of the genetic disease of the company.
In March 2013, Lilith was established. The founder was Wang Xinwen, the former planner who left Tencent Northern Lights Studio. With popular mobile games such as “Legend of Dota” and “Awakening of Nations”, Lilith has become the head manufacturer of the sea in one fell swoop. Currently, it is also called Shanghai F4 with the three game companies of Mihayou, Eagle Corner and Folding Game.
At the same time, a variety of games such as “Tomorrow’s Ark”, “Banghang 3”, “FGO” and so on have also taken turns occupying various game lists since 2019.
When the mobile game market began to move from extensive growth to refinement, dark horses in subdivisions such as the two-dimensional element and tower defense frequently appeared. The imitation skin-changing game market had poor feedback, and cracks had appeared in the game layout of major manufacturers.
The appearance of “Original Gods” is forcing the “elephant” to turn around.
04 The battle for talent
Mad acquisitions are a precursor to transformation.
Public data shows that in the first two months of 2021, Tencent has invested in 18 game companies, including overseas boutique game “Famine” developer Klei, “Life is Strange” developer Dontond, etc.
On March 7, 2021, Tencent programmer Mao Xingyun issued a recruitment order on the Zhihu platform, and said: Tianmei Studio is preparing for the development of 3A console games, and it is a cross-platform 3A masterpiece including the console platform.
Eight days later, Tencent increased its position in the A-share game giant Century Huatong with 2.795 billion, and its shareholding rose from 5% to 10%, becoming the second largest shareholder.
Compared with the 32 game makers invested in the whole year of 2020, Tencent Games’ actions in 2021 have begun to become dense and tight. Since its shareholding in Mihayou failed, Tencent’s business engine has been poised to take off under the stimulus of the huge profits of “Yuan Shen”.
The clarion call for Tencent to enter the 3A territory will sound at the end of 2020.
In December 2020, shortly after the launch of “Yuan Shen”, the theme of “3A Open World” occupies most of the Tencent Developer Conference.
Liu Xinglun, marketing director of Tencent Interactive Entertainment, discussed how to help IP set a clear worldview based on the practical experience of IP construction in “Honor of Kings”. At the Tencent King’s Glory 5th Anniversary Celebration in early November, the trailer for “Code: Departure” released by Tencent was a 3A open world game with King Glory as the IP.
Wei Nan, head of Tencent’s engine core technology group, and Steve Martin, general manager of Lightspeed Studio, as the participants, shared the development process and technical experience of 3A-level games.
Sina Games and the Micro Hotspot Big Data Research Institute jointly released the “February 2021 Game Network Attention Analysis Report”, showing that in February 2021, Tencent Games’ MOBA mobile game king glory ranked 89.69 with a popularity index No. 1 on the mobile game list.
Based on the broad audience of the glory of the king, making it the next “Original God” may become one of Tencent’s strategies. And this Tencent Developer Conference is more like Tencent’s oath before entering the 3A game territory.
However, Tencent is not the only player participating in the 3A “arms race”.
On March 15, 2021, Ye Qian, the producer of NetEase’s 3A masterpiece “Code: Twilight of the Gods” mentioned in an interview with foreign media that “Code: Twilight of the Gods” is a sandbox strategy MMORPG game, and the mobile terminal is current. The primary platform, the game will support mobile/PC/host cross-platform connection.
“3A Open World”, “connect mobile phones, PCs, and host platforms”, consistent with the configuration when “Yuan Shen” was launched. This 3A masterpiece, considered by the industry as a benchmark against “Original God”, signifies the official entry of NetEase.
Nowadays, due to the lack of 3A game R&D talents in China, targeting foreign studios with 3A game R&D experience has become the consensus of large game manufacturers, and NetEase has also stepped up its recruitment.
On March 6, 2021, according to foreign media reports, Theorycraft Games, a new game development studio composed of Blizzard, Riot and former employees of V, received US$37.5 million in Series A financing. It is understood that this financing was led by NetEase The former “League of Legends” executive vice president Joe Tung served as the studio CEO; the former “Valorant”, “Overwatch” and “Halo” technical director Michael Evans served as the CTO; the former “League of Legends” global revenue and financial director served COO.
Unlike the newly invested Theorycraft Games, NetEase announced in June 2020 that it will establish a “focus on console game development”At the same time, Sakura Studios, at the same time, NetEase also mentioned in the announcement, “I hope that the establishment of Sakura Studios can accumulate the R&D experience and technology accumulated in the field of PC games and mobile games over the years, and combine it with Japanese R&D.” .
The seemingly contradictory argument was interpreted by the industry as the “Original God” with multiple benchmarks.
05 Concluding remarks
“The core issue of finance is stability and soundness. Whose life is the best for finance, not who runs fast in the short term”
Ma Huateng’s understanding of Internet finance is also a footnote to the action logic of game makers.
In the past, due to the difficulty, long cycle and high risk of 3A-level game development, they are more inclined to follow the successful game model and make a steady profit for the masses; the launch of “Original God” has opened up for major manufacturers The road to domestic 3A games has also made Mihayou the first successful gold digger in the 3A game sector.
However, the capital frenzy has caused the 3A game sector to start the storm. In the face of the gold rush brought by “Original God”, it can be foreseen: a huge investment of funds for admission and 3A R&D talents as soldiers. , The fierce battle based on the ownership of the second paragraph “Original God” is about to take place.