How do new game forces break through in the shadow of big factories?
Editor’s note: This article is from the micro-channel public number “Chaos University” (ID: hundun-university), Author: Chaos University Business team Xie aerospace, Support: Chaos Innovation Alumni Association.
At the beginning of 2021, App Annie released the “Annual Top 30 Chinese Manufacturers Going Global Revenue List”, which shows that in the past 2020, games are the largest source of overseas revenue for Chinese companies. Among them, there is a company that seems a little unfamiliar to outsiders-Lilith, which surpasses Tencent and NetEase, the two major domestic game giants.
Who is Lilith?
In the 2018 “List of Chinese Publishers’ Overseas Revenues”, Lilith ranked 20th; in 2019, Lilith rose to fourth; in 2020, Lilith once beat Tencent and NetEase, and continued In one quarter, it maintained its position as the number one publisher of Chinese mobile game overseas; ranked second in the whole year, still surpassing Tencent and NetEase, and second only to FunPlus.
In addition to her outstanding achievements in the sea, Lilith’s voice in China is not small. In 2014, Lilith’s first game, “Legend of Little Ice Bing” (formerly known as “Legend of Dota”), quickly became a domestic phenomenon-level product once it was launched. Three years later, Lilith successively released the self-developed strategy mobile game “Sword and Home”, the independent game “Abby”, etc., which also achieved great results after being launched. In 2020, “Sword and Expedition” was released in China, becoming the first dark horse in the mobile game industry in the beginning of the year. “Awakening of Nations” was launched on the national server and successfully created the highest income record for the first week of domestic SLG (strategy game).
For a long time, Tencent and NetEase have accounted for more than 70% of the Chinese game market. However, according to data from Guoyuan Securities Research Institute and Qimai, from the end of 2018 to the present, the proportion of Tencent and Netease in the top 30 games has gradually decreased, from about 22% to about 15%. At the same time, medium-sized game companies represented by Lilith, Mihayou, Folding Paper, etc. are rising rapidly.
Mihayou’s “Original God” once reached a monthly income of 245 million U.S. dollars, pulling popular mobile games such as “Glory of the King” and “PlayerUnknown’s Battlegrounds” off the altar.
The paper-stacked “Love and the Producer” has a turnover of nearly 300 million yuan in the first month, which is higher than one of Tencent’s trump cards, “Crossing the Line of Fire: Gunfight King”.
After Eagle Horn’s “Tomorrow’s Ark” went live, it set off a climax of second creation at station B. The first month’s flow was close to 600 million, which was higher than that of the month’s “Onmyoji”.
……
An increasingly obvious trend is that hot games do not need to be released by major manufacturers, and new game forces are emerging.
How can Lilith achieve rapid development in recent years? How do new game forces break through in the shadow of big factories? Behind the breakthrough, what changes have taken place in the game industry ecology?
Ride the momentum
In 2012, the iPhone 5 has not yet been released, and the tide of smartphones is surging. Wang Xinwen, who works in Tencent’s game department, is 25 years old. He started mobile games with two colleagues in his spare time based on his interest in game design. It took the three people half a year to make a small game. They confidently guessed whether the game’s revenue was 50,000 yuan or more, but after the game was launched, there were only a few hundred downloads, and the total revenue was 300 yuan.
Seeing this result, the three of them were not discouraged, but decided to start a business in a snap. Many years later, Wang Xinwen, who is already the CEO of Lilith Games, recalled in the article “The Failure I Have Experienced” that this decision was made because “the cruel real world is too fascinating and attractive.”
In this unsuccessful experience, Wang Xinwen also summed up two cognitions: You must do online games to have a large income; you must do an operation method suitable for touch screens, not a virtual joystick.
In 2013, Wang Xinwen, Yuan Shuai, and Zhang Hao founded Lilith Games. The next year, they launched the original action card mobile game “Dota Legend”, which made Lilith a blockbuster. After the launch of “Legend of Dota”, the turnover exceeded 100 million in the first month, smoothing out the entire card game circle and quickly becoming a national-level game at that time. It is also the sufficient benefits of this game that Lilith can develop card and SLG games in the next few years.
The first game became a hit. What is the secret to the success of Dota Legend?
Wang Xinwen once believed that the most important reason was innovation in gameplay. However, a few years later, when he introspected again, he saw the “general trend” of the development of the game industry.
“In 2014, the tide of mobile Internet really hit, and first-tier manufacturers such as Tencent and NetEase have not yet fully awakened. In the same year, we launched “Legend of Dota”, the quality is fully ahead of the market competitors, and fully meets the needs of the market. Innovation Is it important? It’s important, but it’s just one of many important reasons.”
According to the “China Mobile Game Industry Research Report” by iResearch, the market share of China’s mobile games surpassed that of web games for the first time in 2014, but there are very few that can be rated as SSS, less than 100.
New demand has been born, but high-quality games are temporarily absent. When the big factory did not respond, “Dota Legend” happened to appear. After “Legend of Dota”, Lilith continued to exert her strength in card games and gradually expanded to SLG.
misplaced competition
“Some game categories have very strong path dependence, such as MMO (massively multiplayer online games), competitive categories and other relatively large categories. These games are easily monopolized by large companies. So, for small and medium-sized manufacturers, Opportunities are more in the subdivision of the track.” When asked how Lilith breaks through the monopoly of big manufacturers, Lilith game producer Wang Yuanhang summed up four words: dislocation competition.
Looking at the successful mid-sized game manufacturers at this stage, each has its own subdivision track. For example, Lilith is good at card and SLG games, Mihayou is good at two-dimensional action games, and folding paper is good at female-oriented games…
“Lilith, Mihayou, these new game forces, they all have a characteristic, that is, they continue to iterate and innovate in a certain subdivision track, slowly launch more mature products, and summarize successful Product experience, and then followed by the introduction of popular models. For example, before the launch of the popular model “Yuan Shen”, Mihayou had the “Benghuai Xueyuan” series, from “Benghuai Xueyuan 1” to “Benghuai Xueyuan” “3” has been iterating and has accumulated 6 years of experience in the development of two-dimensional 3D actions.” Gao Dongxu, chief analyst of China Entertainment Think Tank, told Chaos Jun.
Gao Dongxu believes that Lilith had excellent products such as “Sword and Home” and “Sword and Expedition” before the release of “The Awakening of Nations”. Therefore, the emergence of explosive models is not accidental. “These companies are already A better working mechanism was formed before.”
Didn’t the big factories notice these potential small factories and small categories?
According to the “Late Post” report, as early as 2017, Tencent wanted to invest in game company paper folding, but felt that the two-dimensional and female track where the paper was folded was too small and eventually gave up.
A person from Tencent’s mutual entertainment told Chaos Jun that the flow of these small categories will not be too high, and big manufacturers will not care too much. “The ceiling of mini-category games is not high. Even if it is a relatively high-quality game like “Awakening of Nations”, the first month’s turnover exceeds 1 billion. This is considered very good in mini-category games. However, compared with Tencent’s “King Compared with head products such as Glory and Peace Elite, it does not pose a particularly big threat. Because as an old game, Glory of the King has been released for more than five years, and now its monthly flow can reach 30. Billion.”
“Generally speaking, when the game is first released, there will be more players. The new game “Awakening of Nations” does not have many advantages compared with the old game “Honor of Kings”. Moreover, not every small game Dao can produce products of the scale of “Awakening of Nations”. Therefore, the big manufacturers, especially the star product teams, did not think that these small categories must be done at first. The only thing that excites them is probably “The King”. Glory” this kind of mass product.”
Small track? Big track?
thisAre these small tracks really as insignificant as the big factory thinks?
According to public information, the net profit of Folding Paper, which was founded 7 years ago and Eagle Corner, which was founded less than 2 years ago, has reached 1 billion yuan; Lilith’s income in overseas markets once slapped Tencent and NetEase. In contrast, the established game company Perfect World, established in 2004, has a net profit of 1.504 billion yuan in 2019.
Facts have proved that the once “small track” may be stretched too much.
“The subdivision track looks very small. Maybe when it first started, no one could have imagined that this thing could be made so big. However, after the product quality is piled up to a certain level, it has a chance to break the circle.” Wang Yuanhang told Lord Chaos.
The track can be expanded because users can be migrated. “Players don’t label themselves, say they are a user of a two-dimensional game, or a user of a competitive game. For the player, this is a time for him to entertain. If a game becomes popular, as long as The player is not particularly repulsive of this type of game, he may try it.”
Wang Yuanhang said that this can be compared to film and television works. For example, suspense web dramas are a subdivision genre, but “The Hidden Corner” is so popular that a large number of viewers will watch it.
To think about it from another angle, in the subdivision track that big manufacturers are unwilling to do, medium-sized manufacturers have gone through intensive cultivation and made high-quality products, which attracted more players. At the same time, because medium-sized companies have a deeper understanding of the track, it is easier to make the next big hit on this track. In this way, a virtuous circle is formed, and the track is gradually expanded.
“You will find that the current new game forces, Mihayou, Lilith, Folding Paper… all have one or two competitive products in a certain track.” Wang Yuanhang said.
If we want to summarize the reasons for the rise of Lilith or medium-sized manufacturers, we can find two key points: First, they have found subdivision tracks that are ignored by the giants and can compete in dislocation; second, they can continue to work on these tracks , To make fine products, “stretch” the track, and achieve a single point breakthrough.
Before making a boutique, all innovation and exploration are suffering. This process from 0 to 1, Lilith walked for four years.
Wang Xinwen said frankly in his memory that because of the excessive pursuit of innovation, Lilith had hatched more than a dozen ideas inside, none of them succeeded, and the causes of death were also different. Moreover, the company has invested in 11 games externally, with a total cost of about 120 million and revenue of less than 30 million. Until September 2017, Lilith’s second self-developed game “Sword and Home” was launched, and the monthly revenue exceeded 100 million.
“Actually, “Sword and Home” couldn’t catch up with many hits on the running water. However, it allowed Lilith to plant the first seed. We began to have a deeper understanding of the SLG category. Slowly, the team I also continued to evolve, and then made the second and third…” Wang Yuanhang said.
The distress of giants
The rise of new forces has also aroused the vigilance of the giants: these subdivision tracks are no longer small.
At the beginning of 2018, Tencent Games initiated a “track strategy” internally. In addition to the original business line, a new track dotted line has been redrawn based on 13 vertical game categories, including the two-dimensional, female orientation, and survival sandbox. But it didn’t take long for the plan to come to an end.
Xiao Li, who works at Tencent Mutual Entertainment, told Chaos Jun: “For large companies, the cost of innovation will be greater. Although large companies have strong capabilities, they face greater pressure. In many cases, performance They are all guided by KPIs and traffic, so innovation will be more restrictive.”
It is reported that Tencent has tried a variety of methods to encourage innovation, but the best talents are also more inclined to mature businesses because of greater certainty and bonuses.
“Objectively speaking, Tencent is a large company, and the internal R&D mechanism of large companies will be more complicated. Unlike small and medium-sized companies that can focus on a certain field, they are more capable of trial and error.” Gao Dongxu said.
Moreover, the social network that Tencent is proud of also seems to have become an “obstacle” for it to develop new territories.
“Tencent has the largest social network in China, and its genes are more in channels. Tencent’s casual games are doing well, such as the National Series and Tiantian Series. Because Tencent is more social, casual games are easy to play Social networks are pushed up, and they will also become an important vehicle for monetizing traffic. On the contrary, for heavy games, Tencent’s self-developed products, except for “Honor of Kings”, there are really very few products with good reputation and profitability.” Gao Dongxu said.
Wang Yuanhang also expressed a similar view: “Tencent has QQ and WeChat, so its games, whether self-researched or agency, are mainly sold on these two channels. If you push back, Tencent will The type of game selected will also be affected by the “channel thinking”. The game it chooses will tend to acquire users on QQ and WeChat with the best effect and the most profitable type.”
This means that path dependence has led Tencent to tend to choose pan-user-type games, such as casual sports games like running karts. “To put it bluntly, the traffic in Tencent’s own channels is already very large, and this amount can no longer be used up. In this case, if the company wants to develop a new project internally, this project may have great potential in the future, but it is To use the shortcomings of your company, such a project is difficult to set up, and it is also stressful to do it.”
Know your opponents and confidants, and the rapidly emerging new game forces have not been dazzled by the results. Wang Yuanhang said frankly that there is still a big gap between Tencent and NetEase in terms of size. “Strictly speaking, Tencent is considered the first echelon, Netease is the second echelon, and the rest are the third echelon. Tencent occupies 50% of the domestic market. Share, NetEase accounted for oneThe remaining game companies share the remaining share. “
The end of “Channel is King”
Since giants have an overwhelming advantage in size, are they prone to monopolize?
“If in the early stage, a certain degree of monopoly may still appear, but today, with the increasingly segmented channels, the game industry is no longer likely to have monopoly.” Gao Dongxu said.
The rise of the mobile game market is accompanied by the popularity of smart phones. Public data shows that global shipments of smartphones reached 139 million units in 2008, and the mobile game market has also begun to take off; in 2009, the sales revenue of the mobile game market increased by more than 500% year-on-year.
(2008-2015 mobile game market sales revenue statistics, source: Qianzhan.com)
In the following years, the game market expanded rapidly, but industry standards have not yet been formed. As a result, inferior games and skin-changing games are mixed. So, how do users choose high-quality games from a large number of games?
Channel becomes the key.
At that time, strong channel providers included 360 Game Center, Baidu search related game recommendations, Xiaomi, Huawei and other mobile phone app stores, as well as Tencent App Store that appeared in 2012.
“Recall that around 2014, if users want to play games, open the app store or the rankings of 360 Game Center and download the games in them. At that time, 360 was a very powerful channel. For game developers, Let 360 or Tencent app treasure to push you for a few days, and the income of this game will be guaranteed. At that time, the overall level of the game was not high, and the number was large, so the channel side had a strong voice, and the merchants who mastered the channel were even more powerful. It is easy to form an overwhelming trend.” Gao Dongxu said.
However, the situation where channels are king has now changed.
In September 2020, “The Original God” and “The Awakening of Nations” will open beta, and the publishers Mihayou and Lilith are not on the mainstream Android store. This was unimaginable in the past, because for a long time, game manufacturers have relied on the traditional channels of the app store to reach users, and the app store extracts high amounts of revenue. In the Android system, the channel chamber of commerce splits 50% of the profits. Developers have raised unfairness, because game development is a longWork with cycles and high thresholds, and the channel business just puts the game on the shelves, they can get half of the revenue.
The two “fist products” of Mihayou and Lilith were not on the Android channel, which caused an uproar in the game circle and was regarded as the first time that developers had “hardened” with channels. After that, more game developers tried to break away from traditional channels.
The first one to eat crabs, what is the confidence of Mihayu and Lilith?
In recent years, the richness of game promotion channels and the continuous segmentation of user populations have allowed developers to see new possibilities.
Gao Dongxu introduced, “In 2014, six domestic mobile phone brands including OPPO, vivo, and Huawei established a hard-core alliance. Since then, the application treasure, 360 and other channels have begun to lose ground. In recent years, tapp, B station The distribution mechanism is very good, coupled with the Toutiao distribution platform, there are actually many platforms to choose from.”
At the same time, users are constantly being segmented, and different channels can reach different users, and the voice of a single channel has been weakened to a certain extent.
In addition, the game market has gradually developed from the original “barbaric competition” to “intensive farming.” The number of game products has decreased and the quality has improved.
In 2018, the relevant departments of my country’s games conducted a freeze on version number approval, and when it was restored at the end of the year, the issue of version numbers was tightened. Because of the strict approval of the version number, games can no longer be made by anyone who wants to do it. Inferior games and skin-changing games are all blocked from the threshold. my country’s games are developing towards quality.
Statistics from Gamelook show that in 2014, when the mobile game was booming, the number of mobile games released exceeded 5,000 in the first half of the year alone; and there were 1,213 mobile games that received version numbers in 2020.
In contrast to the decrease in the number of games, the number of distribution channels is increasing. Therefore, the right to choose has transitioned from channel providers to manufacturers of high-quality content.
“There are now a lot of direct investment channels. The popularity of Douyin, Guangdiantong, Huge Engine and other tools gives us the opportunity to directly face users. The specific channel to choose depends mainly on which channel. The reach effect is better.” Wang Yuanhang said.
Using “direct investment channels” means that game publishers use Douyin, Bilibili, etc. to promote the game, and use various marketing methods to attract players to the game’s official website for download. This is different from the traditional distribution method: the game is put on the app store, and players learn about and download the game from the app store.
Moreover, direct investment channels can also enable manufacturers to better understand users and conduct refined operations. “Through direct investment channels, we can obtain more valuable information. Later, we can use data analysis to feed back research and development, monetization and other links. If it is through traditional channels such as app stores, this data becomes a’black box’. There is no control ability.”
Today, the game quality is constantly optimized, Users are getting more and more fancy word of mouth, and the development of games has gradually turned into “content-driven”.
“In the early days of game development, the user’s habit was that I would play whatever you recommended to me. This is very similar to the logic of portals. Now it’s more word-of-mouth logic, such as social networking such as Moments. The platform, in fact, will reach better results. This means that it is now more and more suitable for high-quality content. Manufacturers can directly stand up to users, instead of relying on channel parties as in the past, so the premium of the brand will be It is more and more manifested. When the brand has a certain appeal, and even has some momentum overseas, users will find it. This is also the reason why the “Awakening of Nations” only has official website services.”
However, Wang Yuanhang also said that only high-profile products like “The Awakening of Nations” will adopt such a distribution strategy. Because only the reputation is good enough, can it gradually ferment and bring enough natural quantity. If the quality of the game is relatively poor, the reach effect will be weakened. At this time, we still need to rely on traditional distribution channels. “What kind of channel is used has a lot to do with the quality of the game.”
No matter from which point of view, the segmentation of channels and users ultimately gives small and medium-sized manufacturers more opportunities. “The current situation is that as long as your game quality is good, there will be no unreachable users.” Gao Dongxu said.
Ceiling
Most of the new game forces that have emerged in recent years originated in Shanghai. Mihayu, Lilith, Folding Paper, and Eagle Horn have been called the “Shanghai Game Four Little Dragons” by industry insiders.
Their development paths have a certain commonality: by virtue of the explosive games, they will be bigger and stronger in the subdivision track-Mihayou has “Original God” and the two-dimensional circuit; Lilith has “The Awakening of Nations”, SLG track; the folded paper has “Love and the Producer”, female-oriented track; Eagle Point has “Tomorrow’s Ark”, a two-dimensional track.
Gao Dongxu believes that the development of the game industry is also regional. Guangzhou game companies are better at buying volume; Beijing game companies have relatively strong comprehensive capabilities, but lack outstanding features. Shanghai’s game manufacturers generally pay attention to research and development, product quality and content. Not only that, Shanghai has the soil of the two-dimensional culture, and there are high-quality channels such as Bilibili that can reach “Generation Z” users.
“”Sword and Expedition”, “Original God”, “Love and Producer” are games that my friends and I like to play.” said Lanxizhen, a post-00 college student, but she also said that there are more people around I was playing “King of Glory” and “Eating Chicken”, and my hobby seemed a bit niche. “So when I saw the high water in “Original God”, I was a little shocked.”
When talking about the company’s development, Wang Yuanhang said that cultivating one or two tracks is equivalent to having a small territory. When launching the next product, the possibility of success will be greater. At the same time, because there are products that are out of the lap, it is easier to attract the trackThere are better talents, so a more virtuous circle is formed.
However, subdividing the track is a barrier to protect yourself on the one hand, and a ceiling for growth on the other.
Wang Yuanhang also admitted: It is difficult for major manufacturers to cut into the subdivision track, and for medium-sized game companies, it is not easy to change the track.
“Regardless of whether it is a large, medium, or small manufacturer, once they have their own competitive track, it becomes a difficult point to expand the track. In fact, everyone is now developing new categories of games, but some of them are unsuccessful. The sound in the market is not much. If one day a product succeeds, for the company, there will be an extra track, and the ceiling of the entire enterprise will be higher.”
A person close to Tencent Interactive said, “The game industry is striving for industrialization, with stable main personnel, continuous improvement in technology, experience, and aesthetics, as well as sufficient funds to continue to make good game products. The size of small and medium-sized companies determines that they cannot eat too many categories. However, one category is enough to eat for a lifetime, and most of the cross-category will die unless the threshold is very low.”
Although it is difficult to achieve cross-category, with the continuous segmentation of channels and user groups, more opportunities will emerge in the “niche track” in the future. The story of new game forces and big factories is not over yet.
(Interviewee Lilith Game Producer Wang Yuanhang is an outstanding student of Chaos Innovation Institute Class 2020)