Shulou(Shulou.com)11/24 Report--

Li Chen, who works in Tencent Games's strategic department, finally doesn't have to be as busy as last year.

According to public investment data, Tencent made only 11 investments as of September 2022. Judging from the Q4 product reserve, game companies such as Tencent and NetEase have no plans to release new games. Tencent has only 13 games online in the first half of the year, while NetEase has only 6 games online, which is unusual in previous years.

The 2022 year of "lie flat" is very different from the radical two years from 2020 to 2021. In the past three years, Tencent has invested in 37 and 92 domestic and foreign game development companies respectively. In 2021, Tencent invested in a project nearly every four days and unveiled 60 new games at its annual game launch.

It all started in 2020, when James Mitchell, chief strategy officer of Tencent, thought that Tencent Games's return on investment in recent years was too good to be a good phenomenon. It shows that we have seen too little and there are not enough investment cases.

But the deeper reason is that Miha Youyou's original work "the original God" has emerged as a new force this year, which has since broken the record of "the fastest $1 billion in revenue game", which previously belonged to games such as Tencent's Arena of Valor.

At the same time, the growing Mihayou rejected Tencent's investment, making Tencent aware of the need to get involved in these popular games earlier and replicate the success of investing in South Korean Nexon and American fist companies. But in the past two years alone, Tencent has put aside this obsession and changed its game investment in casting nets. At first, Li Chen did not have to worry about "missing the next original god" every day.

According to statistics, Tencent invested in at least 11 game companies worldwide in the first three quarters of 2022. While the frequency of investment has been greatly reduced, there are only a handful of new games online. Tencent currently focuses on Arena of Valor's overseas version, while other games are mostly updated iteratively; NetEase, another major game company, focuses on "Diablo: immortality" only on Q4.

"We still have some ideas about going out to sea," Li Chen said. Tencent and NetEase suddenly hit the brakes in the game field, which is also a prediction of the overall market prospect.

According to the financial report, the total revenue of Q2 Tencent Games in 2022 was 42.5 billion yuan, down 2.5% from the previous month and 1% from the same period last year. Among them, the domestic game market fell 1% to 31.8 billion yuan, and the international market game revenue fell 1% to 10.7 billion yuan. NetEase's game revenue fell to 9.43 billion yuan in the second quarter, down 12% from the previous quarter.

The market leader's game revenue fell for the first time, making it clear that the best times are no longer the best.

The market is getting colder, with data showing that there were about 666 million game users in China in the first half of 2022, down 0.13% from a year earlier-the first year-on-year decline in the number of domestic game users in seven years. According to the 2022Q1 Global Mobile Application Market report, the global mobile game market revenue during the period was about $21 billion, down 7 per cent from a year earlier.

The entire game market has entered the stock market, and it is difficult for giant players to break through the ceiling.

Over the past 10 years, the game, as the most efficient "money printing machine", has been tightly held by Tencent and NetEase. Ali, Baidu, byte and other big companies have had an impact, but have not achieved significant results. Now, with the first decline in revenue from games such as Arena of Valor and Game for Peace, Tencent's Krypton Magic Wand is no longer effective.

Zhang Qiang, who has worked in Tencent Photon Game Studio for more than 5 years, has witnessed the development of Tencent's two "pillar" games.

Zhang Qiang initially operated League of Legends and made a contribution to the localized UI of the game. The deepest memory is that the online "PUBG" mobile game. At that time, the foreign blue hole company's "chicken eating" game PUBG was launched, while domestic NetEase took the lead by launching the same "chicken eating" type of game "Terminator 2: judgment Day".

Tencent also adjusted rapidly, quickly setting up a team of 200 people in 2018, and launched "PUBG: exciting Battlefield" and "PUBG: whole Army assault" in less than two months. "Photon Studio has more than 4000 people, but in many places at home and abroad, it is already a big project to pull up a team of 200 people directly in Shenzhen."

At that time, just after the online "chicken eating" game, a lot of UI was not perfect and adjusted back and forth several times. With the help of Wechat and QQ promotion channels, the game "PUBG" quickly became popular. In 2019, Tencent, which got the version number, renamed "PUBG" to "exciting Battlefield" and began to ride off the dust in the market.

In fact, missing out on Moba-type games in the mobile field, NetEase really wants to defeat his old enemy in the field of "chicken eating" games. So after "Terminator 2: judgment Day", and then online "Wild Action" and other eight "chicken eating" games, so a "eight British War Lv Bu" (exciting battlefield) scene began to play.

However, due to the lack of version number, social flow blessing, game quality and other factors, NetEase's "chicken eating" game has not yet won the domestic market. As a result, NetEase quickly adjusted and sent "Operation Wilderness" to Japan and other places. Taking the lead in seizing the opportunity this time, coupled with the lack of competition from social giants, NetEase finally made a comeback in the Japanese market. At present, "Operation Wild" is already a national-level game in the Japanese market.

Although NetEase lost the battle of "eating chicken", he did not get nothing. In the previous rounds of mobile games, NetEase did not achieve more results.

In the Moba era on the PC side, Tencent achieved unprecedented success by investing in the boxing company's League of Legends game, which had more than 600 million global players by the end of 2021.

NetEase bet on the "Storm Hero" of Blizzard. The game paid too much attention to team play and did not succeed. On July 9, Storm Hero announced the suspension of service operations. In the era of mobile Moba, NetEase launched "decisive Battle of Ping an Jing", which did not achieve the same success as "Arena of Valor".

In fact, no matter Moba, FPS and other game modes, NetEase is not good at. NetEase is good at games such as MMORPG and ARPG. From lies to dreams, and then to the ghost of beautiful women, NetEase has relied on these games for nearly 20 years. In the era of mobile games, NetEase also successfully created classic games such as "Onmyoji" and "Fantasy West Mobile Tour" through self-research and classic IP mobile games.

But real-time competitive games such as Moba are naturally more popular in the market than round-based games, and more importantly, competitive games are easier to krypton. In the case of League of Legends, which has a large number of players, the owner of e-sports Club once revealed that a cooperative game team Logo avatar sells for 30 yuan and Tencent can sell 30 million yuan a day. In fact, there is almost no cost, just need to do the promotion.

Over the past decade, game giants such as Tencent and NetEase, as well as emerging game manufacturers represented by the "four Little Dragons of Shanghai" such as Miha you, have also made a lot of money. According to the Newzoo report, Tencent retained the first place in total game revenue in 2021, with game revenue exceeding $32 billion, while Sony and Apple ranked second and third.

Tencent also made so much money because its two games, PUBGM (stimulation Battlefield Global name) and Arena of Valor, both earned $2.8 billion a year, ranking first and second in the top 10 global game revenue rankings. NetEase also ranks among the top 10 in global annual income with popular games such as Harry Potter: magic Awakening.

The status of Tencent and NetEase, which suddenly lost the popular style for two years, also depends on a classic game.

"QQ Speed, DNF, CF, League of Legends." Tencent has at least 20 games with more than 100 million users, including Arena of Valor and Game for Peace with more than 100 million daily active users, while NetEase has more than a dozen games with revenue of more than 1 billion yuan, such as A Chinese Odyssey, Fantasy Journey to the West, Onmyoji and so on.

Under the classic game, there is a stack of countless game failures. Behind Tencent's popular online games crossing the line of fire (CF), there are many unsuccessful FPS games, such as CS online, call of Duty, King of Battlefield, War Front and so on. Among them, there are investment, self-research, generation operation and so on. The game industry is a typical VC industry.

But in 2022, the game industry this VC game is no longer popular, relying on massive fishing, the impact of popular style of high-end gambling model, no longer effective.

According to data.ai data, Tencent had 13 mobile games online by the end of July, involving SLG, MMO, ARPG and women, but except for a flash in the pan when "Manager League of Legends and e-sports" and "Dark area Breakthrough" were launched, the response was mediocre.

In addition, Tencent this year several important games, in terms of buying strength is not too tough. According to the analysis of advertising materials provided by Hot Cloud data to Tech Planet, "returning to Empire" is an important attempt of Tencent in the field of SLG. From the perspective of launching creative groups, it began to start on a small scale in March this year, and twice appeared in April and May. Among them, it reached the annual peak in mid-April, declined significantly in June, and gradually calmed down.

Tencent attaches great importance to the hard-core game "Dark area Breakthrough" this year, which reached a release peak in July and has hardly done too much since then.

The root cause is that the market feedback of the game did not meet the expectations after the purchase volume was put in for a period of time. Overall, in 2022, only Tencent and Perfect World launched the "Magic Tower" overseas is not bad, it is reported that Tencent provided technical support for the game, but also provided release services for the game.

NetEase, who pays attention to self-research, announced six new games, such as "against the cold", "forever robbing forever" and "Diablo: immortality" in May 2021, with the lowest number of new trips compared to previous years. Diablo's overseas revenue exceeded $100 million by the end of July, making it one of the few relatively hot games, according to Sensor Tower. But this game is a cooperative product with Blizzard, and it is also Blizzard's classic IP mobile game. A research and development by NetEase told Tech that the "extraordinary Pioneer" he was involved in and another MMORPG PC game were not online. "extraordinary Pioneer" at first against the foreign "Watch Pioneer" and "APEX", and later against the "escape from Takov" game, "the target game has not been popular for long, this game can not have much expectation." In the past two years, Tencent and NetEase have suddenly lost the ability to create popular styles in terms of investment, agency and self-research. Behind it is the disappearance of the demographic dividend of player users, the increasing difficulty of game innovation, and the increasing requirements of game development ability. More importantly, the revenue of some important popular games in the past also began to drop suddenly. After 10 years of Tencent League of Legends, the popularity of games on PC has declined sharply, and the mobile game version has not been tested for a year, and there is no sign that it has become a popular style. Arena of Valor also reported a decline in revenue from Tencent, with July revenue at the lowest level of $225 million for the year. NetEase's popular style comes and goes quickly, making it difficult to support long-term revenue. Take "Harry Potter: the Magic Awakening" as an example, the stream exceeded 1 billion in the first month of launch, and the free version of iOS reached the top for half a month. However, due to the role model Bug, the game fell out of the 1500 place on the iOS total list only a year later. According to bilibili UP main GreenSpaces data, during this period, the loss of players, revenue also fell from 220 million in January, all the way to 77.23 million in June.

It is not only difficult to make popular styles, but also focus on removing games from the shelves. According to the statistics of Mobile Games, in the past year, Tencent suspended / removed 42 games and NetEase removed a total of 21 game products.

According to the future version number reserve and release expectations, it is difficult for each family to create a large number of popular styles, so we collectively enter the shrinking strategic rhythm of the market.

From Krypton gold to 3A big production how to sit firmly on the iron throne of the game has always been the thing that everyone cares about most.

At first, people focused on owning the distribution platform and becoming the one who controlled the water valve in the market.

Among them, Tencent Wegame's dream is to make the next Steam, which is the world's largest digital game distribution platform. However, in the era of PC, Wegame failed to introduce and operate games such as monster hunters, while the era of mobile games did not need a centralized game platform.

WeGame subsequent transformation to do a game social, "now that the App team has gone to iegg, mobile game distribution is actually a false proposition." Zhao Hui, former IEG division of Tencent, told Tech Planet that the well-known mobile game aggregation platform "TapTap" on the market is more like Dianping functions such as ratings and recommendations. But for everyone, self-research and spontaneity is the mainstream, and enterprises have replaced the distribution role of the centralized game platform through mainstream mobile app stores such as Apple, Huawei, Xiaomi, OPPO, vivo, as well as traffic channels such as Douyin and bilibili.

NetEase's game platform (NetEase Gamers), which is similar to Tencent's WeGame, will be offline from January 20, 2020. Games such as boast and dream talk can be logged in through desktop shortcuts.

Today's scattered traffic platforms, Tencent and NetEase finally understand that the era of carrying traffic to consumers is over. The blessing of capital and flow to popular games is not big enough, and the quality of the game itself is more important.

Just like Mihayou, who was still a small factory at that time, the 3A masterpiece "original God", which was developed with 100 million US dollars, counterattacked into the top three in the global revenue list, proving that the obvious failure of krypton gold, such as copying popular styles, changing skins, and stacking volume, and more boutique original masterpieces (3A games) is the foundation to win the market.

Tencent has also taken action by setting up Timi F1 Studio in Timi and Lightspeed LA in North America, both of which focus on 3A games. At present, Tencent has several important 3A games such as "Code: to Jin Yong" and "Arena of Valor: the World". NetEase has developed "Forever robbery", and its Cherry Blossom Studio is still developing some important PC games.

3A masterpiece is famous for its long production cycle and high production cost, so it is not easy to make boutique games. According to Dong Zibo, an observer of the game industry, NetEase has always wanted to combine the popular "chicken eating" game with the martial arts he is good at to create a "chicken eating" game that is not a gunfight but a sword game. However, the first attempt of "Operation Fengyun Island" ended in suspension, and the second attempt of "eternal robbery" was not favored internally.

Fortunately, NetEase CEO Ding Lei, who had seen the sample, was very optimistic about the game and directly called the project manager Cheng long and said, "Don't feel unconfident. I am very optimistic about this project. The game looks good."

Eternal robbery is very popular, but Tencent's code name to Jin Yong, which is similar to it, has received a lot of bad reviews. At Tencent Games's press conference on June 27, the open world martial arts game "Code: to Jin Yong" was officially announced, and many netizens thought that the so-called "photon's first UE5 open world martial arts new work" looked stiff and the picture effect was not good enough. "it's not like an unreal engine 5, but a game made by an unreal engine 3."

The change means that all the games have been reset, is it krypton gold or do you want to play high-quality games? Looking for the original domestic games, there is still a long way to go.

This article is from the official account of Wechat: Tech (ID:tech618), by Yang Xiaohe

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