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

Recently, domestic game manufacturers have handed over their 2022 performance "pre-answer papers." As the first report card after the beginning of the year, the result is not very satisfactory.

According to TechWeb incomplete statistics, as of February 8, 29 A-share game companies have issued 2022 performance forecasts. Among them, 18 companies are expected to be at a loss, accounting for 62% of the total, 9 companies changed from profits to losses, 3 companies increased in advance, and 4 companies turned from losses to profits.

Many people in the game industry see 2022 as a difficult year. The reduction in the number of version numbers has affected the manufacturers' plans to launch products, and the overall performance is poor under pressure on domestic and foreign business. In addition, some game companies set aside a large impairment of goodwill, which is a further drag on performance.

According to TechWeb statistics, of the 29 A-share game companies, 11 are expected to have a positive net profit, of which Perfect World, Kaiying Network and Shengtian Network are expected to increase in advance, Kunlun Wanwei and Sheng Xida are pre-reduced, and Glacier Network, fun Technology and other 4 are expected to turn from losses to profits.

Among the three pre-increased game companies, Perfect World has the fastest growth, with net profit expected to be 1.36 billion yuan to 1.44 billion yuan in 2022, more than triple that of the same period last year, and non-net profit of 690 million yuan to 750 million yuan, an increase of more than five times over the same period last year. The game business is expected to achieve a net profit of 158 million yuan to 164 million yuan, double the growth rate over the same period last year.

It is worth mentioning that the suspension of the version number affects the launch of the new game, and Perfect World's performance increment mainly comes from the stock game. Products such as "Dream New Zhu Xian" and "Magic Tower", which have made great contributions to performance, were launched in or before 2021, only "Perfect World: the Battle of the Gods" is a new game launched in January 2022.

According to Perfect World's announcement, its reserve mobile game product "one punch Superman: the World" and "millions of King Arthur" started testing in January 2023, and "The Demi-Gods & Semi-Devils 2" also won the version number. there are "Devil Continent 2", "perfect New World", "Zhu Xian 2" and other games are in steady progress. The launch of new products may promote further growth, but the ultimate contribution depends on the performance after the launch of the game.

The growth of Kay Ying's network performance is due to the good performance of many games such as "primitive Legend" and "Battle of Angels" and a significant increase in revenue and profits. the second is to receive mediation compensation from Zhou Yu, the former shareholder of Zhejiang Jiuling Network Technology Co., Ltd., and the investment income generated by the disposal of Zhou Yu due to the company's shares.

Among the four companies that reversed losses, Glacier Network continued to make breakthroughs in its card game products by spending money on buying volume and increasing investment in research and development, recharging and increasing revenue during the reporting period to turn losses into profits. However, due to the impact of sales expenses, the net profit in the second half of the year was lower than expected.

The turnaround of palm fun science and technology mainly lies in the provision of a large amount of goodwill impairment in 2021, so there is a large loss in 2021. The net profit of palm fun technology is expected to be 85 million yuan to 119 million yuan in 2022, but it is far from the profit level of two years ago, with a net profit of 317 million yuan in 2020.

The total pre-loss of 18 companies exceeded 10 billion yuan of goodwill impairment into a "performance killer" 29 A-share game companies, 18 companies made pre-losses, accounting for 62%, with a total loss of 10.8 billion yuan to 14.4 billion yuan. Among them, 9 companies, such as Century Huatong and Caesar Culture, lost money for the first time, 2 companies expanded their losses and 7 companies narrowed their losses.

Looking through the performance reports of these pre-loss companies, it is not difficult to find that the reasons that affect their net profits last year are more or less related to the impairment of goodwill or assets.

Generally speaking, goodwill impairment means that the subsidiaries purchased by listed companies are not as profitable as expected, and goodwill should be taken into account after re-evaluating the value of the acquired companies. In other words, the previous acquisition of the company is expensive, now need to deduct the extra money from the net profit.

Take Century Huatong, which has the largest pre-loss, for example, since 2014, the company has successively acquired Tianyou, Qiku, Diandian, Shengqu Games (formerly Shanda Games) and other companies to develop online game business. By the end of the third quarter of 2022, its goodwill has reached 17.6 billion yuan, which is the highest in the A-share game sector in the same period.

After a year of recession in the game market, Century Huatong temporarily estimates that the provision for impairment of goodwill ranges from 4.5 billion yuan to 6 billion yuan. in addition, the company intends to set aside part of the impairment provision and fair value change profit and loss for some invested companies and other assets. together with the foregoing goodwill impairment provision, the total is 6.3 billion yuan to 8.3 billion yuan. This directly leads to a pre-loss of 6 billion to 8 billion yuan in 2022. If the final loss is close to the upper limit of the forecast, it is equivalent to the total profits of the past three years.

It is worth noting that after this impairment, the goodwill in Century Huatong's account is still about 11.6 billion to 13.1 billion yuan. The high goodwill figure is regarded by many in the industry as the biggest risk in the business process of Century Huatong, because the impairment of goodwill generally means that the profitability of acquired assets is lower than expected or falls sharply, and this decline may be temporary or for a long time.

Wang Jie, chairman of Century Huatong, said in an open letter after the announcement that "although the impairment of goodwill will cause a loss of performance in the short term, it does not mean that the fundamentals of the company have changed significantly. The impairment of goodwill will not affect the company's actual profitability and cash flow, nor will it affect the company's ability to repay debts."

Wang Meng believes that in the past year, the company has taken the initiative to take a series of measures to reduce costs and increase efficiency, sacrificing the gross profit and net profit of some businesses, which will be conducive to cost control in 2023, increase management energy efficiency and return to normal profitability.

In addition, Caesar Culture, as a byte concept stock, is also the first loss, with a loss of up to 935 million, in which the impact of the provision for impairment of goodwill on the net profit of shareholders of listed companies is-400 million yuan ~-360 million yuan. Baotong Technology will set aside provision for impairment of goodwill for Guangzhou Yi Fantong Asset Group, a subsidiary of the game, with an estimated impairment amount of 470 million to 490 million yuan.

In addition to the impairment of goodwill, the reasons for the pre-loss of game manufacturers include: due to the epidemic and the release progress of version numbers, the launch of new products has been delayed; competition in the domestic game market has intensified, and the cost of obtaining customers for new products has increased, resulting in an increase in operating costs; the threshold for games to go to sea is rising, coupled with the gradual fading of the demographic dividend, the growth space that games bring to the company is shrinking.

"due to the rhythm of the launch time of the company's products, the company's performance in 2022 is under periodic pressure," the tourist network, which is also losing money, said in the performance forecast. " Baotong Technology attributed the sharp decline in net profit to many unfavorable conditions, such as a substantial increase in game promotion fees, large investment in research and development, delays in product launch, failure to obtain customized product version numbers within the agreed time, and long cycle for new product exploration. "

Will the game industry change for the better in 2023? In 2022, the game industry suffered a cold winter due to the epidemic situation, version number and other factors. According to the data disclosed by the Tourism Committee, a number of indicators of China's game industry declined in 2022, including a 10.33% year-on-year decline in market revenue to 265.884 billion yuan and a 0.33% year-on-year decline in the number of users to 664 million, both of which were the first negative growth since 2014.

Specific to the game manufacturers, the chill has been more intuitively reflected through the performance forecast. So far, A-share game plate, only Perfect World, Kunlun Wanwei, Kaiying network three companies estimated net profit of more than 1 billion, more than 60% of the enterprise pre-loss, distinct performance differentiation. Some people in the industry sighed, "the extent and scope of the decline is beyond expectations. I did not expect that the market will be so bad in 2022."

It is an established fact that the game sector is difficult in 2022, and now the focus of the market is whether the game industry can recover in 2023.

In mid-January, the State Press and publication Administration announced the approval information of domestic online games in January, a total of 88 games have been examined, Tencent, NetEase and other large manufacturers are in the list. According to statistics, since the resumption of the release of game version numbers in April 2022, up to now, a total of 556 domestic online games and 44 imported games have obtained version numbers.

A number of brokerage institutions said in the research report that the domestic game and entertainment industry is expected to hit bottom and rebound in 2023. The obvious relaxation of version number approval is expected to boost the supply of the game industry, and the recovery of consumption is also expected to promote the repair of users' willingness to Krypton gold. Leading companies such as Tencent and NetEase will benefit from the recovery.

However, some institutions believe that the impact can not achieve a reverse breakthrough in the short term, and the long-term impact of the version number will still be shown in 2023. At present, Tencent, NetEase and other big companies have shifted the focus of R & D increment overseas, the growth of the domestic game market may not be too optimistic, but the game industry in 2023 will not be worse than in 2022.

The online game sector is up 1.37% as of press time, with 44 companies rising and 20 falling, according to Futu Niuniu App.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.