Recently, with the release of a new batch of game version numbers by the Copyright Administration, the industry has become more determined about the commercialization prospects of the meta-universe in the fields of games, entertainment, and social networking. With the opening of the Boao Forum for Asia on April 20, the meta-universe has once again attracted the author's attention. According to the conference schedule provided on the official website, "How far is the 'metacosm' from us? "Will be the finale theme for the final day of April 22 (see image below). At that time, the metacosm may once again become the focus of hot discussion in the market.
As one of the leading domestic game companies, 37 Mutual Entertainment, an A-share listed company, has also made a big move in the meta-universe recently.
According to the announcement of 37 Interactive Entertainment Company ("Announcement on the Signing of a Strategic Cooperation Framework Agreement between the Company and Guangzhou Zhidu Universe Technology Co., Ltd. and Zhidu Technology Co., Ltd.") and the relevant announcement issued by Zhidu Shares:
Recently, Guangzhou Sanqi Interactive Entertainment Technology Co., Ltd. (hereinafter referred to as "Guangzhou Sanqi"), a wholly-owned subsidiary of the Company, guangzhou Zhidu Universe Technology Co., Ltd. (hereinafter referred to as "Zhidu Universe") and Zhidu Technology Co., Ltd. (hereinafter referred to as "Zhidu Shares") jointly signed the "Strategic Cooperation Framework Agreement".
In line with the principle of "complementary advantages and win-win cooperation", all parties give full play to the resource advantages of Guangzhou Sanqi's well-known game IP, arts and crafts, game models and other resources, as well as the advantages of science and technology, innovation, marketing and ecological resources of Zhidu Universe and Zhidu Co., Ltd., jointly promote the deep integration of new generation meta-universe technology and game economy, and land the "Internet +" action plan on the other side of Meta to create the country's leading 37 interactive entertainment meta-universe exhibition hall.
To put it simply, 37 Interactive Entertainment cooperates with Zhidu Shares and Zhidu Universe in the meta-universe. The three parties will make full use of their respective technical advantages, scenario advantages and industrial advantages in research and development technology, artificial intelligence, blockchain and other aspects to jointly promote the deep integration of a new generation of meta-universe technology and game economy.
What are the advantages of each and how can they complement each other?
According to the announcement of 37 Interactive Entertainment, the company's main business covers a wide range of games and other business sectors, with well-known game research and development brand 37 Games, professional game operation brands 37 mobile games, 37GAMES and 37 online games. At the same time, 37 Interactive Entertainment actively lays out entertainment fields such as film and television, music, artist management, animation, pan-entertainment media, meta-universe, cultural health, social networking, and new consumption.
This year, Zhidu Co., Ltd. announced the establishment of a "meta-universe" joint venture company "Guangzhou Zhidu Universe Technology Co., Ltd." According to the announcement, Guangzhou Zhidu Universe Technology Co., Ltd. is a meta-universe company jointly invested and established by Zhidu Shares and Guoguang Electric Appliances. The author has also reported before, see the article "Meta-universe horizon| the establishment of a meta-universe joint venture company, what are the highlights of Zhidu shares? 》。
Among them, "Meta Other Shore" is a meta-universe-related project focused on by the joint venture company Zhidu Universe, and is a meta-universe art community developed by Zhidu Universe. The announcement said:
Zhidu Universe is mainly engaged in the research and development and operation of the digital art meta-universe community, and launches the first domestic art meta-universe community "Meta" through VR, AR, MR, blockchain, cloud computing, artificial intelligence and other technologies. The "Meta Shore" will be on the chain and sold into the corresponding digital collection, which users can obtain in the form of purchases and blind boxes.
The content of this cooperation, judging from the cooperation announcement released by 37 Interactive Entertainment, 37 Interactive Entertainment will land the "Internet +" action plan in the other side of Meta, build the 37 Interactive Entertainment Meta Universe Pavilion and carry out a series of activities. (See figure below)
Meta-universe since last year's attention, domestic policies are also following up, the closest is The most recent is the release of "Meta-Universe 10" in Guangzhou in April, boosting the rapid development of the meta-universe industry. Morgan Stanley predicts that the potential total size of China's "meta-universe" market will reach 52 trillion yuan, about $8 trillion. Domestic industries and investment institutions have also launched the layout of the meta-universe track, and a large number of enterprises have applied for the registration of meta-universe-related trademarks in order to obtain a place in the future. According to Qixinbao data, in 2021, there were 340 financing incidents in the AR/VR industry, with an investment amount of up to 55.6 billion yuan, a year-on-year increase of 128%. I have written a series of metaversmic analysis articles since last year, which I will not repeat here.
We return to the company's performance and business aspects.
At present, 37 Interactive Entertainment has not yet released its 2021 annual report, but has released a performance forecast.
According to the performance forecast, the net profit attributable to the shareholders of the listed company in 2021 increased by 1.41% to 3.23% year-on-year, and the net profit after deducting non-recurring gains and losses increased by 6.61% to 8.70% year-on-year.
The company said that during the reporting period, the company's newly launched "Douluo Continent: Soul Master Showdown", "Glory Archangel", "Peerless Immortal King", "Douluo Continent: Martial Soul Awakening", as well as the global release of "Puzzles & Survival", "Call Me Big Boss", "Song of the Cloud City" and other games performed well, and the company expects the net profit attributable to the shareholders of the listed company to be 2.8 billion yuan to 2.85 billion yuan, and the net profit after deducting non-recurring gains and losses is 2.55 billion yuan to 2.6 billion yuan.
In the case of the suspension of the release of domestic game versions in the second half of last year, the company "broadened the company's diversified game categories and further made a breakthrough in the overseas market."
At the institutional research meeting after the announcement of the performance forecast, the company said that "the core reason for the more eye-catching performance of overseas business is that our team has always adhered to the overseas large market and large category strategy, insisted on taking the high-quality route, making long-term products, and laying a relatively solid foundation on the ground." ”
In terms of overseas achievements, according to the minutes of the above-mentioned institutional research meeting, the company said:
For example, "Puzzles & Survival", which integrates the gameplay of "match 3 + SLG", successfully ranked 4th in the 2021 global mobile game revenue growth list of SensorTower statistics; after the otherworld adventure theme MMORPG mobile game "Song of the City on the Clouds" was launched in the Korean market, it successfully entered the Top5 of the Korean best-seller list and ranked among the Top25 of the overseas revenue list of domestic mobile games.
For the 2022 business plan, the company said:
The company will continue to continue the "boutique, diversification, globalization" strategy, overseas markets to further diversify the layout of key categories, deep ploughing key markets, further broaden the game category, enhance market share; the company will continue to expand the domestic game category through self-development and agency products, maintain the company's competitive advantage in various business categories, and will continue to iterate and innovate in the promotion strategy; at the same time, continuously improve the level of self-development, polish product quality, and provide players with more boutique games while optimizing the vitality of existing products. Maintain high-quality and steady development.
For the overseas business of 37 Interactive Entertainment, Zheshang Securities said in a recent research report that the company's overseas issuance business has set up a high barrier and is undervalued by the market, and the overseas business will remain high.
The agency believes that the barriers to global issuance are much higher than those of domestic issuance. Here's why.
First, most companies are unable to build a full overseas distribution team, especially for small language markets, where the ROI is too low. For example, the Thai mobile game market, only 500 million US dollars a year, if the self-built distribution team covers the Thai market, it often cannot return the cost. Only publishers with a large number of games in their hands can achieve positive revenue. At present, the company's overseas issuance business has covered more than 200 countries, and a relatively complete overseas distribution team has been established.
Second, companies with global issuance capabilities will be far stronger than companies that only have regional issuance capabilities in upstream project competition. Before the tightening of this round of editions, when the game company set up the project, it was mainly aimed at the domestic market, and the income of the overseas market was only the icing on the cake. However, after the regulation, the game company at the beginning of the project, the target of the global market, at this time, the company with global publishing capabilities, in the project competition will be far stronger than the company with only a specific regional publishing capability, because the game developers also want to solve the global publishing problem in one stop.
For example, the company's overseas masterpiece Puzzles & Survival has entered the top 100 of the iOS best-seller list in North America, Europe, Australia, the Middle East, Japan and other markets.
In summary, global distribution capabilities have driven companies to form a positive cycle of "strong distribution - good projects - stronger distribution", and the success of Puzzles & Survival is expected to continue.
The above logic of the institution, the author found some data to illustrate the rapid growth of the overseas game market.
According to the "2021 China Game Industry Report", in 2021, the revenue of Chinese mobile games abroad in overseas markets will reach 18.013 billion US dollars, and it is still in a growth trend, and in many popular mobile game country markets, the frequency of Chinese mobile games in the best-seller list and download list is also getting higher and higher.
In overseas markets, the United States, Japan and South Korea have become the main targets. In 2021, the U.S., Japan, and South Korea markets contributed to the main overseas game revenue, accounting for 32.58%/18.54%/7.19% respectively. (See figure below)
And the prospects for overseas markets seem to be broad. According to game data analysis agency Newzoo, the global game market will reach $218.7 billion in 2024, and the CAGR (compound annual growth rate) from 2021 to 2024 will be 7.55%. The number of players worldwide will exceed 3.3 billion in 2024. ArPU (ratio of revenue to active users) will remain on the rise.
37 Interactive Entertainment may have seen the rapid growth and development potential of overseas markets, and it was mentioned in the 2021 interim report that it will further exert the first-mover advantage of overseas markets and rely on strong game research and development capabilities and localization marketing capabilities to continuously expand the scale of overseas business. Now, judging from the 2021 performance forecast and the content of the research meeting minutes released, the company has indeed made certain achievements in overseas business (see above).
In terms of institutional views, according to Choice data, since March (nearly two months), 4 institutions have given 37 interactive entertainment ratings, 3 rated buys, and 1 rated overweights. Compared with the previous rating, Zheshang Securities and Caitong Securities gave 37 Interactive Entertainment rating for the first time. (See table below for the "Rating Adjustment" item)
I wonder if the cooperation between 37 Mutual Entertainment and Zhidu Shares in the meta-universe can once again boost the company's performance?
Author: Xu Yuanyao