On May 21, Dungeons & Warriors: Origins (DNF mobile game), which was expected by Tencent, players, and the market, was officially launched, and quickly achieved great success, with a number of data monopolizing the domestic iOS list and mobile game best-selling list in the first month of its launch.
Source: Tencent's official website
According to data from Sensor Tower, in the last 11 days of May, DNF's revenue in the domestic iOS market surpassed the combined revenue of "Honor of Kings" and "Peace Elite", driving Tencent Games' mobile revenue in May, achieving a 12% growth.
According to Bloomberg, DNF mobile games earned $140 million (about 1 billion yuan) in the first week. Some institutions predict that DNF mobile games are expected to bring Tencent more than 15 billion yuan in annual revenue, accounting for 8% of the total game revenue.
When the situation of DNF mobile games is very good, Tencent released a blockbuster news:
Due to the expiration of the contract, DNF mobile games will no longer be available on some Android app stores from June 20.
Source: Tencent's official website
The good results of DNF mobile games have given Tencent the confidence to call Android out. Channels and commissions, the biggest contradiction in the game circle in recent years, have once again become the focus.
More brutal than the "Apple Tax", with a 50% "Android Tax"
Android mobile games are known as "official servers" and "channels". The "official server" is the official game server, and the "channel" is the distribution channel of the game, including the mobile phone manufacturer's own app store, such as Apple's App Store, Xiaomi's Xiaomi App Store, etc., as well as third-party application markets, such as 360 mobile phone assistants, App Treasure, etc. The mobile game market generally adopts a joint operation model, with game manufacturers responsible for providing client update packages and other content, and distribution channels mainly responsible for promotion, marketing, data analysis and other links. Game manufacturers want to put the finished games in the app store, and they want to be part of the revenue.
In the App Store, Apple charges a 30% share of the digital content consumption that occurs in the app for apps with an annual revenue of more than $1 million, and a 15% percentage for small and medium-sized developers with an annual revenue of less than $1 million. This is known as the "Apple Tax".
The "Android tax" is not collected by Android (Google), but usually refers to the "channel tax" of game apps. More specifically, it is a "hard-core alliance" formed in 2014 by Android mobile phone brands led by Huawei, OPPO, and vivo, with the help of collective monopoly, following Apple's example and charging 50% of the commission to game manufacturers. This percentage then became an industry practice and continued for nearly a decade.
Xiaomi did not join the "hardcore alliance", and the commission was 30%, which is one of the few distribution channels that has not been removed from the shelves of DNF mobile games.
Hardcore Alliance
Percentage of each platform
As a new generation of Tencent's cash cow, DNF mobile games have exceeded 5 billion yuan in the first month, and continue to launch hard-core alliance channels, according to the 50% commission ratio, which means that a large amount of turnover will be handed over, and Tencent is naturally not happy.
Tencent has flipped the table, and there is no shortage of strong supporters in the game industry. Huang Yimeng, CEO of XD Company and founder of TapTap, said on social media: "The domestic Android channel is really disgusting, not only will you have to be divided into half of the income when you put it on the shelves, but your official website package will also be replaced by various tanuki for princes when it is installed, and it will be secretly replaced with a channel package that needs to be shared, so it is better to directly remove it from the shelves and only do the official website." ”
Source: X
I can't bear it, I can't escape
Since the hardcore alliance is so ruthless, can game manufacturers say no?
Looking back, the willingness of game companies to pay a high 50% share for the Android channel is the result of domestic mobile phone manufacturers occupying the core position of the terminal back then. No matter how well the game is made, there is no user who does everything for nothing, and the user is in the hands of the channel. In the early days of the mobile game industry, the app store that came with mobile phones was almost the only way for users to access game content. If you bypass the mobile phone manufacturers, game manufacturers may need to pay more than a 50% split to find these users.
Moreover, in the game market at that time, the product homogeneity was serious, the content was uneven, everyone wanted to occupy a place in the market, and one more channel would have more revenue, and some games didn't care about the share ratio in order to lay the channel.
Today, even though the old members of the hard-core alliance Coolpad, Lenovo, Meizu, and Nubia have been reduced to "others", but OPPO, vivo, Huawei, and Honor still occupy nearly two-thirds of the domestic market share, according to Counterpoint data, in the first quarter of 2024, vivo, Honor, Huawei, and OPPO ranked first, second, fourth, and fifth respectively in domestic smartphone sales, accounting for 17.4% and 16.1% of the market share , 15.5%, 15.3%, and the sum is 64.3%. The remaining Apple and Xiaomi are in third and sixth place, respectively.
According to data from Quest Mobile, as of June 2023, the number of active devices in the two major systems of Android and iOS in China is 951 million and 263 million respectively, and Android devices account for 78.3% of the total number of smart terminal devices. Among them, Huawei, Xiaomi, OPPO, and vivo's app stores and game centers contributed more than 226 million game downloads, about 3.8 times that of Apple's AppStore in the same period.
Most game companies still rely on the Android channel.
The voice of the channel has been weakened
With the changes in the pattern and ecology of the game industry, leading companies such as Tencent, NetEase, and miHoYo have challenged the Android channel.
On January 1, 2021, the Huawei Game Center App released an official announcement titled "To Tencent Game Users of Huawei Game Center", stating that Tencent Games had to suspend relevant cooperation in accordance with Tencent's unilateral request and remove Tencent Games from the Huawei platform: "Tencent Games unilaterally made major changes to the cooperation between the two parties at 17:57 on December 31, 2020, resulting in major obstacles to the continued cooperation between the two parties. ”
Tencent Games responded that due to the failure to renew the contract between Huawei's mobile game platform and its "Mobile Game Promotion Project Agreement" as scheduled, Tencent Games' related products were suddenly removed from the shelves.
Although the two sides did not further disclose the reason for the termination of the cooperation, it is widely believed that the two sides disagreed over Huawei's share of the game's revenue.
Also in 2021, NetEase CEO Ding Lei also vomited bitterness about the high Android tax: "China's Android market share is the most expensive in the world, which makes no sense." ”
Behind the conflict, first of all, the game industry has entered the stage of high-quality stock competition under the background of policy regulation and version quota, and excellent product strength is the key to winning the market, while on the other hand, the traffic model of the channel has begun to disintegrate, users do not have to download games in the traditional app store, and game manufacturers also have richer promotion channels to choose from. Hardcore alliances are on the wane.
Games can also be successful by bypassing Android channels, and Genshin Impact is an example of this. In 2020, the release of "Genshin Impact" did not choose to cooperate with traditional Android channels, and only Bilibili and TapTap were released for the first time, and then only reached a 3:7 sharing agreement with Xiaomi. "Genshin Impact" is still a great success, earning nearly 36 billion yuan in turnover on its first anniversary of launch, and has even become one of the most successful games in China going overseas.
With the rise of Douyin and Kuaishou, buying from short video platforms has become an important way to promote games. According to Quest Mobile's 2023 Mobile Game Industry Insights Report, in 2021, the game industry accounted for 57.7% of purchases and 42.3% of intermodal transportation fees, respectively. By 2023, the proportion of the buy-volume issuance model will increase to 61.5%, and the buy-in volume is gradually replacing the joint operation of channels to become the mainstream.
We are also seeing more and more games released without Android channels: Eagle Corner's "Ark of Tomorrow", Lilith's "Awakening of the Kingdoms", miHoYo's "Honkai: Star Railway", Kurlo's "Singing Tide", and Heartwarming "Let's Go Muffin".
In August 2023, "All-Star Street Ball Party" became NetEase's "first game to be released in public beta on Android channels". Two days before the open beta, the game officially announced the issuance of a "channel subsidy that is not on the shelves" and a rebate of "1.5 billion yuan" to players.
After kicking out the hardcore alliance, NetEase chose to cooperate with Douyin, and 99% of the investment amount flowed to Byte's huge engine, and used Douyin short videos to guide users to bypass the app store to download games directly, so as to avoid the high share of the channel.
Can Tencent's "hard gas" be replicated?
After all, there are only a few who are still beautiful after the hardcore alliance is lifted, and for the vast majority of small and medium-sized game companies, Tencent's "calling" is difficult to replicate. There are only a handful of companies in the market that can achieve the entire industry chain of game development, distribution, operation, and intermodal transportation.
On the Android channel, the essence is also to obtain users and traffic, and the most important thing Tencent lacks is traffic. Since its listing in 2006, DNF has been the record holder for the fastest 1 million and 2 million simultaneous online games in China, and the number of players worldwide has even exceeded 1 billion. Even in 2023, DNF will still have 4 million people online at the same time.
In addition, Tencent has WeChat, QQ as the main propaganda front, Tencent video and other tools and software to assist communication, no need to rely on Android channels to run through the promotion of the game. These resources and means are not available to ordinary game manufacturers.
In May, the linkage effect of WeChat when the DNF mobile game was launched
In addition, Tencent, like other game companies, has also increased its investment in traffic on short video platforms. Since this year, the IP of many well-known games such as "Honor of Kings" and "League of Legends" has been opened to the Douyin live broadcast room, and in the past, as long as the content of these two games appeared on Douyin, it was possible to be reported and taken off the shelves. Most small and medium-sized companies can't afford to burn the money that Tencent burns in terms of buying volume.
It can be said that the vast majority of game companies other than Tencent, NetEase, and miHoYo do not have games that are well-known to the whole people, nor do they have massive resources and built-in channels. Flipping the table with the hardcore league is obviously not an option.
According to the Economic Observer, the mentality of many game industry practitioners about the DNF mobile game removal incident is to drink soup with Tencent, hoping that Tencent will negotiate the price low so that the entire industry can be wiped out.
The game between game manufacturers and channels will continue.