Image source @ Visual China
Wen 丨 Table Appearance (ID: excel-ers), author 丨 Guo Danchun Zhang Ranran, editor 丨 Fu Xiaoling, data support 丨 Insight Data Research Institute
On December 9, 2020, this is already the 48th day that netizen sledgehammers play "Original God".
As a gamer who loves to make money, 48 days ago, he smelled the business opportunity of "playing games" in the free exploration setting of the open world of "Original God".
However, after two consecutive days, after a full 10 hours of "liver", he found that the demand for playing in "Original God" was very small, and the income of playing was very low, "far less than the income of playing "Glory of the King".
In the world of "Glory of Kings", he has the strength of "being the king every season", relying on team training with his roommates, and his income is seven to eight thousand in the peak season and two to three thousand in the off-season.
Since there is no business opportunity, why did you finally stay in the game of "Original God" and choose to continue to play?
The answer given by the sledgehammer is:
"Because it's so cool to mine with a group of friends, this group of people is so interesting!"
The "interesting group friends" he calls are a QQ group of nearly 2,000 "Original God" players. In addition to the "gold fighters" such as sledgehammers, there are also Lo Niang, straight men, heavy 3D enthusiasts, plot control, etc., which almost cover the sentient beings of the players of "Original God".
And they are players who are either not available or lost to Tencent Games.
<h2>01, the second dimension is lost, and investment becomes aggressive</h2>
At the end of September 2020, the game developer Miha You public beta launched the two-dimensional game "Original God".
Within 30 days of the game's launch, it attracted $245 million, once surpassing Tencent's "Glory of kings" and "Peace Elite" to become the world's highest-paid mobile game. It also won Apple and Google's 2020 Game of the Year Awards.
However, this game, which is currently stable in the second place in the global revenue, completely bypasses the traditional game distribution channels, and cannot download "Original God" on Tencent's app store app treasure.
This is not an isolated case, and similar to the situation of "Original God" refusing to enter the Huawei Store, Xiaomi App Store and Tencent App Bao, the two-dimensional game provider Lilith's "Awakening of All Nations" has not been listed on the Huawei Store.
According to the late Late Post report, MihaYou spent 90% of the domestic marketing expenses on the B station and ByteDance's today's headlines and vibrato, watermelon video.
The newly emerging vertical category mobile game providers not only hold their works in the two-dimensional and female fields that Tencent is not good at, but also bypass their channels, and Tencent's sense of crisis can be imagined.
According to people familiar with the matter, Tencent had negotiated investment matters with Mihayou in the second half of 2020 and said that it did not care about the proportion of shares and would not participate in any decision-making.
But Mihayu declined the investment, after all, it does not need to be attached to the big factory now.
And this is exactly where Tencent worries - although it holds the 30 billion level fist products such as "Glory of kings" and "Peace Elite",
Tencent Games still dominates the entire domestic market, but if the next national game comes from a new mobile game provider, and the company happens not to be a friend of Tencent, Tencent will be very passive.
In order to avoid the same situation as Miha's tour from happening again, Tencent took up the checkbook and classified more unreported vertical tracks of games under Tencent's game map.
According to the data, since New Year's Day in 2021, Tencent's related investment in games has reached 42, more than last year's total (24). And the investment targets are concentrated in the field of niche games such as two-dimensional and female-oriented.
In these investments, whether they can hatch the next "Original God", no one knows. But Tencent obviously can't let the next blockbuster have nothing to do with it.
This sense of urgency, regardless of gains and losses, is driven by a combination of internal causes and external pressures.
Internal factors, with the release of the game life cycle, blockbusters such as "Peace Elite" also have a decline in player activity. The "stop growth" of some game revenues has caused pressure on Tencent's game revenue.
It can be seen that the growth rate of Tencent's game revenue in 2020Q4 showed signs of slowing down. Among them, the revenue of domestic games has shown a downward trend.
Externally speaking, since the beginning of this year, Tencent's nemesis such as Byte and Ali has also competed to lay out the game field, and the goal is vertical tracks such as the secondary yuan that Tencent has heavily invested in.
This forced Tencent to pull some "celebrity" startups that have not yet entered the research and development stage into the investment list in order to avoid the side of high-quality targets (right in the picture below).
However, although the "banknote ability" can help Tencent expand its territory, it seems that it will no longer be certain whether it can relieve the anxiety of Tencent's games.
Because the audience of its previous unfavorable "investment + traffic" style of play is not highly overlapped with "Original God" and its audience.
<h2>02, under the flow of the art, the end of the tour to harvest the "victory of imitation"</h2>
For the post-80s and post-90s, "no QQ, no youth".
At that time, two people who did not know each other greeted each other on QQ across the screen, and whenever they heard the sound of "coughing" and saw the lit avatar, their hearts would "flutter and flutter" and jump straight.
One day in 2003, young boys and girls who have taken QQ as an emotional guardian place found that in addition to chatting, writing logs, and decorating photo albums, QQ has launched game functions, and even you can see what games your friends are playing.
Driven by curiosity, countless people clicked into that interface, which opened the way to the top of Tencent Games.
After the millennium, a Korean-style online game called "Millennium" was introduced to the mainland through Taiwan's Asian Union Games, kicking off the prelude to the era of online games in the mainland.
Shanda landed on the NASDAQ with its "second-rate" online game "Legend" representing South Korea, and the 31-year-old founder Chen Tianqiao also became the youngest chinese richest man.
NetEase became popular by relying on its self-developed game "Big Talk Westward Journey Online II", which exceeded the 200,000 mark online around the Spring Festival in 2002 and squeezed into the top three mainland online games. Since then, online games have become a new profit growth point for NetEase Portal.
This market, which is about to explode, has certainly attracted the attention of Tencent.
Tencent, which does not have any experience in game development, initially chose a relatively easy game agency to cut into the market. Adhering to the principle of "if you want to introduce the best", Tencent represents The Triumph of South Korea's Imazic Company, a 3D role-playing game, developed with a very high-performance Unreal II engine, and the effect exceeds 2D".
However, the best is not necessarily the right one.
Triumph's graphics and special effects were brilliant, but the problem was that the infrastructure at the time wasn't enough to support the game.
For example, Tencent originally announced that it would conduct internal beta on May 20, 2003, but because the difficulty of the program was far beyond expectations, it was not released until August 1 that the public beta version was released. As soon as it was released, the server quickly crashed due to the influx of a large number of players.
At the same time, Triumph has high requirements for network bandwidth and computer configuration, and in that era of imperfect network infrastructure, many players simply cannot play the game smoothly. As a result, the first game launched by Tencent failed.
However, although the "tuition fee" paid by the first test of the water network game was heavy, Tencent did not give up on it, but decided to try again - this time specializing in chess and cards and small casual games.
After establishing the entry from casual games into the market, Tencent adopted a unified strategy: find popular games in the market, and then imitate the new ones developed by itself, using QQ users and traffic to seize the market.
Like the earliest released board games, the games such as military flags, upgrades, chess, landlords and studs are almost all modeled after the Lianzhong games.
Remarks: The left is the Lianzhong game platform, and the right is the QQ game platform
The game is online on QQ, which has 130 million registered users, and a new display window is added to prompt the user what game his friends are playing, and the game is bound to a QQ account, and the user can directly enter and play after clicking.
Think about how many post-80s get the landlord skill on qq games under the summons of the "two lack one" atmosphere at that time, and you know how much the drainage effect of this function is.
The traffic entrance was wide open, and the scale of Tencent's board games rose rapidly. By December 2004, the number of simultaneous online users of QQ board games reached 1 million, achieving a counter-overtake of lianzhong (the highest number of simultaneous online users was 720,000).
Under the same diversion strategy, in 2005, Tencent imitated the grand "Bubble Hall" and launched the casual game "QQ Hall", which also greatly impacted "Bubble Hall".
However, although Tencent gradually gained an advantage in lightweight casual games, the mainstream game mode at that time was still RPG (role-playing game).
In 2006, Shi Yuzhu's Giant Network relied on an online game "Journey" that "began to make money in the internal testing stage", and it took only one year to achieve the listing of the New York Stock Exchange to ring the bell.
In 2008, NetEase won the cooperation with Blizzard, and then officially represented its classic online game "World of Warcraft". Countless players "encountered Warcraft mistakenly for life", and since then, the online games of the national costume have only been divided into two types: World of Warcraft and others.
Tencent tried to move the strategy of casual games to the field of RPG games, imitating "World of Warcraft" and launching "QQ Fantasy" on QQ, but the data was less than expected.
Under the RPG game agent and self-development, Tencent decided to bypass the most intense RPG field, find entry points in other categories such as gun battles, racing, flying shooting, music and dance, etc., and copy the diversion mode.
In 2008, Tencent's self-research (imitation) and agent went hand in hand, and launched four games, "QQ Flying Car", "QQ Dance", "Dungeons and Warriors", and "Crossfire", known as "Four Masterpieces". It swept the campus with great success.
At that time, the university girls' dormitory was echoed with the background music of the dance; the university boys' dormitory and the Internet café were players who forgot to eat and sleep.
Note: The data was compiled in October 2018, and the PCU counted here refers to the highest number of simultaneous online users in history.
According to reports at the time, after acting on the main 2D horizontal fighting style of "Dungeons and Warriors", Tencent spent 6 months to achieve more than one million people online at the same time. At the same level, "Journey to the West" took 20 months, and "Journey" took 13 months.
With the popularity of the "four masterpieces", since 2009, Tencent has replaced Shanda as the highest-paid game company in China.
However, this "imitation victory" was quickly reversed by following step by step, and a large number of users entered the market.
<h2>03. Suffered a sharp blow from public opinion and entered the "dormant period" of investment</h2>
On March 5, 2010, the lobby on the ground floor of Tencent Tower was crowded with people cheering for the qq display on the big screen and the simultaneous online users reached 100 million. This year, Tencent has far exceeded the market value of the listed portals in the same period, and the scenery is unique.
Remarks: The stock charts are from top to bottom for Tencent, NetEase, Baidu, Sohu and Sina.
However, it is based on a huge user scale, imitating in various fields, and then defeating the strategy of imitating objects, and eventually fermenting into a storm of bad reviews, which broke out at its highest moment.
First, the bitter lords gathered in the "Tencent" report article of "Dog Day" and denounced Tencent's "shameless imitation". Lianzhong founder Bao Yueqiao is also a member of the statement, after leaving the river under the United Zhong, he not only no longer touched the game, but also avoided getting involved with Tencent in the projects invested by angel investors.
Then there is the sensational 3Q war in China's Internet industry, adding a boom and setting the tone for Tencent's behavior to monopoly and closure.
In the end, although Tencent won the war, it lost public opinion, scolding Tencent for being a political correctness at the time. "Tencent Biography" records that Ma Huateng was exhausted and even began to doubt his "product beliefs".
Tencent has entered the preparatory period for strategic transformation and has continuously opened expert discussions to "diagnose Tencent".
In the end, in the way of "capital + traffic", Tencent was allowed to go from "copycat" to open.
According to the data of New Fortune in 2014, since Tencent's listing, the cumulative expenditure on outbound M&A investment has exceeded 53 billion, of which 98% occurred after the "3Q War" (2010).
Judging from the statistical results, this is one of the main investment focuses on games.
In the form of casting a wide net, Tencent invested in game manufacturers at home and abroad from 2010 to 2015, covering terminal games, mobile games and page games.
Since it has become a shareholder of various game manufacturers, it is natural to take down their game agency rights. This is an example of this in Tencent.
In 2008, in addition to the "Four Masterpieces", Tencent also made a key decision - to take a stake in Riot Games ( Fist ) , an American company. At the time, the matter did not attract attention, but three years later, with this relationship, Tencent obtained the exclusive agency rights in China for the "League of Legends" it developed.
How hot was League of Legends at that time? It is said that basically three-quarters of the people in Internet cafes are playing this game.
After investing in Game Valley in 2010, Tencent also got the agency right to play its masterpiece "Seven Heroes". According to Tencent's earnings report, the game's "initial performance exceeded expectations", and according to market rumors, monthly revenue is expected to exceed 70 million yuan.
Based on this performance, from 2014 to 2015, Tencent launched a large number of game products from the invested companies in the annual press conference of interactive entertainment.
After playing the "capital + traffic" play in China, Tencent has also copied this model indefinitely in the international market by investing in overseas distribution companies.
For example, garena (a subsidiary of Sea Limited) entitled "League of Legends" exclusively in Southeast Asia, known as the "Southeast Asia Little Tencent".
Under the continuous strengthening of the "banknote capability", Tencent's investment in the game industry chain has been continuously extended.
Game tool providers such as development engines, recording tools, and accelerators, game live broadcasting, MCN institutions, and game event operation platforms, and game IP and cloud games have successively become Tencent's investment target areas.
From a series of "buying, buying and buying" such as products, distribution and production tools, Tencent's "capital + traffic" has been verified, and the game industry system has basically taken shape. At this time, the negative public opinion about Tencent has dissipated, and the low-key Tencent game has ushered in the era of WeChat traffic.
<h2>04. "Investment + traffic" playing style, dominating the era of mobile games</h2>
In order to buy QQ show to fill red diamonds, dress up QQ space to charge yellow diamonds, play QQ games to charge blue diamonds, later use QQ less and less, carefully dressed space has long been abandoned.
In ten years, from teenagers to young people, the demand for open socialization and personality has faded, and they have become professionals, paying more attention to the social and privacy closed loop of acquaintances. At this time, after the 80s and 90s, "no WeChat, no years"
Acquaintance social networking has brought a steady stream of traffic, ushering in the WeChat outbreak, Tencent games that got ferry tickets, are in the upstream of the mobile game food chain.
After 2010, the popularity of smartphones has brought the game market into the era of mobile games. According to the data, in 2013, the annual revenue of the domestic mobile game market was 11.24 billion yuan, an increase of 236.9% year-on-year.
Behind the high growth of the market volume is the mushrooming of mobile game manufacturers.
In 2011, the mobile game developer Touch Technology and Gude Games, which were established less than 3 years ago, became famous by the "Fishing Master" and "World OL" respectively, and the first batch of domestic mobile game products with a flow of more than 10 million yuan were born.
Since 2012, mobile game companies that have achieved successful listing have followed suit, and the potential of industry gold mining can be seen.
In 2013, after seeing South Korean social giant Kakao succeed in the mobile gaming space, Tencent, which has zero mobile game experience, began to move forward with its gaming business.
With the "lessons of the past" in the era of online games, Tencent chose to cut directly from the casual game category to the game market.
"Everyday Love Elimination" and "Everyday Cool Run" were officially launched in August and September 2013 respectively, and have special game entrances on WeChat and mobile QQ.
Under the huge traffic tilt, the number of registered users in the 10 days of "Everyday Love Elimination" exceeded 40 million, and "Everyday Cool Run" just went online and topped the App Store list.
Then, Tencent maximized its traffic strategy on mobile casual games, and developed mobile games covering various categories such as chess and cards, racing and so on.
However, casual light games are the same as in the online game period, just dessert, and the main dish is still a heavyweight game.
After 2014, more and more heavyweight mobile games, whether it is the picture or the gameplay, have a very big breakthrough, and the boundary between mobile games and terminal games in product form is becoming more and more blurred. Based on this, the mobile game market began to pursue the end of research and development.
NetEase fully turned to the mobile game market, and the first game launched was the mobile game version of evergreen brand "Fantasy Journey to the West".
Based on the strong influence of the "Fantasy Journey to the West" end game, after the mobile game was launched, those players who had long been far away from the jianghu because of life factors had new ways and returned in large numbers.
This is the same as watching martial arts dramas when I was a child, even if the martial arts are not popular later, as long as the new version of "Dragon Slaying in the Sky" is broadcast, many viewers will choose to relive the classics.
After its launch in 2015, "Fantasy Journey to the West" was at the top of the best-seller list for most of the time in a year.
This year, Tencent also continued to move in the heavyweight mobile game market, and many mobile game masterpieces such as "National Super God" and "Blood Legend Mobile Game" were launched, but they failed to break the monopoly of the "Fantasy Journey to the West" mobile game on the top of the list. Until "Glory of Kings" suddenly emerged.
Although "Glory of kings" is Tencent's self-developed game, in fact, it is the same as "Fantasy Journey to the West", which also has the shadow of the old game brand.
The gameplay of "Glory of Kings" is imitated from "League of Legends", but compared to "League of Legends", its difficulty of getting started is reduced, and the length of each round is also significantly shortened. Generally speaking, the time of a game of "League of Legends" is 20 to 40 minutes, and the time of "Glory of Kings" is 10 to 20 minutes.
Highly adaptable to fast-paced, fragmented idle scenes, and can be "blacked" with WeChat friends at the touch of a finger, so that "Glory of the King" has gained viral spread and irreproducible player stickiness.
Since then, "Glory of the King" has been proud of the market and has been dominating the top spot in the domestic mobile game flow, and it is understood that during the epidemic period, the single-day flow reached 2 billion yuan.
The success of "Glory of the King" in porting the end game IP and traffic effect gameplay allows Tencent to see the development potential of high-quality online game IP and make its terminal games mobile games.
However, with the normalization of games, players' needs for games are more diverse, personalized, and aesthetics are more diverse, and special games for specific groups of people such as "Love and Producer" and "Traveling Frog" are gradually becoming popular.
And many of these vertical categories are not areas that Tencent is good at.
In order to further diversify the game lineup, Tencent has begun to make capital play a role. However, unlike the previous drastic pursuit of holdings, this time the investment method is more "Buddhist".
At the level of game developers, mainly for the purpose of IP cooperation, through the acquisition of a small amount of equity of the other party, in the form of alliances and non-intervention in the operation of the other party, with investment to "make a friend".
In addition to investing money to get IP, Tencent has also begun to pay attention to original IP.
With the establishment and improvement of Reading Group, Tencent Pictures and Tencent E-sports, Tencent will be involved in the entertainment industry chain in literature, film and television, animation and live broadcasting.
Then the popular IP that continues to emerge on the entertainment creative side is discovered by Tencent to find the value of the game, and then "peddled" to a wide range of users.
For example, after "Under One Man" and "Little Red Lady of the Fox Demon" became popular on the Tencent animation platform, Tencent Games quickly adapted it into a mobile game work, pushed it to the market, and recreated a wave of heat.
The combination of Tencent e-sports and live broadcasting can extend the commercial potential of game IP as much as possible.
Taking "Glory of Kings" as an example, the first "Glory of Kings" professional competition (referred to as KPL) in 2016 had a cumulative audience of 560 million people, and the DAU reached 13 million during the finals, which was very popular and recalled.
In addition, while playing "Glory of the King" or eating chicken on mobile phones, while watching related live broadcasts on Tiger Tooth or Fighting Fish, it has become the standard image of contemporary players.
Holding the WeChat traffic entrance, Tencent Games swallowed most of the dividends of the mobile game stage, and after the market demand turned to diversification, Tencent once again capital punched out, as much as possible to cover vertical categories of games and IP.
However, at the moment when the concentration of the game industry has developed in a reverse direction, Tencent's investment defense technique has not been able to do it tightly.
<h2>05. In the era of "content is king", Tencent games have encountered double "Waterloo"</h2>
Missing Out on "Original God" and being rejected by its developer Miha You is just the tip of the iceberg of cracks in Tencent's vast game empire.
The essence is that Tencent is "too far" away from the new generation of users, and in front of this generation, which is different from the Internet natives after the 80s and 90s, Tencent's "investment + traffic" play is not effective.
As Gen Z users become the mainstream consumer group, the two-dimensional culture with its group color prevails, and the two-dimensional mobile game market has also ushered in explosive growth.
"Yin and Yang Division", "FGO", "Ark of Tomorrow", etc. are all popular games for the rise of the two-dimensional mobile game track, for example, the peak revenue of "FGO" accounts for 74% of the total revenue of the game business of Station B.
In fact, Tencent's layout in two-dimensional games is not too late.
Like the above-mentioned "Fox Demon Little Red Lady", as well as "Naruto" mobile games, "Saint Seiya" and other mobile games, are two-dimensional games, and these anime IP adaptations of mobile games, due to their own fan base, the initial flow of water is generally high.
But these games give people the feeling that players come with feelings for the original IP, and finally find that it is just a "skin changing" game.
The lack of excellent operation and character development makes it difficult for these games to attract two-dimensional players. Take "Little Red Lady fox" as an example, which not only has a serious loss of players in the later stage, but also has a rating of only 4.9 on TapTap.
Remarks: On the left is "Little Red Lady of the Fox Demon", and on the right is "Yin and Yang Division"
In contrast, NetEase's original two-dimensional mobile game "Yin and Yang Division", because of its excellent game experience, has been able to often squeeze into the top 10 of the flowing water list since its launch in 2016.
In addition, anime adaptations such as Saint Seiya, Fairy Tail, and Naruto are also declining in 2020 or being directly squeezed out of the top 10 domestic two-dimensional mobile games.
In addition to the game products can not impress the core two-dimensional users, Tencent's existing traffic pool to create the top publicity channels, in the two-dimensional world is also useless.
Previously, Tencent relied on the hundreds of millions of computers logged into QQ to pop up floating windows for new games; in the game center of the WeChat discovery page, in the form of "red dots", it told users "what your friends are playing", which was unfavorable in the terminal game and mobile game markets. With the largest independent app store app treasure, help game developers do intermodal distribution, you can also earn a lot of shares.
However, with the regional saturation of mobile phone market sales, the demographic dividend of various types of app stores has gradually peaked. Channel providers such as the Apple Store, Huawei Store, and Tencent App Treasure usually only give up limited resources to high-flowing works in order to ensure revenue sharing.
This has led to the middle and tail manufacturers not only difficult to get resources, but even if they get, they are also reduced to the "hit workers" of channel providers under the huge share of expenditure, which eventually forces manufacturers to look for external channels.
In the external emerging channels, new traffic entrances such as today's headlines and vibrato have the characteristics of huge traffic dividends and low-cost customer acquisition; the rise of vertical channels such as B station and TapTap can match more accurate player groups for manufacturers.
With reduced channel costs and increased conversion rates, game providers can spend more money on game research and development, and the improvement of game quality means market competitiveness.
Based on this, more and more two-dimensional mobile games have bypassed the traditional distribution channels and flocked to emerging channels.
In addition to the new forces in the vertical category are out of control, the threat from the Internet giants' next game is also suddenly approaching.
In 2019, Ali Lingxi Interactive Entertainment released the self-developed mobile game "Romance of the Three Kingdoms • Strategic Edition", which became the biggest dark horse hit in the market.
According to Sensor Tower store intelligence data, the global revenue of "Romance of the Three Kingdoms Strategy Edition" in 2021Q1 is expected to exceed 194 million US dollars, ranking fifth in the world in terms of revenue.
According to Ali's latest financial report:
As the gaming business has passed the incubation stage, revenue will be transferred from the "Innovative Business" project to the "Digital Media and Entertainment Business".
Compared with Ali's relatively gentle rhythm, ByteDance is menacing.
This year, by investing in Mu Hitomi Technology, Byte will be regarded as the mobile game "Endless Showdown" of "Glory of kings overseas version" and will be included in the pocket.
According to Sensor Tower store intelligence data, in 2019, The Endless Showdown's revenue in overseas markets has reached $214 million, surpassing Glory of Kings ($193 million).
With the support of Douyin and its overseas version of TikTok' own traffic, Tencent and Byte are facing off against each other in the field of overseas MOBA mobile games or inevitable.
The change of game products and distribution channels has caused Tencent to encounter "Waterloo", but it should also see a clear direction: the mobile game market has reached a new stage of "content is king" and "word of mouth is supreme".
Coupled with the outbreak of the "version number crisis" - the former State Administration of Press, Publication, Radio, Film and Television suspended the distribution of all game version numbers in 2018, without the version number of games can not be commercialized, after the recovery of the following year, the number of distributions significantly contracted - and Internet giants also joined the background of competition, game quality has become an inevitable trend.
Is the crisis is also the face of opportunity, Tencent this year with capital in the two-dimensional, women and other vertical tracks to do the layout, the result is like the end of the game to the mobile game stage like sweeping the market, or will miss the "original god", cracks appear again, it takes time to test.
<h2>brief summary</h2>
In the past development timeline, around the accumulation and release of traffic and capital, Tencent has established a huge game empire.
However, under the background of the rise of a new generation of consumer groups, changes in game demand, and changes in the competitive environment, Tencent's "investment + traffic" approach has appeared to cover places that cannot be covered.
"Miha Tour" is relying on content, with the confidence to reject traditional channels and refuse giant investment. Similarly, Tencent needs to provide better games in order to achieve higher revenue in the global market.
Whether you continue to invest or develop your own, the past traffic thinking may have reached the time to change again.
Reference materials:
1. Wu Xiaobo's "Tencent Biography"
2. Leaf Pig Game Network: The reporter's undercover QQ group revealed, who is playing "Original God"?
3. Late Post "Tencent Missed the Original God"