Author: Liu Xiaojie
"(Going overseas) may have been an option before, but now it is a must." Talking about the changes in the trend of going overseas in the past two years, Gong Xiaosi, founder of WafaGames, told Yicai.com.
Gong Xiaosi's team was established in the Middle East and started making games in 2017. At that time, many companies paid attention to going overseas, but she felt more and more that the competition in the past two years has become more intense.
Limited by the domestic game version number and the peak of Internet traffic, it is already a breakthrough direction for Chinese companies to go overseas, but under many challenges, it is not easy for domestic companies to go overseas. There is no place in the market that is not the Red Sea." Gong Xiaosi said in the interview.
In several interviews organized by Google and data.ai, the first financial reporter and several heads of game overseas companies talked about the new trend of game overseas. It is generally believed that the evolution of user needs and market structure has made domestic overseas companies go abroad. Facing a competitive environment with ever-increasing costs and increasing risks.
However, the overseas revenue share of Chinese game companies is still growing steadily.
Seizing market opportunities and having good enough talents and market environment, Chinese companies going overseas may just lack time to accumulate.
SMEs face greater challenges
"The entire R&D investment in terms of time, capital and manpower is higher than before. Compared with two years ago, going overseas is a greater challenge for small and medium-sized enterprises." Zhao Yijiang, head of business development in mainland China, Google Play said in an interview.
In the early stage of the mobile Internet era, mobile games had user bonuses, but with the development of the industry for more than ten years, players have been exposed to games for a longer time, and they have a deeper understanding of what is fun and what is a high-quality game. Wu Qing, CMO of Diandian Interactive think.
Founded in 2010, Diandian Interactive has been deeply involved in the foreign game market for a long time. It was the first to engage in social page games on the Facebook platform, and later began to make mobile games. In 2018, it was acquired by Century Huatong.
According to SensorTower's statistics, in March this year, Diandian Interactive's simulation business game "Fifi Adventure" broke into the TOP29 revenue list of domestic overseas mobile games. This is the first time that a simulation business mobile game has entered the monthly overseas mobile game TOP30 revenue list.
Wu Qing introduced that the project of "Fifi Adventure" was established in 2019. During this period, the development volume of the game was many times larger than that of traditional business simulation games, and the content production cost and production cycle have increased a lot.
Users' requirements for quality are getting higher and higher, resulting in more and more investment in product research and development. Wu Qing believes that "in the case of users' time being filled, manufacturers need to compete for users' time."
In terms of R&D investment, Zhao Yijiang believes that the release of "Yuan Shen" is a landmark event.
Mihayou CEO Liu Wei revealed in an interview in 2020 that the research and development investment of "Yuan Shen" has reached 100 million US dollars.
From "Yuan Shen", there is a demonstration, "take 100 million US dollars to make games, and then use 100 million US dollars to push games", and the research and development investment is getting bigger and bigger.
In 2021, many game companies have disclosed the increase in R&D investment in their financial reports.
Taking the overseas veteran IGG as an example, the group's revenue will increase by 11% in 2021, but its adjusted net profit will decline by 78.6%.
IGG said that in 2021, the group is in the R&D and operation investment period. Due to the substantial increase in game marketing and R&D expenses, profits will be under short-term pressure.
According to the financial report, IGG’s R&D expenses in fiscal 2021 were HK$1.254 billion, a year-on-year increase of 82%.
R&D expenses as a percentage of revenue were 21%, up 8% from 13% in 2021.
IGG said that increasing investment in research and development and further expanding the game product matrix is a necessary process to move towards "diversification + quality".
It is worth mentioning that IGG also mentioned in the financial report that Chinese game companies have increased their efforts to deploy overseas markets, which has also intensified the competition in the industry and increased the cost of corporate promotion.
The competition of game companies and users' expectations for quality have also led to a cycle of high-quality products. Game developers continue to improve the quality of games. At the same time, users can obtain higher and higher quality games, more choices, and better tastes. becomes increasingly difficult to satisfy.
"In the past two years, it is quite common for game manufacturers to delay the release time. Part of the reason is that the quality of the games planned to be launched may be far from the products that have just been released on the market. Considering the possible cost of user acquisition. It will not be cost-effective, instead of this, the team might as well return to the furnace to make this product better, and release this product when it is more fully prepared." Zhao Yijiang said.
The threshold for making games has been raised, and at the same time, games going overseas are also faced with the challenges of a scattered and diverse overseas market environment.
Different from the single and largest domestic game market in the world, the overseas market is divided into many regional markets. Different regions and different people have their own inclinations. Therefore, it is difficult for a product to have a large income after it becomes a "popular". , "Although the revenue performance of products that rank first overseas can be more stable, the total revenue may not be as good as China's, and it is unlikely that revenue of the magnitude of "Honor of Kings" will appear abroad." Wu Qing said .
Newzoo's "2021 Global Game Market Report" shows that in 2021, Chinese games will account for nearly 26% of the global market with US$45.6 billion in revenue, followed by the United States, accounting for about 24% of the global market. Covering half of the global market, the other half of the market is scattered in Japan and South Korea, Europe, Southeast Asia, Latin America, the Middle East and other regions.
This means that companies going overseas need to understand different user behaviors in different cultures and different market environments, and it is necessary to have sufficient familiarity with the political and economic environment of various regions, deal with risks and challenges in regulatory policies, establish contacts, etc., For businesses, this is not something that happens overnight.
In addition, many game practitioners have said that the platform's privacy policy has made it more difficult to acquire customers.
Last April, Apple announced a new policy to enforce IDFA (Identifier for Advertising), which means users can limit ad tracking and information collection to protect privacy.
For the game purchase circle that needs to collect a large amount of user information, the IDFA new policy is undoubtedly a big earthquake. The most intuitive manifestation is that the cost of user traffic is increasing year by year.
"It's getting harder and harder to make games." This is the voice of many people in the industry.
Chinese manufacturers only need time to accumulate
Despite many challenges, the bright side is that Chinese manufacturers' share of overseas mobile game revenue is still growing steadily.
In an online forum hosted by data.ai recently, Zheng Weida, head of the agency's Greater China region, said that from 2019 to 2021, the share of China's overseas mobile game market share in the overseas mobile game market will increase year by year. The annual time accounted for 17%, 20% and 21% of the overseas mobile game market share respectively.
In April this year, data.ai released the "2022 Top 52 Global Publishers List". According to the comprehensive revenue of the App Store and Google Play in 2021, Chinese manufacturers occupy 16 of them, which is the largest number on the list. nation.
Zheng Weida believes that this means that the quality of Chinese games and service experience have been affirmed by global users.
"I think Chinese companies can be successful in any category, because China does have enough good talents, a good enough market environment, and the R&D efficiency and development are faster than overseas. The main thing is time and determination." Wu Qing believes that .
In the top 50 of the US and Japan rankings, more and more products from China are on the list. "In addition to the current limited version number, I think half of the TOP50 games in the US and Japan will be products from Chinese game manufacturers. It's strange." Wu Qing has great confidence in domestic game makers going overseas.
For Chinese companies going overseas, time and experience may be an important aspect.
When asked about the secret of success in going overseas, Yi Lu, CEO of Shellwood Games, also told Yicai that the biggest advantage of the team is the accumulation of time.
Shellwood Games is a wholly-owned subsidiary of Shenzhou Taiyue, a domestic A-share listed company, and has operations in more than 150 countries and regions around the world. The main overseas countries and regions are North America, Europe, Russia, Japan, South Korea, etc.
According to data.ai data, among the top 30 Chinese game makers and apps in terms of overseas revenue in April 2022, Shellwood Games ranked seventh, and its games "Age of Z Origins" and "War and Order" were among the top 30 Chinese game makers in April 2022. Ranked 9th and 15th respectively in the overseas revenue rankings.
According to the 2021 financial report of Shenzhou Taiyue, Shellwood Games will have a revenue of 3.265 billion yuan and a net profit of 617 million yuan in 2021, of which the separate income of the games "Age of Origins" and "War and Order" will reach 1.779 billion yuan and 1.186 billion yuan respectively.
Yi Lu was a member of the early core team of Shellwood Games, and later took over the company. He believes that the team has an advantage in that it began to contact overseas markets very early, "About 2011, when smartphones were just born, we were always accompanied by smart phones. Mobile and mobile games grew, so I gained some experience."
In the financial report, Shenzhou Taiyue mentioned that the company's game R&D team said that most of its core members graduated from well-known universities and have more than ten years of experience in the game industry.
Based on years of development experience, the team has a mature game development system. At the same time, after a long-term accumulation of operating experience, the game operation team has a strong ability to analyze and operate players' game psychology.
Yi Lu believes that making a sea is an iterative process, "If a company that can immerse itself in this industry for ten or twenty years, if it has been growing, it will inevitably encounter more opportunities, because the time is long enough. There are Maybe when the ability is insufficient, the opportunity may not be seized, but if there are enough opportunities, one day it will be seized.”
"Chinese companies are still in an exploratory stage." Wu Qing said that the entire market for Chinese games to go overseas may only take more than ten years. Overall, Chinese game makers are not as experienced in globalization as European, American and Japanese game makers. Industry accumulation and talent pool have a lot to do, and Chinese overseas companies are still in the initial stage of accumulation.
Where are the market opportunities?
In the global game market that is full of Red Seas, where are the opportunities that can be seized by overseas companies that are ready to show their talents?
In the online forum held by data.ai, Yuan Yu, partner and vice president of China Mobile Games, said that the growth space of the overseas game market comes from two directions, one is emerging markets, such as Vietnam, Indonesia, Brazil and other countries, these regions Both the population and the economy are growing rapidly, and the corresponding game market will continue to grow thanks to the demographic dividend.
The other is mature markets in developed countries, and the growth in these regions comes from breakthroughs at the product level.
"We have observed that players in these regions have an increasing demand for high quality, whether it is an excellent product such as "Genshin Impact" that has swept the world with its theme and art style, or a mobile game such as "Call of Duty" that has been transformed by the end-game masterpiece , all because the product quality is high enough, and it has achieved commercial success in the world."
The report released by data.ai in the forum also confirms these two directions.
Mature markets in developed countries have high per capita game spending and are still the main source of revenue for overseas manufacturers. However, the number of players in emerging markets such as Southeast Asia and Latin America has grown the fastest, and game downloads have grown significantly, showing good potential.
From 2018 to 2021, North America and Japan have always been the main sources of revenue for Chinese games going overseas, accounting for almost half of the revenue. These two countries and regions are also the two largest game markets in the world after China.
Followed by Western Europe, South Korea, Southeast Asia market, ranked 3-5.
From the perspective of monetization ability, the first few developed countries are also the markets with the highest per capita game spending.
According to statistics from Newzoo and the Prospective Industry Research Institute, among the major game markets in the world, the per capita consumption of Japanese players is the highest, reaching US$291 per person in 2020, followed by South Korea, the United States and countries in Western Europe.
In addition, Newzoo's "2021 Global Game Market Report" shows that players from the European and North American markets account for a very high proportion of player consumption, and players in the two markets account for less than a quarter of the total global players (14% in Europe and 7% in North America). %), but together they account for more than 40% of the global game market revenue.
Users in mature markets in developed countries have the characteristics of "high value", and the game payment habits and payment amount are relatively high. For manufacturers, this can undoubtedly reduce the risk and improve the return rate after the product acquires users.
However, due to the maturity of the market in developed countries, it is also very challenging to obtain revenue growth in these regions. Therefore, as Yuan Yu mentioned, more investment is needed to polish products in these regions and acquire users with high quality.
Different from mature markets, consumer spending in emerging markets such as Southeast Asia and Latin America may not be high, but downloads have grown significantly, which is also another direction that can be tapped.
In terms of the growth trend of game downloads in China's overseas market, Southeast Asia and Latin America have seen the most significant growth and will be key development areas in the future.
Zheng Weida mentioned that in the Southeast Asian market, Indonesia, Vietnam and the Philippines are the three main markets. In particular, the download volume of the Philippines in 2021 will increase by 12% year-on-year, which is worthy of attention.
The overall digital landscape in Latin America is also developing, with growth in the number of Internet users, improving Internet infrastructure, smartphones and mobile Internet becoming more affordable are all positive factors.
Zheng Weida introduced that the development of smart TVs in Latin America is limited, so local users prefer to use mobile devices to play games, and the proportion of the population using smartphones in Latin America will increase to 75% in 2025, which has the prospect of mobile game growth.
However, a very big challenge that also exists in Southeast Asia and Latin America is that the cultures, government policies and user behaviors of the countries below the region are quite different, which also tests the strategies of game manufacturers in the local market and local operations. ability.
At the same time, game developers from Europe and the United States also set their sights on these emerging markets with high potential.
The road ahead is bright, but the road is tortuous, and Chinese game makers need to be fully prepared.