China Games 2021: Financing of nearly 26 billion from 209, the second dimension lost to the Metaverse?

Game companies have joined the battle for the tuyere, can you sit back and relax when you seize the tuyere?

In 2021, many major events have occurred in the game industry, such as the introduction of the “strictest in history” anti-addiction policy for minors, the stricter game approvals, no game version numbers for 5 consecutive months, and a sharp drop in the number of games that have passed the review.

According to the “2021 China Game Market Investment and Financing Survey Report” recently released by Gamma Data, last year, the game market showed a marked increase in investment activity, of which investment from leading companies such as Tencent accounted for the majority of the overall investment amount. .

In 2021, Tencent’s investment amount will be 20.62 billion yuan, accounting for 79.7% of the total investment amount in the market. However, it is worth noting that the investment events counted by Gamma data do not include investment cases with undisclosed amounts. ByteDance’s investment spending last year was also eye-catching. It is reported that its total investment amount has exceeded 10 billion yuan.

China Games 2021: Financing of nearly 26 billion from 209, the second dimension lost to the Metaverse?

At the same time as the investment amount increases, the investment direction also shows the characteristics of a small concentration in the two-dimensional market. In the stalls where the scale of the pan-two-dimensional audience continues to expand and the industry explodes, the two-dimensional has become a major category in the game industry that cannot be ignored. In the new year, will this situation change?

The game market is rejuvenated, and it has become a “password to get rich” for small and medium-sized enterprises

After several “big waves”, the game industry has basically formed a fixed pattern, and it is difficult to make major changes.In terms of revenue, Tencent occupies 56% of the market share, NetEase occupies 19.6% of the market share, Sanqi Interactive Entertainment occupies 5.2%, and the remaining 19.2% is divided among hundreds of game companies.

In general, my country’s game industry is highly concentrated, the market is significantly unbalanced, and a large number of resources are in the hands of a few leading companies. However, since 2020, the games of some small and medium-sized game manufacturers have exploded in the market, squeezing the share of leading companies to a certain extent, resulting in a 6.43% drop in the market concentration of the game industry in 2020 compared with 2019.

This change has given hope to small and medium-sized game manufacturers, which has stimulated the enthusiasm for research and development. And these small and medium-sized enterprises are divided into two different schools. One group insists on independent research and development, such as Mihayou and Lilith; The road goes smoother.

However, in the fierce market competition, how to successfully attract the attention of leading companies has become a major problem, and R&D is the fastest shortcut. Data shows that in 2021, the number of companies engaged in game research and development will account for 80.38% of the financing, and self-research has become the “password to get rich” for small companies to receive resources from leading companies.

China Games 2021: Financing of nearly 26 billion from 209, the second dimension lost to the Metaverse?

For leading companies such as Tencent, when most of the resources are included, the investment is mainly “defense”.

The meaning of “defense” is to take the initiative in the subdivision field, thereby blocking the possibility of small and medium game companies “breaking out” from the niche field by virtue of their characteristic games.

According to statistics, Tencent invested in 49 game companies in the first half of 2021, about one every 3.8 days on average. This probably stems from the long-lost sense of urgency that Tencent felt after Mihayou hit the game market with “Yuan Shen”.

To put it simply, the influence of self-developed games on leading companies is limited after all. Seizing potential start-ups in the segmented field and exchanging capital for a certain amount of control is beneficial to leading companies on the one hand. They can increase their influence in the game market, and on the other hand, they can prevent start-ups from growing into new giants by deeply cultivating market segments.

In 2020, the market promotion of two-dimensional games will be intensified, users will grow rapidly, and two-dimensional games will rapidly grow into the most potential segment. Therefore, in last year’s investment strategy, leading companies such as Tencent, Bilibili, and ByteDance all chose to shift to the two-dimensional track. In the second half of the year, the Metaverse is on the rise again, so will this year’s investment focus be on the Metaverse?

Game companies have joined the battle for the tuyere, can you sit back and relax when you seize the tuyere?

According to the “White Paper on Mobile App Purchases in 2021”, the market for mobile game purchases in 2021 will grow by about 14.5%, but the overall growth rate will drop by nearly 30%. With the continuous innovation of high-quality mobile games, consumers have higher and higher requirements for games, and the revenue brought by purchases has been declining.

The reduction in the effect of purchases is actually the awakening of consumers’ self-consciousness, and the younger generation, who are the main players in game consumption, are more willing to follow their own preferences in game selection. But “what do young people like” is a too complicated proposition, and game companies have chosen a simpler solution, which is to seize the wind.

This can explain why the second dimension is so favored by leading companies in the process of investment and financing.Data shows that from January to June 2021, the actual sales revenue of the two-dimensional mobile game market reached 15.81 billion yuan, with a growth rate of 50.15%.

And the biggest outlet in the second half of this year is undoubtedly the Metaverse. According to the statistics of “Game News”, a total of 33 game companies have participated in the construction of the Metaverse this year, either in the form of registered trademarks or in the form of launching related technology development, but most of them have not yet made progress.

However, this does not prevent companies from scrambling to enter this field. Even though the Metaverse is ridiculed as “on paper”, with the development of technology, industry leaders have reached a “consensus” that the integration of the real world and the virtual world is an important development direction in the future.

China Games 2021: Financing of nearly 26 billion from 209, the second dimension lost to the Metaverse?

From this point of view, it is not unreasonable to lay out the metaverse in advance to seize the opportunity. However, trademark registration is only the simplest and least technical step in developing the Metaverse business. Enterprises still need to invest a lot of time and energy to analyze how the market will develop next.

According to the previous investment strategies of leading companies, in the past two years, investors have participated more in the financing of game-related companies through strategic investment, and most of the shareholding ratios are below 30%. In other words, it is “only money, no effort”.

The author believes that this investment model will exist for a long time and will continue to expand the Metaverse business. Compared with fighting alone, it is the practice of leading companies to not miss any other possibilities while doing independent research and development.

For leading companies, under strategic investment, the cost of holding less than 30% of the shares is not high, and even a loss will not shake the foundation of the company. The greater significance is that it can optimize its own business structure. Once any investment product successfully runs off the track, the leading company will have a certain right to speak. It can be said that this is a typical policy of “casting a wide net and fishing widely”.

However, with the overall tightening of the game industry policy, seizing the wind can only stabilize the giant ship of the enterprise. If you want to continue to sail forward, more power is needed.

In the future, high-quality games in the market will become mainstream, and Chinese games will be on a bigger stage

In fact, in 2018, the game industry also experienced a storm of version number suspension, which mainly rectified the chaos in the market filled with inferior coins and provided a guarantee for the overall healthy development of the industry.The suspension of the version number in 2021 is different from that in 2018. Along with the suspension of the version number, there is also the strong supervision of the protection of minors. These two signals together send a signal to the outside world: the era of game quality has really arrived. .

The impact of “the most stringent anti-addiction system for minors in history” is mainly reflected in two aspects: First, minors gradually withdraw from the market, game companies can only absorb money from adults, and adults consume more money. Young people are more rational, which requires game companies to launch more boutique gameplay to attract players.

The second is that adults have more mature minds than minors, which in turn will push game manufacturers to create more “high-energy” gameplay and further promote the quality of games.

But what kind of game can be called “boutique”?

The author believes that in addition to investing heavily in research and development, such as “hardware” such as picture effects and fluency, it is also necessary to consider whether there is a large IP and whether it is integrated with mainstream game platforms.

For example, the mobile game “Harry Potter Magic Awakening” launched by NetEase some time ago adopted the global IP “Harry Potter”, which attracted the attention of many fans at the beginning of its launch. A turnover of 2.3 billion yuan.

With the further development of technology and the gradual maturity of the metaverse, devices such as VR and AR are likely to become mainstream game platforms in the future. Therefore, in the future, whether an enterprise has core technologies in related fields is likely to become a decisive factor in the competition for quality products. From another perspective, companies that have been deeply involved in VR and other fields for many years may have a greater first-mover advantage.

China Games 2021: Financing of nearly 26 billion from 209, the second dimension lost to the Metaverse?

Then, for companies with weaker technical strength, especially for the majority of small and medium-sized game start-ups, it will become more difficult to survive this innovation, but it is not impossible.

According to the data from the Prospective Institute, in 2020, the sales revenue of China’s self-developed games in overseas markets will maintain a steady increase, with actual sales revenue reaching US$15.450 billion, an increase of US$3.855 billion over 2019 and a year-on-year increase of 33.25%. Going overseas has become the consensus of the entire industry.

Especially in the context of the suspension of version numbers and the tightening of policies, going overseas may be the best choice for small and medium-sized enterprises to “slow a breath”. Of course, the highly competitive overseas market also has a certain polishing effect on overseas games, which can make game products appear more refined when they actually mature and “return to China”.

Generally speaking, judging from the current market development, it is unlikely that the game industry will change, but the overall atmosphere of the game industry will undergo great changes, and high-quality games will become the mainstream in the future market. At the same time, the proportion of overseas games will continue to increase, and Chinese games will begin to perform and fight in the global market.

References:

[1] Oriental Fortune Network: Insights into 2021: China’s game industry competition pattern and market share (with market concentration, corporate competitiveness evaluation, etc.)

[2] New knowledge of games: 150 game companies invested in ten years, three strategies of Tencent game investment

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