Metaverse games can’t save Chinese game companies

The core of Metaverse games, Chinese game companies can’t learn

At present, as long as it can be a little side, a “Metaverse” can be added to the corporate concept column.

In the field of games, the concept of Metaverse is equivalent to the password of wealth. Metaverse is to games what the concept of new energy is to car companies. It seems that everyone can build cars across borders, but is that really the case?

Metaverse game core

High user stickiness

Roblox is a game that went live 17 years ago. After entering the U.S. stock market this year, the stock price has risen sharply, and its market value has even surpassed traditional game manufacturers such as Nintendo and Activision Blizzard.

After that, the Metaverse game concept was heated up. In the A-share market, many game companies have also begun to catch up with the concept of Metaverse. As represented by Zhongqingbao, it announced that it will release a Metaverse concept simulation business game. Although the game is still under development, its attributes cannot be confirmed. However, this has allowed Zhongqingbao’s stock price to rise more than three times in 51 trading days.

In fact, Roblox has been operating at a loss since its listing, and the loss has increased significantly in the past year. In 2021, the quarter-on-quarter loss of Q3 was US$74 million, which was narrower than the US$140 million loss of Q2, but the loss was larger than the same period last year.

Metaverse games can't save Chinese game companies

The first share of metaverse games has not yet been profitable. It is conceivable that other metaverse games that are still in concept will have a bubble. Investors should be clear about what is the core of Roblox’s popularity? Then we can use this to distinguish whether other games that also focus on the concept of Metaverse really have development potential.

“Mantis Watch” selects the world’s most popular 5 game keywords, namely Roblox (“Roblox”), LOL (“League of Legends”), Fortnite (“Fortnite”), PUBG (“PUBG Mobile”) ), WOW (“World of Warcraft”), a comparison of global search trends in the past 9 years.

It can be seen that, normally, the popularity of a game will decrease with the time it goes online. After reaching the peak, the popularity will often continue to decay, but Roblox as a whole shows a different trend.

Metaverse games can't save Chinese game companies

Roblox is the first stock of Metaverse Games, and the financial report after listing shows that it has not made a stable profit through revenue. However, as shown in the figure above, Roblox has outstanding highlights, and the popularity curve of an established game has risen smoothly, and it can still maintain a high user growth rate.

This trend can also be reflected in Roblox’s financial report, Roblox Q3 daily active users reached 47.3 million, a year-on-year increase of 31%. More importantly, in the past two years, Roblox’s daily active users have never seen a decline, and the growth rate of its user base has accelerated since last year.

Metaverse games can't save Chinese game companies

The continuous high growth of Roblox daily active users is drawing the unlimited prospects of Metaverse games. This is the key to attracting investors and recognizing Metaverse games. But in fact, it may be difficult for Chinese game companies to learn Roblox’s growth core, and even if they do, they will have to face a longer monetization cycle.

China Game Company

Cannot copy Roblox

In September of this year, “Squid Game” was launched on the streaming media platform Netflix. In less than a month, in major game social media and game live broadcasts around the world, you can see a copy of the levels and scenes in the play. Game screen.

And it is Roblox that set off this second wave of “squid craze”, which allows players to use the platform to quickly replicate scenes in the drama and quickly gamify them. This phenomenon is also a good explanation why Roblox can last forever.

Roblox actually only assumes the role of platform operation, and its content is mainly produced by users (UCG). Users keep up with current affairs hotspots and continue to make games to enrich the gaming experience on the platform. This makes it not dependent on a specific IP, or requires developers to iteratively update.

If the game is not easily outdated, it is necessary to provide users with a high degree of freedom, and the Metaverse game is most likely to be presented in the form of a platform. But as a platform, although you can better face the problem of user attenuation, it also has to face a longer period of profitability.

A senior game practitioner pointed out that comparing the strategy of launching a single game, doing a platform like Roblox is like building a B station in the video field. Most game practitioners will not choose this path. “Mantis Observation” believes that this is also one of the reasons why Chinese game companies cannot replicate Roblox. The core of Metaverse games lies in the way it operates.

First of all, being an operator needs to pay a high price.

In order to accumulate users, Roblox chose to distribute the revenue of players’ krypton gold to game developers in order to create better content and attract more players to join. Roblox’s financial report also shows that this year the company paid $130 million in dividends to developers, which is 5 times the sales expenses during the same period.

Metaverse games emphasize high degrees of freedom and social attributes, encourage users to create, and improve the interactive experience of virtual friends playing games and competitions to form a virtuous circle. This means that game companies should focus on operations to improve user experience. Whether it is to share creative users or maintain community stickiness, it is necessary to sacrifice a part of the company’s profit as the premise.

However, Chinese game companies like to go the other way roughly, and are more willing to take the initiative to make game promotion content into pictures, videos, etc., and put them on various media, forums, short videos and other platforms for “buying.” This model keeps the cost of game companies high. The most prominent is Sanqi Mutual Entertainment. Its sales expenses in 2017 were 1.91 billion yuan, and by 2020 it soared to 8.21 billion yuan.

Metaverse games can't save Chinese game companies

There are three main ways to charge domestic games: prop-based charging, in-game function charges, and in-game advertising charges. Take the glory of the king as an example. Heroes, skins, and runes are the main ways players consume. In order to increase revenue to cover the high promotion costs, the phenomenon of forced krypton is very common in various domestic games.

It is foreseeable that it will still be at a loss during the expansion period. This is the only way for the Metaverse Game Company. Even if Chinese game companies have technically realized the elements of Metaverse games, in terms of operation and management, it may be difficult to lay down their urgent profitable hands and lean over to intensively cultivate.

Looking specifically at it, there are actually a lot of uncertainties in the operation of a game. For example, a BUG may seriously affect the playing experience. Or a certain failed marketing campaign will hurt Krypton’s game feelings and cause loss of users. These will have a negative impact on the sustainable operation of this game.

Metaverse games like Roblox should be niche at first, and they need long-term user training to get follow-up feedback. However, the games in operation often have accidents, and they still need to be watched while walking. For our research games that focus on the concept of Metaverse, in fact, the eight characters have not yet been written, and it is even more difficult to judge its intrinsic value.

In addition, the supervision of public opinion is actually increasing the uncertainty of the future of metaverse games.

If the government introduces relevant industry restriction policies, including but not limited to restrictions on games for minors, cancellation of software-related policy tax incentives, additional taxes, and restrictions on game version numbers, etc. This kind of Metaverse games is still in its infancy, and may disappear like the after-school education and training industry.

Metaverse game

Still a “premature baby”

Although major Internet companies have deployed Metaverse games.

For example, Tencent has invested in Roblox and Epic Games. In addition, he is also developing Metaverse-related technologies and applications, such as the blockchain accounting system Zhixinchain, virtual human Siren and so on.

NetEase’s Ding Lei also publicly stated that NetEase is ready for Metaverse at all levels of technology and planning. With a shot, NetEase may run faster than anyone else.

Mihayou spent 89 million US dollars in the stranger social application Soul, exploring how to socialize between avatars, and preparing for the identity system of the Metaverse game.

ByteDance and Tencent participated in the acquisition competition of VR hardware vendor PICO. In the end, it spent about 9 billion yuan on acquisitions to get it into the bag. In addition, it also invested in the code Qiankun of the mobile game company that has the UGC creation platform “Restart the World”.

But at this stage, the big factory is obviously just spending money to find opportunities.

Tencent’s page is currently only a display, and there is no payment method. The boss of ByteDance said directly that it would not consider profitability within 5 years. Mihayou’s virtual characters set an amount, but few people pay the bill.

Dachang may have the best chance of converting the Metaverse concept into a product, but they are still far from commercialization. And those A-share game companies that are still in trouble are talking about Metaverse games, but because this is the only life-saving straw they can hold on.

For example, the performance of Zhongqingbao Games is not outstanding. It is mentioned in the 2021 semi-annual report that 6 of the 12 projects the company promised to invest in did not generate profit. Its own performance has been dismal enough, coupled with the overall decline of the online game industry. At this time, the concept of the Metaverse has fallen from the sky. Is there any reason not to hurry up and hype?

Although companies such as Sanqi Mutual Entertainment, Chuangmeng Tiandi, Dianhun Network, and 439 have registered trademarks related to “Metaverse”. But at present, it is still only at the stage of registering a trademark.

In fact, they knew very well that Metaverse games were only super “premature babies.” A person from a game company told the “Securities Daily” reporter that many game companies currently have plans for VR, but they are more cautious within the company as to whether they are involved in Metaverse, and further judgment is needed.

“Mantis Observation” believes that technology is not the biggest difficulty preventing Chinese game companies from developing a Metaverse game, because at this stage, as long as certain elements can be met, it is considered a Metaverse game. However, Metaverse games are still full of risks in China. Both Metaverse and Metaverse games are still too illusory, and they cannot bring economic effects to these companies in a short time.

What the metaverse truly embodies is actually the virtual reality technology behind it and the reserve of related content creation capabilities. The concrete manifestation of a successful Metaverse game is actually the operational capability behind it. However, how to face the long profit cycle and cultivate a long-tail game, Chinese game companies still need to learn.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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