On December 15th, Tencent Holdings (00700.HK)’s blockbuster new game “Yuanmeng Star” was launched on all platforms. It topped the iOS free list immediately after its launch and dominated the list for many days. It performed well. Due to the influx of too many players, the game server was once overrun that night.
This time Tencent has rarely mobilized various key resources for “Yuanmeng Star”. This high-profile approach seems to show that Tencent has high hopes for this game. Just a year ago, Ma Huateng said at an internal staff meeting He also said that he would never believe in buying volume again.
So why does the game “Yuanmeng Star” receive so much attention from Tencent? Is it expected to grow into the next hit game in the future?
Growth of local games stagnates
Looking at Tencent’s financial reports in recent quarters, the biggest problem is that the revenue from games in the local market, which was once the engine of growth, is facing stagnant growth.
In the first three quarters of 2023, the year-on-year growth rate of local games was only about 4%, which seriously hindered the overall performance.
The local game business basically relies on several old games such as “Honor of Kings” and “Peace Elite” to support the scene. Several new domestic games such as “Golden Shovel War” and “Dark Zone Breakout” are also performing well. However, the game itself has a small audience and it is difficult to become a national-level hit like “Honor of Kings” and “Peace Elite”. game. Tencent needs to find the next new hit.
In 2020, a PC game called “Fall Beans: Ultimate Knockout” became popular overseas, with more than 50 million registered users worldwide in a short period of time. The relaxed gameplay and strong social nature have made party games quickly become popular around the world. Party games have thus become a new trend and opportunity in the industry.
Party games have a wide audience due to their light and fun characteristics. This kind of large DAU and strong social game characteristics are the game categories that Tencent is best at, and can give full play to the traffic advantages of WeChat and QQ.
According to Gamma data, the number of mobile casual game users in China has exceeded 500 million, and the actual sales revenue of the domestic mobile casual game market in the first half of 2023 was 16.705 billion yuan, a year-on-year increase of 135.43%.
Party games are an emerging category of casual games. The main payment method is in-app purchases. The number of potential users in the future is large and the market prospects are very broad.
Tencent’s “Honor of Kings” and “Peace Elite” occupy the two golden tracks of MOBA and shooting respectively. The fast-growing casual party games in recent years have become a strategic area that Tencent must win.
”Yuanmeng Star” has the potential to become a hit game due to its large DAU and strong social attributes. After the launch, due to the excellent product quality and Tencent’s generous and high-standard publicity investment, good results were expected. But whether it can become a big hit depends on its subsequent long-term operating capabilities. The latest big test is the Spring Festival. Let’s see whether the “family fun” concept officially promoted by “Yuanmeng Star” can become a popular choice for family and friends gathering during the Spring Festival. Phenomenal product.
“Yuanmeng Star” VS “Egg Boy Party”
Speaking of “Yuanmeng Star”, we have to mention the competing product “Egg Boy Party” from NetEase.
Since “Egg Boy Party” was launched in May 2022, it has quickly attracted the attention of a large number of casual players, especially young players. In December of the same year, “Eggboy Party” began to gain momentum. Not only did it top the iOS game download list, it also dominated the App Store’s free game list for two months. During the Spring Festival that year, the revenue of “Egg Boy Party” once exceeded that of “Genshin Impact” and was second only to “Honor of Kings” and “Peace Elite”.
Ding Lei said at the 2022 fourth quarter financial report conference call: “Egg Party” achieved exponential growth during the Spring Festival, with the number of daily active users exceeding 30 million, becoming the game with the highest daily active users in the company’s history.
According to official data, the MAU (monthly active users) of “Egg Party” has exceeded 100 million in August 2023. On December 8, NetEase publicly announced that the number of users of the game has reached 500 million.
In the past, “Jelly Bean Man” became popular around the world, and later in NetEase’s “Eggman Party” became popular in China. According to research data from Goldman Sachs, NetEase’s “Danzi Party” will have revenue of approximately 7 billion to 8 billion yuan in 2023.
This also makes Tencent more certain that this is a track that is likely to produce the next big hit, and it is a battle that must be won. Therefore, it can be seen that Tencent has rarely mobilized various key resources for “Yuanmeng Star”, built online + offline momentum, and rarely invested astronomical amounts of cash, which shows that Tencent attaches great importance to “Yuanmeng Star”.
Of course, NetEase has also taken measures. Recently, “Egg Party” has also been promoted on major media platforms such as Douyin. On the day when it announced the achievement of 500 million users on December 8, it announced that it would start a full-scale carnival of “Egg Party” on December 15. Festival”, giving users many free benefits.
And December 15th is the launch date of “Yuanmeng Star”.
In fact, a similar plot happened between Tencent and NetEase a few years ago. It was also the foreign PC version of the chicken game that first became popular, and then NetEase quickly followed up. In October 2017, NetEase took the lead in launching the “Knives Out” mobile game, which became a hit. Tencent’s style of play at that time was very similar to that of now. It also used the same late strike strategy and also obtained the official authorization from the Korean game studio Blue Hole of the original chicken game. A few months later, Tencent’s chicken-fighting game “PlayerUnknown’s Battlegrounds” (later renamed “Peace Elite”) was launched with the selling point of genuine authorization. Relying on the original IP + WeChat’s powerful social advantages, it completely defeated NetEase’s “PlayerUnknown’s Battlegrounds”.
Of course, history will not simply repeat itself. I think “Yuanmeng Star” can still have the upper hand in the confrontation this time, but it will be more difficult to achieve the crushing victory like before.
The reason is that NetEase’s “Danzi Party” has been online for a year and a half, and has accumulated a very considerable number of users, good reputation and UGC ecological foundation. It has completed the initial starting stage and entered a stable development stage, instead of being just a few years ahead. It will face strong competition from Tencent within a few months.
Therefore, it is expected that “Yuanmeng Star” will achieve rapid growth in early users and sales after its launch, but the subsequent winter vacation and Spring Festival are more likely to be the climax of competition between the two, and the subsequent direction of competition requires continued attention.
In short, Tencent won the chicken battle, but NetEase’s “Knives Out” flourished inside and outside the wall, becoming Japan’s second most profitable mobile game in 2020. According to sensor tower data, 90% of the revenue of “Knives Out” comes from the Japanese market. The global cumulative revenue has already exceeded 2 billion US dollars.
Internationalization and the Metaverse
This time Tencent has obtained the genuine authorization of “Jelly Bean Man”, which can be understood as a major selling point against NetEase’s “Eggman Party”. After all, players definitely prefer genuine games.
But at the same time, Tencent also obtained the official license for another well-known party game “Humanity Failed”, which also means that “Yuanmeng Star” has become a rare game in the industry with dual official licenses.
The point is that these two games are popular foreign PC games and do not have mobile versions. Therefore, I think this indicates that “Yuanmeng Star” will not only compete head-on with “Egg Boy Party” in the domestic market, but also point its sword at the same time. The international market with a broader market has set off a new craze of party mobile games abroad.
In addition, “Yuanmeng Star” announced that it plans to invest 1.4 billion yuan in the first phase of the game’s ecological construction, of which 1 billion yuan will be used to encourage UGC map creators, and there will be no cap on long-term investment.
UGC can be said to be the “conspiracy” of the entire party game track. If you want to make an evergreen game, then UGC is absolutely indispensable.
Roblox, the first company in the global metaverse, is currently the world’s largest multiplayer online creative game and is known as the closest prototype to the metaverse. More than 5 million young developers have used Roblox to develop 3D, VR and other digital content, attracting more than 100 million monthly active players.
”Yuanmeng Star” has invested heavily in UGC this time, relying on the Unreal Engine and the ability to use AI to give the map editor stronger creative capabilities, provide more advanced editing functions, and help high-quality and rich content be produced faster, Produce better. It is no longer a simple level-breaking game, but can be seen as a social product. The end of “Yuan Meng Star” is the Yuan Universe.
TikTok has become a new battlefield for game companies
2019 is an important year for Tencent Games.
In the past, Tencent Games relied on the strong traffic advantages of WeChat and QQ. Its major studio groups could easily achieve good results as long as the quality of the games they launched was not too bad, or a mature foreign gameplay was moved to mobile phones.
However, the environment of the game industry has undergone tremendous changes in recent years. On the one hand, it is because MiHoYo’s “Genshin Impact” has exploded globally and become a phenomenon-level game, which has greatly increased players’ requirements for game quality and promoted the game. Quality process. On the other hand, with the explosive development of short videos such as Douyin, Kuaishou, and Bilibili, the traffic monopoly of Tencent-based APPs has been broken, giving game companies more traffic sources.
The great success of “Danzi Party” is largely due to its understanding of Douyin’s traffic, becoming the first large DAU game in NetEase’s history to have over 10 million daily active users.
As more and more young people spend more time on short videos such as Douyin, Tencent is also actively seeking changes.
As analyzed by the author in “The Attack and Defense of Byte and Tencent Games” (published in “Securities Market Weekly” Issue 89, 2023), as Byte withdraws from the game self-research business, it focuses on game live broadcast and advertising industry Tencent and Byte are gradually moving toward reconciliation.
According to data tracked by DataEye, an advertising and marketing data agency cited by the Financial Associated Press, in the past thirty days, nearly 38% of the ads for “Yuanmeng Star” were placed on the Byte-based online advertising aggregation platform Pangolin Alliance (mainly Douyin). ), making it the advertising service platform that Tencent has invested the most in this game. On Tencent’s own advertising aggregation platform Youlianghui, Tencent only places 12% of its advertising resources.
This means that Tencent Games’ past traffic advantage has been eroded by short video platforms such as Douyin, and excellent products from gaming companies such as NetEase can also quickly become popular through non-Tencent channels such as Douyin. And as game version numbers become increasingly tight, competition among game companies in the future will return more to the product strength of games.