Party Pooper: Tencent’s “Yuanmeng Star” Struggles Against NetEase’s “Egg Boy Party”

“Yuanmeng Star” is not merely a game to us; it encapsulates a social dimension, serving as our bastion. It is imperative that we exert our utmost efforts to amalgamate all endeavors, fostering collective exploration and development,” articulated Ma Huateng at Tencent’s annual convocation on January 29th, underscoring the significance of “Yuanmeng Star” as the harbinger of the company’s aspirations to ascendancy.

Why, one may ponder, does Tencent bestow such considerable attention upon a mere amusement?

I contend that Tencent’s framework transcends the confines of a mere gaming entity. The elevation of “Yuanmeng Star” to the echelons of the conglomerate’s strategic ambit stems largely from discernible trends and nascent energies reshaping the future trajectory of Tencent as a whole. “Egg Party,” for instance, leverages the guise of gaming to tap into the youthful market through a User Generated Content (UGC) ecosystem, thereby unsettling the erstwhile stability Tencent enjoyed amidst content and channel competition. Consequently, “Yuanmeng Star” metamorphoses beyond the confines of a singular gaming category, as Tencent wagers on the genesis of next-generation social milieus.

It stands to reason that the substantial Daily Active Users (DAU) and subtle social attributes of “Egg Party” seamlessly align with Tencent’s historical trajectories in gaming product development and traffic prerogatives. However, post-Spring Festival, the pinnacle of game marketing fervor, the chasm between “Yuanmeng Star” and “Egg Boy Party” quietly widens.

On the user front, NetEase officially disclosed that “Egg Boy Party” surpassed 40 million DAU on New Year’s Eve, while “Yuanmeng Star” remains reticent about its DAU statistics during the Spring Festival. Nevertheless, the schism between the two amplifies on the revenue spectrum. As per data until February 15th, the cumulative revenue of “Egg Boy Party” over the past 30 days on the China App Store approximated 144 million yuan, eclipsing “Yuanmeng Star” by approximately 61.55 million yuan.

In response, a Tencent IEG insider remarked, “Part of the rationale lies in the fact that ‘Yuanmeng Star’ has yet to embark on a concerted commercial endeavor, with revenue not constituting the focal point of its current phase.”

Noteworthy is the revenue surge experienced by “Peace Elite” and “Honor of Kings” during the winter hiatus and Spring Festival, indicative of the game’s robust user base stability. For instance, “Honor of Kings” introduced a total of 18 new skins in January, a notable escalation compared to previous periods. Moreover, the full-scale release of “Honor of Kings” on the Douyin platform before the Spring Festival buoyed user acquisition and retention, thereby propelling revenue growth through the synergy of new users and novel skins.

Setting aside the aforementioned considerations, the variance in Average Revenue Per User (ARPU) values between “Yuanmeng Star” and “Egg Boy Party” also contributes to the revenue gap. Third-party data suggests that users of “Egg Boy Party” exhibit greater propensity and contentment towards purchasing in-game assets, with ARPU hovering around 35 yuan, while Yuanmeng’s ARPU oscillates between 10 to 17 yuan.

In light of this, some seasoned gaming pundits posit that the familial carnival ethos underpinning “Yuanmeng Star” ought to yield higher ARPU returns than “Egg Party.” However, the latter excels in catering to niche demographics, engendering fervent patronage among party aficionados. Consequently, its efficacy in advertising, traffic orientation, and diversion is markedly superior. Should this trend persist, it is conceivable that “Egg Boy Party’s” ascendancy will be further accentuated in 2024, thereby widening the gap in market share and revenue vis-à-vis “Yuanmeng Star.”

Tencent’s underestimation of Danzai becomes apparent.

Ma Xiaoyi, Tencent’s senior vice president, once extolled Tencent’s proficiency in pioneering gameplay innovations, positing it as the linchpin for industry advancement and user base expansion. However, he also acknowledged the exigency for a multifaceted content strategy in lieu of breakthrough gameplay innovations. In this context, miHoYo’s content-driven approach serves as an instructive exemplar, warranting emulation.

In hindsight, NetEase has furnished Tencent with another instructive parable.

Since its inception in May 2022, “Eggman Party” has steadily amassed momentum, propelled by UGC mechanisms and short-form videos, metamorphosing into an unsuspecting luminary within gaming circles and galvanizing social revelry.

Third-party analytics evince that “Eggman Party” not only dominated the iOS game download charts from December 23, 2022, but also reigned supreme atop the App Store’s free game rankings for two consecutive months. During the 2023 Spring Festival, “Eggman Party’s” revenue momentarily eclipsed that of “Yuanshin,” trailing only “Honor of Kings” and “Peace Elite.” NetEase further divulged during its 2022Q4 financial briefing that “Egg Boy Party” witnessed exponential growth during the 2023 Spring Festival, amassing over 30 million DAU.

Despite “Eggman Party’s” incumbency advantage, Tencent has meticulously plotted its foray into the party gaming domain. Epic Games, a Tencent-affiliated entity, acquired Tonic Games Group, the parent company of Mediatonic, developers of “Fall Bean Man,” in 2021. Concurrently, Cisco introduced “Beast Party,” which ascended to the summit of Steam’s global anticipation rankings. Moreover, collaborations with Nintendo yielded party game adaptations such as “Mario Kart 8 Deluxe” and “Super Mario Party.”

Insiders intimate that Tianmei initially contemplated direct competition with “Danzi Party.” However, the latter’s user base predominantly comprised younger and female demographics. Owing to various considerations, perhaps apprehensions regarding regulatory compliance, Tencent opted to eschew direct confrontation, thereby recasting “Yuanmeng Star” as a family-centric amusement targeting a diverse demographic spectrum. Regrettably, this strategic pivot inadvertently undermined its ability to capture the core constituency of “Egg Boy Party” and cultivate distinct audience niches.

A meticulous analysis of third-party metrics elucidates contrasting user engagement patterns between “Egg Boy Party” and “Yuanmeng Star.” The former elicits protracted engagement, with users averaging nearly 2.6 daily sessions. Conversely, “Yuanmeng Star” registers an average of 2.33 daily sessions, with roughly 20% of playtime dedicated to peripheral activities. Evidently, Danzai aficionados gravitate towards leisurely engagement modalities, whereas Yuanmeng enthusiasts evince a predilection for immersive, time-intensive gameplay.

Though “Yuanmeng Star” has traversed a mere two-month trajectory, two pivotal junctures loom large: its inaugural month and the winter holiday and Spring Festival period, representing crucibles wherein the game’s fate may be irrevocably sealed. Alas, despite Tencent marshaling its corporate might in support of Yuanmeng, ranging from cross-platform integration to concerted marketing endeavors, the game evinces no discernible headway vis-à-vis Danzai.

While Tencent boasts formidable social capital and an enviable IP repository, NetEase’s “Danzi Party” has effectively solidified its market hegemony, shaping entrenched user predilections. Emerging as a paradigmatic party game IP, “Danzi Party” presents a formidable challenge to its counterparts. Faced with this ineluctable reality, the face-off between “Yuanmeng Star” and “Egg Boy Party” portends a fiercely contested battleground. Even with Tencent mobilizing its full array of resources and orchestrating synergistic alliances across channels, the prospect of reversing the tide in this protracted party war remains elusive.

Casting our retrospective gaze to 2017, amidst the PUBG phenomenon, NetEase’s preemptive launch of “Knives Out” was swiftly overshadowed by Tencent’s triumphant foray with “Peace Elite.”

Three salient factors underpinned Tencent’s triumph in the battle royale milieu: Firstly, social competitive gaming dovetailed seamlessly with Tencent’s traffic ecosystem and social nexus epitomized by WeChat and QQ. Launching its chicken-themed mobile game during the Spring Festival capitalizes on the surge in demand for online diversions during festivities. Secondly, NetEase’s “Wild Action” faltered in its nascent stage, lacking entrenched user bonds, thereby mitigating the sunk costs associated with user attrition. Lastly, Tencent’s ownership of authentic gaming IPs conferred a competitive edge, augmenting user acquisition and engagement.

Fundamentally, “Peace Elite” engendered a network effect among users during the Chicken Fight, fulfilling the imperative for swift team formation and commensurate skill-level matching. Analogously, “Egg Boy Party” has transcended the confines of a standalone game, evolving into a platform product. Leveraging copious resources and a robust content ecosystem, “Egg Party” perpetuates a virtuous cycle of user-generated content, fortifying its word-of-mouth and brand influence, and expanding UGC potential exponentially.

Henceforth, assessing the performance of “Yuanmeng Star” over its two-month tenure since launch, sustaining its momentum proves arduous, let alone replicating the spectacle of the “Chicken War” in 2018.

I posit that “Danzi Party” confronts two primary user barriers:

Firstly, a demographic disparity prevails between its user bases: “Danzi” predominantly attracts students and female users, with a notable presence among college demographics. In contrast, “Yuanmeng Star” boasts a more diverse user cohort; merely 11% of monthly Active Users engage with both “Eggman Party” and “Yuanmeng Star” simultaneously (as per Questmobile data in January 2024).

Secondly, vying for market share and consumer expenditure between the two products is inevitable. “Yuanmeng Star” grapples with formidable challenges in enticing “Danzi Party” players or captivating new audiences. Under such circumstances, “Yuanmeng Star” faces mounting hurdles in retaining purchase volumes. It is conceivable that building a 30 million DAU party product, within Tencent’s capabilities, necessitates substantial investments and resource allocations, albeit unsustainable in perpetuity. Should ROI falter and purchase volumes dwindle irreparably, protracted engagement becomes untenable.

The crux lies in “Danzi Party’s” adept validation of the student demographic as its primary audience, spearheading its inception via content-driven traffic. Thus, it enjoys a first-mover advantage in user models and content preferences, culminating in the establishment of a robust core user base. Notably, upon “Yuanmeng Star’s” launch on December 15, 2023, NetEase’s “Danzi Party” had already attained the “double million achievement,” boasting over 100 million Monthly Active Users (MAU), accumulating 1 billion total maps, and amassing 500 million registered users, with 30 million DAU.

Consequently, “Yuanmeng Star” finds itself compelled to accentuate its differentiators and embark upon active innovation within core gameplay. Recent endeavors, such as the promotion of werewolf killing, shooting PVP and PVE, alongside the downplay of primary racing gameplay and frequent updates to secondary gameplay elements, underscore its aspiration to evolve into a “QQ lobby” offering diversified gameplay to ensnare a broader user base.

In this context, a gaming analyst contends that Tencent has succumbed to a myopic fixation on cultivating a massive DAU, irrespective of product quality. He opines, “Yuanmeng, though inherently more enjoyable than ‘Danzi,’ finds itself futile in usurping its counterpart’s entrenched user base. Unlike the nascent days of the Chicken War, wherein temporal discrepancies facilitated market entry, the landscape of domestic party gaming has since matured, with ‘Danzi’ firmly ensconced within the student communication circle. Prowling the peripheries for marginal demographics proves futile at this juncture.”

Why, then, does User Generated Content (UGC) emerge triumphant?

Reflecting upon the meteoric ascent of “Egg Boy Party,” following a brief surge in popularity post-May 2022 launch, its fortunes dwindled, languishing beyond the top 200 bestsellers in the App Store. The tide turned two months later with the integration of a UGC editor at the forefront, catalyzing a resurgence via pioneering social platforms like Douyin. Subsequent introductions of werewolf killing gameplay and diverse map variants during the 2023 Spring Festival injected fresh vitality into the UGC ecosystem, propelling “Egg Boy Party” to dark horse status within the gaming sphere.

“Party games are quintessentially vessels devoid of prescribed gameplay standards. Defined by inclusivity, any modality conducive to collective engagement finds resonance within this realm. The party track embodies expansive possibilities, necessitating perpetual exploration,” remarked Xiang, a seasoned game producer.

According to CITIC Securities’ analysis, party games epitomize lightweight multiplayer competitions, characterized by low entry barriers, viral propagation, and the emergence of phenomenon-level DAU products. Despite domestic casual gaming surpassing 800 million users, the party game market remains relatively underexploited, presenting a blue ocean opportunity within mobile gaming segmentation.

Furthermore, HSBC Brokerage’s prognostications posit that “Egg Boy Party’s” robust UGC ecosystem, encompassing 20 million content creators and generating 3.8 new maps per second, alongside sustained promotional endeavors, augur well for its sustained leadership in the short term.

Hence, Tencent’s palpable unease precipitated a staggering $1.4 billion investment in game ecological incubation during its inaugural phase, with $1 billion earmarked for bolstering UGC creation. Sensing the imperative to seize the initiative, Tencent recognized the UGC map as an inexorable focal point for competition. To capitalize on this, Tencent forged alliances with Douyin, Kuaishou, Bilibili, Douyu, Huya, Xiaohongshu, Weibo, and other platforms, culminating in the formation of “Xingmeng Partners,” underscoring Tencent’s profound regard for Yuanmeng.

While a game’s intrinsic efforts are pivotal, accounting for market dividends is equally imperative. Relative to Bilibili, Douyu, Huya, Kuaishou, QQ, Weibo, and other platforms, Douyin emerges as the linchpin in catalyzing “Egg Boy Party’s” ascendancy.

Primarily, Douyin’s traffic ascendancy and entertainment-oriented milieu, coupled with its youthful user demographic and the burgeoning popularity of short-form videos, ideally complement the growth trajectory of casual games. Moreover, short-form videos and live broadcasts serve as conduits for showcasing player-generated gameplay and immersive party scenarios, with the UGC mechanism engendering palpable playability value and enhancing game longevity, consonant with the social ethos underpinning party games.

Indeed, “Egg Boy Party’s” resonance with the post-2000 generation, capitalizes on opportune timing and positioning:

On one hand, “Eggman Party” melds impeccable artistry with a relaxed gameplay tempo, fostering highly interactive social gaming experiences—ranging from competitive races to team-based thematic levels and two-player cooperation or confrontation—endeared by myriad young players. These gameplay vistas epitomize a novel “social currency” resonating with the self-expressive proclivities and robust group identities characterizing the post-2000 generation.

On the other hand, the UGC framework engendered by “Egg Boy Party” transcends conventional boundaries, affording players unfettered autonomy in level creation and map customization, thereby engendering a nexus of creative synergy and engendering novel content beyond the traditional confines.

The gaming industry adroitly navigates the content consumption-production conundrum through three paradigms:

Firstly, the PVP mechanism engenders player cooperation and competition, independent of official content interactions, exemplified by competitive juggernauts like “Honor of Kings” and “Peace Elite.”

Secondly, enhancing randomness augments replayability by introducing diverse variables, typified by Roguelike games.

Lastly, the UGC mechanism empowers players to partake in crafting game mechanics and gameplay, harmonizing content production with consumption and extending game lifecycles.

Presently, “Egg Boy Party” transcends its party game origins to morph into a content dissemination-centric product, evolving into a platform product. Correspondingly, user experiences undergo a paradigm shift—from sporadic gameplay sessions to consuming novel gameplay or maps—astride a seamless resolution of content production-consumption dichotomy.

This seismic transformation within party games heralds a paradigmatic shift. Whereas erstwhile industry dynamics hinged on lightweight casual games and card-based diversions to educate users, the contemporary landscape witnesses a reconfiguration—wherein lightweight games transition towards substantive engagement. Notably, “Eggman Party’s” enriched gameplay and escalating complexity render casual party games tantamount to their more serious counterparts.

In alignment with this trajectory, “Yuanmeng Star” charts a growth trajectory akin to “Danzi Party” post-launch. DataEye-ADX elucidates that during the initial month following its launch, the Pangolin Alliance (TikTok streaming channel) constituted nearly 40% of Yuanmeng’s distribution channels. Tencent’s enlistment of Zhang Daxian, the “king brother,” for Douyin live broadcasts, garnered over 60 million views and 1.2 billion likes.

However, despite “Yuanmeng Star’s” auspicious beginnings, buoyed by anchor-driven momentum and purchase volume surges, this data deluge betrays an artificial impetus akin to “pulling seedlings to stimulate growth”:

On one hand, “Yuanmeng Star” primarily attracts users via Tencent’s manifold platforms, comprising a significant proportion of exploratory or early adopter demographics. Lacking vertical player engagement, cultivating user loyalty and consolidating the user base proves challenging, precipitating tepid user expenditure rates.

On the other hand, “Yuanmeng Star’s” nascent stage engenders a transient influx of users procured via internal and external IP linkages, predominantly enticed by promotional skins or incentives. Subsequent user retention, activity, and expenditure metrics exhibit tepid performance in the ensuing days and weeks.

In this context, industry insiders perceive Yuanmeng as emblematic of IEG’s strategic disquietude vis-à-vis Danzi Party. “Honor of Kings” boasts over 8 years of operation, while “Peace Elite” nears its 5-year anniversary. Despite Tencent’s expansive portfolio, it grapples with the absence of compelling new products to succeed incumbent titles, adopting a reactive stance vis-à-vis industry trends, epitomized by the ascent of “Genshin Impact” in 2020 and the party game zeitgeist ignited by “Egg Boy Party” in early 2023.

Even Ma Huateng underscored gaming’s imperative for perpetual innovation during Tencent’s annual meeting on January 29, lamenting the company’s lackluster response to emergent challenges. He remarked, “In the past year, formidable challenges loomed large. As new-generation game companies proliferate, our dearth of breakthroughs in gameplay and content is palpable. Our peers continue to innovate, leaving us feeling stagnant.”

Currently, NetEase’s bolstered deterrence via “Egg Boy Party” portends increasingly daunting challenges for Tencent Games at large.

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