Text | Core Competition

Is the hard life of the game industry finally coming to an end?

On July 21, 27 departments including the Ministry of Commerce issued the opinions on promoting the High-quality Development of Foreign Cultural Trade (hereinafter referred to as opinions). It is mentioned in the opinion that we should expand the pilot examination of online games, actively cultivate export competitive advantages in areas such as online games, and actively support the listing and financing of qualified cultural and trade enterprises.

Many people think that this is good news for the gaming industry. Boosted by the news, the shares of a number of game companies in the A-share and Hong Kong stock markets rose sharply today.

In the A-share market, Glacier Network (+ 12.58%) and Huicheng Technology (+ 10.06%) rose by the daily limit, while Panax Notoginseng Mutual Entertainment, Perfect World and Gigabit rose more than 3%. In the Hong Kong stock market, NetEase, Inc rose 6.26%, Xinxin Network rose 6.95%, Baiao Family interaction, Zen Tour Technology and so on all rose more than 3%.

More than one senior practitioner of the game told Jingcore that it is necessary to be cautious about the rise in stock prices in the secondary market, and the policy translates into short emotional links. But it takes a cycle for policies to land, and it takes time for practitioners to restore confidence.

It will take time to repair confidence.

In view of the fact that this "opinion" is too long, I will not repeat it here one by one. We focus on three points: version number approval pilot, game going out to sea, and listing financing.

The second batch of version numbers were issued in June this year, and the words "domestic mobile games (pilot)" appeared in the application category of domestic online game approval information.

On the one hand, the domestic game version number has been suspended for a long time since August 2021, and the examination and approval was resumed on April 11 this year; on the other hand, the pilot project of territorial management of online games was implemented. Many people believe that this signal is the normalization of the game version number.

In this opinion, it is also mentioned that it will expand the pilot audit of online games and innovate the way of supervision after the event. Only in terms of tattooing, this should be good news for the game industry.

However, some practitioners Zhihu Inc. @ Miao Yu believe that the pilot should be conducive to the normalization of the version number, but the real result depends on whether there is the next wave of Tencent and NetEase, Inc's version number, and Tencent is still hoarding a lot of products. He believes that the real sign of the end of the second cold winter of this wave of version numbers is that Tencent gets the version number.

The author found that as of July 21, the State Press and publication Administration had approved and issued 172 game version numbers in 2022. It is worth mentioning that Tencent and NetEase, Inc two big factories are still in a "running" state, and their self-research department products have not yet been issued a new version number.

In addition to the game version number, another focus of the game industry in the past two years is going out to sea.Not only has a new generation of game millionaires such as Lilith, FunPlus and Miha you been born, but traditional manufacturers such as Tencent, NetEase, Inc and Sanqi Mutual Entertainment are also making great efforts to expand the global market.

According to the "China Game Industry report from January to June 2022" released by the Game working Committee, Chinese game companies continued to expand their overseas markets in the first half of the year, and the actual overseas sales of Chinese independent R & D games reached US $8.989 billion, an increase of 6.16% over the same period last year.

It should be pointed out that since 2020, the overseas revenue growth rate of domestic self-research games has shown a downward trend year by year. According to the analysis of this report, it is pointed out that in the increasingly complex and severe international environment, the resistance and risk of domestic game enterprises going to sea are increasing. With the continuous layout of the game industry by the Internet giants, the competition in the overseas market of games will be further intensified.

In this opinion, it is also proposed to vigorously develop digital cultural trade and strengthen international brand construction, including online games.

In recent years, the overseas recognition of China's self-developed game products continues to rise, and the integration of Chinese culture into game products has also become an important channel for culture to go out to sea.

Some practitioners in the industry believe that 27 departments, such as the Ministry of Commerce, have issued "opinions" to emphasize that "supervision after the event" is not a bad thing for the game to go to sea, nor is it entirely good. A senior game expert said that it is possible that games going out to sea in the future will also be regulated.

To put it simply, their concern is that the export game has not been managed before, and once there is a policy intervention, it may affect the leniency of the game going to sea.

Will game companies set off a wave of listing?

At the general environmental level, the development of the global game market has slowed down in 2022.

Focusing on the domestic market, the China Game Industry report from January to June 2022 mentioned that the development of China's game market was hampered by the epidemic and other factors, with revenue and user size declining slightly compared with the same period last year. Overseas markets, according to the Sensor Tower report, global mobile game revenue in the first half of 2022 was 41.2 billion US dollars, down 6.6 per cent from the same period last year.

Over the past few years, the domestic game market has maintained a steady rise in the same frequency. You may not have expected that this will be the case in 2022. Will the manufacturers respond to the same measures? From the point of view of investment mergers and acquisitions alone, the pace of domestic and foreign markets appears to be very inconsistent.

According to relevant media statistics, in the first half of 2022, the global game industry has confirmed a total of 130 investment and financing, acquisition, holdings and other projects, of which domestic accounted for 26%. It is disclosed that the total amount of financing for mergers and acquisitions is 666.5 billion yuan, compared with 3.3 billion yuan in China. Both sets of data fell sharply compared with the same period last year.

Unlike domestic investment and financing entering the "cold winter", H1 overseas investment and financing has ushered in a "hot summer" this year. There were 96 investment projects, an increase of 70% over the same period last year. It was disclosed that the amount of financing and mergers and acquisitions reached 663.1 billion yuan, an increase of 768% over the same period last year.

For the time being, regardless of whether Chinese game manufacturers are unwilling to invest in a slowdown in mergers and acquisitions, or have no courage. We are pleased to see that the policy level has torn a hole for the investment and financing of game companies.

This opinion will incorporate innovative financial services into the plan. It is mentioned that actively support the listing and financing of qualified cultural and trade enterprises, as well as through the issuance of corporate bonds, corporate bonds, non-financial corporate debt financing instruments and other means of financing.

In recent years, few pure game companies have successfully landed in the Aspirh capital market. Last year, only celadon games were successfully listed on the Hong Kong Stock Exchange. As for the A-share market, there has been no newcomer to the game for many years.

Since 2016, A-share regulators have been very strict in the examination of game companies, and few companies with games as their main business have gone public. Recently, a mainstream company listed on A shares, that is, gigabit (January 2017).

It is reported that Miha Youyou, Duoyi Network and so on have also submitted applications for A-share listing, but all stopped queuing. There are also companies like tap4fun that were rejected by the stock issue review committee during the audit process.

In other words, or because of any previous large-scale capital operations in A-shares, the approval process is extremely rigorous and lengthy, allowing some potential game companies to miss the opportunity to go public.

In combination with the "opinions" issued by 27 departments such as the Ministry of Commerce, we encourage active support for the listing and financing of qualified cultural trade enterprises. Does this mean that game companies will have the opportunity to list in A shares? After seeing the exit channel, the financial capital will increase the investment in the game company, and even set off the listing tide of the game company?

A senior game practitioner told Jingjing that this may be too much, and that it takes a cycle for capital to restore confidence. Of course, some practitioners believe that the news is still being followed closely, but on the whole it should be good news.

This "opinion" on whether the game industry will play a role as a weather vane, practitioners have different interpretations. I don't know how you understand it.