Financial Services Association, March 28 (Reporter Cui Ming) The growth of the mini game business compounded the low base in 2022, and China Mobile Games (00302.HK) turned a loss into a profit last year. At the performance conference held today, Xiao Jian, chairman of China Mobile Games, revealed that the company's mini game revenue last year exceeded 600 million yuan, and more than 10 mini game products will be launched this year. A CIFA reporter learned that the Chinese mobile game's key IP masterpiece “World of Fairy Sword” will begin three tests in May this year, and it is planned to officially launch within the year.

According to the 2023 financial report released by China Mobile Games last night, the company's total revenue last year was 2,606 billion yuan, down 4% year on year; adjusted net profit was 5.379 million yuan, turning a year-on-year loss into a profit.

However, gross margin declined due to the decline in revenue contributions from self-developed games. According to financial reports, in 2023, the gross margin of mobile games in China was 36.2%, a year-on-year decrease of about 5 percentage points. China Mobile Games explained that the main reason was that the revenue of the company's two core self-developed games, “All Star Fighter” and “Thunder Dominion,” fell short of expectations.

In terms of self-developed new games, the wholly-owned subsidiary of China Mobile Games, Wenmai Interactive Self-Research (002555.SZ), the only domestic distribution strategy mobile game “City Lord World” with the theme of the Three Kingdoms was launched last year. Xian Handi, vice chairman of China Mobile Games, said that the game is still in the early stages, and there is a certain delay in revenue. In addition, the company plans to continue developing and promoting the second similar game, “Code Name: Hero”, in order to gain more market share in this game category.

Compared to the lackluster performance of mobile games, mini-games have become a new business growth point for mobile games in China, and are also frequently mentioned by company executives at performance meetings.

Last year, the mobile game “Legend of Sword and Fairy: A New Beginning”, a collaboration between China Mobile Games and Kaiying Network (002517.SZ), was at the top of the WeChat Mini Game bestseller list. It also launched various mini-game products such as “Legend of Kyushu Sword and Sword” and “The Legend of Gunmen for All” and “The Legend of Gunmen for All”. The reporter learned at the performance conference that last year, mini-games brought in more than 600 million yuan in revenue for mobile games. Xiao Jian revealed that the mini-game “Country Love: Management Life”, authorized by Benshan Media, is scheduled to be officially launched in the first half of this year.

Xian Handy said that since the ARPU value of mini-games is generally lower than that of app games, the company's overall ARPU value decreased last year (down from 201 yuan in 2022 to 183 yuan in 2023). However, he said that this is also in line with current consumer trends in the domestic game market, and game companies are beginning to focus on developing game activity and payment rates.

At the results conference, China Mobile Games also revealed the latest developments in the key IP masterpiece “Fairy Sword World”, which has received much attention from the market. Currently, “Fairy Sword World” has started an online reservation campaign. The number of reservations has exceeded 4 million, and two tests have been carried out. It is scheduled to be officially launched in 2024. The reporter learned that the pre-launch commercial billing test (third test) will begin in May of this year. The commercial design of this game is mainly cosmetic payment.

AIGC technology is widely used in “World of Fairy Swords”. According to the Chinese mobile game side, after “Fairy Sword World” introduced AIGC assisted design, the production cost of original game art was reduced by about 50% compared to the original game art. It is also used for in-game NPC production. The design is based on an event-driven AI decision-making framework, which can quickly generate NPC behavior. The company will also continue to explore AIGC's ability to assist in R&D scenarios such as 3D motion generation, 3D model generation, scene generation, and dubbing generation in game development.

According to reports, the “World of Fairy Sword” game will enable account exchange between different platforms. No matter what device the player accesses, they will access the same world. Furthermore, “Fairy Sword World” will be adapted to multiple terminals to improve terminal reach. It already supports mobile, PC, and cloud, and will continue to launch VR/MR versions and console versions in the future.