ByteDance in the gaming industry has finally turned into a game and a dream.
Recently, Zhaoxiguangnian publicly responded to previous rumors of layoffs for the first time, clearly stating that there will be business direction and organizational adjustments, the game business will usher in a large-scale contraction, and in the future, it will focus more on the exploration of some innovative games and related technologies.
It is understood that ByteDance was established in 2019 to develop game R&D and distribution business, and has successively acquired more than 20 game-related companies such as Shanghai Mokun, Mutong Technology, and Youai Interactive Entertainment. According to incomplete statistics, from 2019 to 2022, ByteDance’s investment in the gaming field is approximately 30 billion yuan.
In July this year, ByteDance’s new game “Crystal Core” was launched and immediately rushed to the top four of the iOS best-selling list. “Crystal Core” is considered to be the first “hit” of a self-developed game. Unexpectedly, just a few months later, ByteDance was "broken".
So, why did ByteDance make such major adjustments to its gaming business? Have you really given up on the gaming track completely?
The downturn of the gaming industry is not over yet?
html On July 27, the China International Digital Entertainment Industry Conference (CDEC) was held in Shanghai. Zhang Yijun, first vice chairman of the China Audiovisual and Digital Publishing Association and chairman of the Game Working Committee of the China Audiovisual and Digital Publishing Association, released the "2023 January- June China Game Industry Report". Thereport shows that from January to June 2023, the actual sales revenue of the Chinese game market was 144.263 billion yuan, a year-on-year decrease of 2.39% and a month-on-month increase of 22.16%. Judging from the scale of game users, the number of game users in China in the first half of 2023 was 668 million, a year-on-year increase of 0.35%.
From the data point of view, the industry stock characteristics are obvious. Although there are some signs of recovery, it is still in a downward cycle. The main reason is that the current willingness of game players to consume is not high, they are becoming more and more sensitive to the price of paid games, and the budget for krypton gold has also been reduced. As Zhang Yijun mentioned, "The main reason for the year-on-year decline in revenue is that users' willingness and spending power have not recovered from January to April; after entering May, despite a large increase in market revenue, it is still difficult to offset the previous decline."
Therefore, it can also be seen that many game companies are facing significant performance pressure. Wind data shows that in the first three quarters of 2023, 12 of the 28 A-share listed game companies have experienced a decline in revenue, and 15 companies have experienced a decline in net profit attributable to their parent companies.
Under this situation, ByteDance's once promising development difficulties have gradually become apparent. In recent years, news about the abolition of many of its studios and projects has been exposed. According to public information, "Endgame", "Dartman", "Art of War: Crimson Tide" (national server), "Legend of Civet", "Martial Arts", "Sonic at the 2020 Tokyo Olympics" and "Warhammer 40K: Thunder" published by Asahi Light Year A total of 7 products of "Expedition" (national server) have been discontinued.
And if we focus on ByteDance itself, this time it is determined to adjust its game business, perhaps not just because of the weak performance of the industry.
focuses on the main line, has it become the main theme of ByteDance’s development?
Looking back at the time point when ByteDance laid out its game business, we can understand that its involvement in the game field also considered opening up more room for growth to a certain extent.
Founder Securities research report has revealed that the essence of mobile Internet monetization is traffic monetization, and in terms of monetization efficiency, game business exceeds e-commerce business and advertising business. In addition, it is understood that the gaming industry accounts for approximately 22.4% of the entire Internet industry revenue, which can be regarded as the “biggest share” of Internet revenue. Of course, from the perspective of ByteDance, developing the game business is also of certain significance for enriching Douyin’s content ecology.
Under this circumstance, ByteDance attaches great importance to the game business and adopts the approach of "strengthening to produce miracles" to increase its investment layout. For example, large manpower and time costs are invested in game development. For example, "Crystal Core" was developed with a team of over 100 people for more than three years. The investment has also yielded certain results.GameLook data shows that within two weeks of the launch of "Crystal Core", the revenue across the entire platform reached 400-500 million yuan, and the single-day revenue is estimated to exceed 30 million yuan; in the domestic ARPG (action role-playing game) category during the same period, "Crystal Core" It is the mobile game with the strongest ability to attract money.
However, as the development of the Internet industry slows down and cost pressure becomes more and more obvious, relevant companies have begun to think about "how to pursue higher quality and rational growth." In view of the current situation of the game industry, "shrinking focus" has gradually become a Byte The beating theme of development.
In fact, the e-commerce business has always contributed the most to ByteDance’s performance. It is understood that in the first half of this year, ByteDance’s revenue reached US$54 billion, almost equal to 89% of Meta’s revenue in the same period, and the revenue mainly came from domestic Douyin e-commerce.
According to Douyin official disclosure, in the past year, the global Douyin e-commerce gross merchandise volume (GMV) has grown by 80%, of which Douyin Mall GMV has grown by more than 140% annually. Douyin has set its GMV target at 2.3 trillion in 2023, and has completed 2 trillion as of October this year. Moreover, overseas business TikTok may become ByteDance’s biggest growth point in the future. According to public information, the total transaction volume of TikTok’s e-commerce business will be US$2 billion in 2022, and the annual total e-commerce transaction target by 2023 will be US$23 billion.
Therefore, with the development of its main business being strong, ByteDance has not only made adjustments to its game business, but also made significant contractions in new businesses such as education and PICO. According to insiders, currently nearly half of PICO's employees will be transferred or laid off, and more will only retain hardware developers.
Regarding strategic contraction, at ByteDance’s 11th anniversary annual meeting, ByteDance CEO Liang Rubo also said, “In the next year, the company will focus on the two main businesses of information platform and e-commerce; we must have imagination for exploratory business. strength while maintaining a normal mind.”
However, returning to ByteDance’s game business, there may be a treasure trove worth cultivating.
mini-games, does ByteDance still need to work on?
The current game products can be roughly divided into three categories: the first category is hard-core games represented by Steam and the console buyout system;
the second category is to meet the needs of hard-core game users upwards, and also downwards. Games that are compatible with novice experience upgrades are generally called mid-core overseas. The third category is casual games, which generally have low difficulty, easy installation, and high playability.
Among them, small games have gradually become an incremental and objective track. In recent years, the popularity of small games such as "Jump", "Sheep" and "Synthesize Watermelon" have been confirmed.
From a research and development perspective, compared to mid-to-hardcore games, the development cycle of this type of game is shorter and the related costs are lower. A report from the Huajing Industrial Research Institute pointed out that even for natively produced mini-games, the R&D cycle and cost can be reduced to at least 50% of that of mobile game apps; under the same launch effect, the R&D payback cycle for mini-games is shorter. Moreover, there are already very mature technologies to support the development of this type of game.
Therefore, the mini-game market has also become a treasure trove for game developers to bet on. In June 2023, the WeChat Mini Game team stated at the Mini Game Developer Conference that as of June 16, the number of WeChat Mini Game developers exceeded 300,000, the total number of users exceeded 1 billion, and MAU exceeded 400 million.
The mini-game business also provided a strong boost to Tencent’s performance growth in the third quarter to a certain extent. In its third-quarter financial report, Tencent mentioned mini-games four times. In this regard, Liu Chiping, executive director of Tencent, said, "WeChat Mini Games is the largest casual game community in China. At present, the advertising loading rate of mini games is still very light. We hope to achieve more monetization in the future."
In addition, it is understood that although young and middle-aged people aged 24 to 40 are the main players of WeChat mini games, the proportion of users over 40 years old has also reached 30%. This means that the user groups targeted by mini-games are not limited.
In this case, ByteDance is actually expected to get a piece of the pie. Specifically, based on the traffic advantage, the development of Douyin's mini-game ecosystem is also relatively strong.
public information shows that the number of active users of Douyin mini games will increase by 45% in 2022, and is expected to increase by 150% in 2023. The Douyin mini game ecosystem is entering a period of rapid development.
Perhaps it is precisely because of the prospects of the small game market segment that ByteDance’s major adjustment of its game business does not affect Ohayoo, which focuses on small games. Ohayoo has developed rapidly in recent years with the help of traffic platforms such as Douyin and Toutiao. As of now, the Ohayoo platform has released more than 200 games, with cumulative downloads exceeding 1 billion, monthly active users exceeding 80 million, and 14 games with sales exceeding 100 million.
Overall, it is undoubtedly a more pragmatic move to apply limited resources to businesses with more substantial growth than pursuing "big and comprehensive". On this basis, ByteDance is also targeting a more promising business. future. It is worth mentioning that since 2020, there have been frequent reports that ByteDance is considering going public. Although the IPO process has not been implemented, ByteDance's development focus will undoubtedly enable it to "pack lightly" and achieve a more reliable Continued growth is also expected to receive more positive feedback from the capital market.
Author: Platelet
Source: Song Guo Finance
