36 krypton Finance
Cover source | visual China
Rumors circulated for several times. On April 11, the news that the game version number that had been suspended for more than 8 months was re issued was confirmed.
On the same day, the game sector of ah shares was in a carnival. A-share glacier network, Dasheng culture and Youzu network rose by the limit. Hong Kong stock station B rose by more than 14%, Tencent and Netease rose by more than 5%, and heart company rose by more than 22%.
In the reviewed list, the common points of the characteristics of 45 games are widely discussed. The factors such as the number of approvals, development companies and game types have become the incision for the industry to try to get a glimpse of the leopard and analyze the policy trend through these editions.
The history of “version number” is not long. Games in the PC era don’t even have this concept. Until July 2016, after the relevant departments included the mobile game in the scope of version number approval, according to the regulations, without the game version number, the new game can only be tested in public and in-house, but the recharge port cannot be opened for commercial realization.
For the game industry, the edition number is the first hurdle to make money. In just six years, the game industry pressed the pause button twice in 2018 and 2021 respectively, each lasting for 8 months, while the life cycle of a game generally does not exceed 3 years - “version” has almost become a heart disease for practitioners.
Looking back on the past, although the two suspension backgrounds are different, the results show that they have really changed the development direction and operation mode of the industry and the fate of some small and medium-sized companies. Can the short-term excitement brought by the re issuance of the edition really break the long-lasting tension in the market?
Stop the past
According to statistics, at least 1000 new games were lost in the game industry directly or indirectly, and more than 600 game companies closed down during the year.
On March 29 of that year, the former State Administration of press, publication, radio, film and television issued the notice on important matters of game application and approval, saying that due to institutional reform, the progress of game approval will be affected.
Subsequently, in June and August, the filing channels of domestic and imported games were also closed one after another. At the same time, the State Press and Publication Administration announced that it would implement the regulation of the total amount of games and control the number of new online games, “explore the age appropriate prompt system in line with national conditions and take measures to limit the use time of minors”.
This is the first time that the game industry has encountered targeted policy supervision. The suspension of edition numbers has an all-round impact on the industry. In 2018, the overall decline of the game sector was 36.66%. Among the 53 listed game companies, 18 had losses, with a total loss of 27.04 billion yuan, of which 10 had a loss of more than 1 billion yuan.
In the industry, whoever stands the highest will fall the hardest. Tencent is the first to bear the brunt.
In 2018, Tencent launched the Jedi survival mobile game version (later renamed peace elite). Jedi survival without a version number means that it will not be able to contribute revenue in 2018. The later data proved that the peace elite and the glory of the king accounted for the top two games in the mobile game revenue for a long time.
At the beginning of the suspension, no one expected that the period would be as long as 8 months, and the impact would spread silently.
After the release of the version number policy, in the financial report of the second and third quarters of 2018, the growth rate of Tencent’s online game revenue began to slow down. In the third quarter, as the peak season, the online game revenue was 25.8 billion yuan, down 4% year-on-year. Throughout the year, both overall revenue and net profit were lower than market expectations.
Liu Chiping, President of Tencent holdings, said at that time that the inability to realize the “eat chicken” game was one of the reasons for the poor performance.
According to the business composition of Tencent in 2018, it is also a real “game company”. In March 2018, the release of the version number news, Tencent Hong Kong shares fell slightly by 5%; After the State Press and publication administration clearly controlled the number of new online games, Tencent fell by more than 20% in September and October, reaching the lowest level of HK $257.
Hong Jiajun, chief analyst of overseas TMT of Societe Generale Securities, told 36 krypton: “the valuation logic of the game industry in the secondary market has its particularity. Because games are extremely dependent on products, and the game life cycle is usually two to three years, so ‘sustainability’ has become a very important discount factor in valuation.”
Therefore, if the visibility of cash flow profit in the next 5-10 years becomes 3-5 years due to policy reasons, the valuation will be halved accordingly.
However, for Tencent’s model of expanding its territory by investment, the chain effect is constantly amplified.
Tencent invested five investments in 2018: invested 2.985 billion yuan in Shanda game, holding 12%; Invest US $630 million in Betta; Invest US $460 million in Huya; Invest 2.9 billion yuan in Ubisoft and obtain 5% shares; Invested 320 million yuan in station B, and the shareholding ratio rose to 12%.
However, due to changes in the market environment, Tencent made a total impairment provision of 17.577 billion yuan that year, five times that of the previous year. In the fourth quarter, Tencent also confirmed an investment impairment of 2.1 billion yuan.
Retransmission is not an inflection point
Since 2018, the regulatory trend of “underage” and “anti addiction” has been hitting the industry from time to time. But because of the direct stimulation of COVID-19 to the home economy in 2020, game stocks have recovered blood in the two tier market in the past two years. From the beginning of 2019 to the end of 2020 6, the game industry has risen 161.65% overall.
Until August last year, the notice on further strict management to effectively prevent minors from indulging in online games made clear requirements for minors’ game time. All online game enterprises can only provide 1-hour online game services to minors from 20:00 to 21:00 every day on Friday, Saturday, Sunday and legal holidays.
For Internet companies, users’ time is money. After the time of the majority of minor users was limited, the game market once again ushered in a wave of bad news. In order to “prevent addiction” and comply with the new deal, the version number also stagnated again.
Now the version number has relapsed. According to the feedback from the secondary market, the game and even the Internet industry are expected to be repaired.
Xie Chen, an analyst at Zheshang securities, pointed out that due to the suspension of the version number, there are few new tours in the near future. Once a company obtains the version number, it will obtain a higher ROI in purchase volume and marketing, driving the long-term decline of the company’s marketing expense rate. In addition, the peaking of industry space and the tightening of supervision have brought about a significant clearing of the supply side, which has reduced the R & D cost rate of industry leaders.
Just once