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This year, game manufacturers have tightened their "money bags".

Game Spinning Top 2024/07/12 15:16

In the first half of this year, the "cold air" of the game investment and financing market has not yet converged.

In the domestic market, not only did the number of investment and financing in the first half of the year further shrink to a new low in five years, but also the amount of investment of more than 100 million yuan and the amount of disclosed investment continued to decline. In the first half of last year, there were three cases with an investment of more than 100 million yuan, with a total investment of 1.23 billion yuan (RMB, the same below), while this year there was only one case, with a total investment of 570 million yuan. The number of investments has plummeted and the amount of investment has been halved.

Recently, according to public information in the market, Gyrojun has collected 60 confirmed capital in the game industry, including investments, acquisitions, and increased holdings, a decrease of 30% compared with the same period in 2023 (86 cases). Among them, 23 were domestic and 37 were overseas. The total amount disclosed was approximately RMB18.39 billion, a year-on-year decrease of 60.5%.

Tencent, NetEase, Bilibili and other companies that were active in the game investment and financing market in the early years continued to shrink their war investment. Sanqi Mutual Entertainment, miHoYo, Alibaba, etc., most of them "do not do their jobs" and invest their money in hard technologies such as AI, artificial rockets, and brain-computer interfaces. There are also some manufacturers and institutions whose money has flowed to overseas markets, and the number of domestic game investment or mutual investment is gradually decreasing.

Game Top, This year, game manufacturers have tightened their "money bags".

In 2024, who will be favored by capital?

This year, the downturn in the game investment and financing market is not surprising. Since last year, the investment and financing of the industry has been at a low level. The reason we also mentioned is that, on the one hand, the macroeconomic downturn, a large number of manufacturers have taken measures to increase cash reserves or focus on core business in response to uncertain market risks.

On the other hand, there is a scarcity of potential investment targets in the market, and the investment tendency of game manufacturers is shifting. Driven by the globalization strategy, some manufacturers tend to invest in high-tech teams or overseas game studios. In addition, this year's game market stock of new games is too saturated, the competition is large, and the return on investment is not high.

Of course, manufacturers with strong backgrounds, strong strength or high-quality product endorsements can still quickly gain the favor of capital. For example:

In addition to the above-mentioned teams, the small game manufacturer Fanshu Network, the barrage interactive game manufacturer Jingdan Network, the physical card manufacturer Card Game, and the AI game manufacturer Qiku Network have all been favored by capital. In the case of a downturn in the investment and financing market of the industry, the manufacturers who can get investment are undoubtedly lucky.


Of course, from them, we also see the purpose of manufacturers' war investment, one is to strengthen and win-win cooperation, such as Tencent's investment in Shanghai Baha, Wangyuan Shengtang, Zenyou Technology increased its holdings in Lexi Entertainment Tour, and Gigabit invested in Yunshuang Network; The second is to lay out hot tracks and emerging technologies, such as Zhangqu's investment in Fanshu Network, Alibaba's investment in MiniMax, etc.

In the past two years, the mini game track has exploded, and game companies have also shifted in their investment strategies. Yang Wuyue, investment officer of Kaiying Network, once said that he has regarded mini games as one of the important investment directions, and revealed that the company's preferred investment targets should have the characteristics of differentiation and low cost, that is, small and medium-sized R&D companies focusing on differentiated categories.

The AI field is not only the focus of corporate investment, but also many producers choose to take root in this track. For example, Qiku Network and Yuanyi Entertainment, the former was founded by Wu Yufu, the former game producer of "Tianxia", focusing on the research and development of game artificial intelligence applications, and the company received millions of financing in less than 3 months after its establishment; The latter, "Dream Zhu Xian" producer Zhao Tongtong founded after leaving his job, and is developing an AI open-world shooter game, which has received tens of millions of dollars in financing from IDG Capital and Zulong Entertainment.


Tighten the "money bag" or invest in "hard technology"

The sharp decline in the number of investment and financing in the game industry is not unrelated to the strategic contraction of large manufacturers. In the past few years, Tencent, NetEase, and Bilibili were the most active buyers in the game industry. From 2021 to 2022, these three companies accounted for almost half of the industry's game investment. In the first half of this year, these three companies all tightened their pockets, Tencent only made 5 investments, NetEase only had 1, and Station B did not invest once.

According to the externally available investment and financing events we have collated, Tencent's investment in the first half of the year decreased by nearly half compared with the same period last year. The reason is: on the one hand, there is a scarcity of high-quality targets that can enter Tencent's "magic eye", and Tencent has gathered more than 100 game teams.


A while ago, Tencent Senior Vice President Ma Xiaoyi mentioned in an exchange with the media that Tencent's selection criteria for investment targets are the top two teams on the track to be worthy of investment. At present, those who can rank among the top 2 in the track either have strong funds themselves, or they have already been Tencent's guests.

On the other hand, Tencent's investment strategy has begun to shift to overseas, hardware and new tracks. In the past two years, Tencent has invested in a large number of overseas game teams, and has also invested a lot in AI technology. Since last year, it has invested in AI manufacturers such as Shenyan Technology, MiniMax, Lightyear Away, and Moonshot AI.

There are few cases of NetEase investing in games, and only one company invested in Build A Rocket Boy in the first half of this year. Founded by former Rockstar North president Leslie Benzies, the studio is currently working on the highly anticipated open-world title Everywhere, as well as a triple-A story game, MindsEye.

Game Top, This year, game manufacturers have tightened their "money bags".

It is reported that the studio has also launched a suite of innovative user-generated content (UGC) tools, "Arcadia". Whether it is UGC or story-driven plot games, it is a track that NetEase values. In fact, NetEase's attention is not about foreign investment but about self-construction, and in the past two years, NetEase has built more than 10 game studios overseas, and most of them focus on PC and consoles.

When Tencent, NetEase, Bilibili and other large companies tightened their "money bags", manufacturers such as Sanqi Mutual Entertainment, Nuowei Venture Capital, and Animoca Brands became the main investors, but the focus of investment of these three manufacturers was slightly different.

In the first half of this year, Sanqi Mutual Entertainment invested in "hard technology", and none of the 5 investment and financing fell in the game field. The attitude of "not doing business" is the same as that of miHoYo. However, it is not difficult to understand that Sanqi Mutual Entertainment and miHoYo are both self-developed manufacturers, and most of them hope to achieve an advanced layout of "hard technology" through simultaneous investment and research.

For example, in the AI track, on the one hand, they invest in the most potential AI companies, using their own funds, data, computing power and other resources to help; On the other hand, internal R&D is carried out simultaneously, in order to integrate external technologies into its own ecology and achieve complementary advantages.


In the past few years, the institution has invested in many small and medium-sized game teams such as Van Pass, Nast Games, Dianqing Technology, and Summer Island. This year, Guangzhou Hante Network, Shisu Technology, and Trendy Play Country have also received financial support from Novo Venture Capital.

Among them, Guangzhou Hunter Network, formerly known as HunterStudio Studio, has developed a single-player action Rogue game "Lost Castle", which played well after being released on Steam, and had 2 million sales at the end of 2020. The company is currently working on a casual competitive brawl game, Drill Party.

Game Top, This year, game manufacturers have tightened their "money bags".

Unlike Nova Ventures, which focuses on China, Animoca Brands prefers overseas game teams. According to public information, Animoca Brands was founded in Hong Kong, China in 2014 and is a company focusing on the field of digital entertainment. He was first engaged in traditional game development, and currently mainly develops and publishes products based on blockchain, GameFi and artificial intelligence.

In the first half of this year, Animoca Brands invested in 4 overseas game studios, including Halfbrick Studios, Mon Studios, and TRALA LAB. Among them, Halfbrick Studios is the developer of "Fruit Ninja" and "Rocket Jet", and is currently entering the field of chain games.

In addition to these manufacturers, there are also Yao Ji Technology's investment in chess and card game manufacturers Cute Cat; Sequoia China takes a stake in 5EGAME; Baidu acquires part of Funmangic's shares; Jiayu Capital invests in the Galaxy π, which focuses on the "sports + game" model.

On the whole, in the first half of 2024, game manufacturers have a cautious investment attitude, and there are still a few early investors like Novi Venture Capital, and most manufacturers either do not invest, or invest in teams with strong backgrounds or products.

Epilogue:

In our opinion, it is still difficult to be optimistic about the domestic game investment and financing market this year, so in the face of the established fact that investment and financing have "cooled down", the most important thing for small and medium-sized game teams is to "survive". While seeking differentiation and low cost, expand more diversified revenue channels.

As for overseas markets, the investment and financing environment is generally similar to that in China. This year, there has been a surge of layoffs in overseas games, and many overseas game companies are also talking about reducing costs and increasing efficiency, and the number of teams that can obtain financing is limited. However, due to the well-established exit mechanism in the overseas game market, there are many more cases of large-scale mergers and acquisitions than in China. For example, Nintendo acquired Shiver Entertainment, a game porter for the Switch platform; Disney's strategic investment in Fortnite developer Epic Games; Voodoo acquires social app platform BeReal, among others.

Attached: Summary of game investment and financing in the first half of 2024:


Concentrate:

1. The financing data is incomplete statistics from "Game Gyro", and there are statistical omissions due to the wide range of overseas involvement;

2. The financing time is calculated based on the time of media disclosure;

3. Data source: IT orange, Tianyancha, company financial reports and other Internet information, which is compiled and mapped by "Game Gyro", and the source of pictures and data citations must be indicated.

4. For the financing of the amount disclosed to the market, the actual figure is used in the calculation. For the amount of financing that is not disclosed, part of the financing amount data is an estimate, and the calculation method is: fuzzy amount processing: millions = 1 million; tens of millions = 10 million; 100 million yuan and above = 100000000. Currency conversion is calculated at the exchange rate on the day of statistics.

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