On Aug 17, Tencent announced its second quarter 2022 results. In the game business, Q2 revenue was 42.5 billion yuan, and the domestic market was 31.8 billion yuan, down 1% year on year; The international market revenue was 10.7 billion yuan, down 1% year on year. It is rare in Tencent's game history for both domestic and overseas markets to see a year-on-year decline, but it is not surprising when looking at the overall market.
According to the January-June 2022 China Game Industry Report, the actual sales revenue of China's game market in the first half of 2022 was 147.789 billion yuan, down 1.8% year-on-year. Specifically in Q2, sales revenue in the domestic game market fell by 7% year on year.
The same is true overseas, where global mobile game revenue in the first half of this year was $41.2 billion, down 6.6% from a year earlier, according to Sensor Tower.
As the leader in the domestic game market, Tencent's game development problems are mirrored by the whole industry. In the industry encountered bottlenecks, Tencent game as a leader will make what kind of choice, is the focus.
Control cost and product quantity
The industry report pointed out that the overall growth of domestic macroeconomic slowdown, the public consumption will decline, the public entertainment consumption and even game spending also decreased, coupled with the lack of influential new game launches in the first half of this year, failed to bring consumption increase.
Lack of influential new products, in fact, is a platitudes of new products to come out, often appear online early rely on a wave of marketing revenue to rush to the top, and then rapidly fall toward the bottom, stable performance more than 3 months.
According to Tencent's financial report, Honor of Kings and Peace Elite are the two games with the highest total usage time in the industry, and their respective total usage time of adult users has increased year-on-year. However, it should be noted that these two national games have been online for 7 years and 4 years respectively.
As a content industry, the game industry wants to break the development bottleneck, with new revenue than cost savings.
In the face of new products, Tencent changed its previous style. It strictly controlled the quantity and quality of products, significantly reduced the number of self-developed products and the number of online products. It also kept extremely cautious about the two-dimensional circuit where manufacturers generally flooded in, instead of relying on its own IP resources to adapt and seize the market.
Dark Zone Breakout, which launched in mid-July, was the eighth most played game of the month.
Which reflects the tencent in FPS game mobile game track achievements, hope that through the core foreign absorb more FPS game fusion user's idea, in experienced track continuous exploration of deep, is not too much focus on core circuit, put more energy in his familiar track, this is tencent gives a revelation.
Go to sea three prongs
The domestic market is stable, for the international market, Tencent is forging ahead.
As we've previously reported, Tencent has now set up several game studios around the world to recruit talent, and it's clear that Tencent Games continues to expand into overseas markets in an attempt to continue to drive overall growth.
In terms of revenue, Q2's foreign revenue accounted for 25%, slightly higher than Q1's 24%. In previous earnings calls, Tencent's management also made it clear that it will continue to increase international revenue in the future.
According to the current development situation of overseas market, overseas market is still a market with huge potential despite the decline of the overall market and the intensifying competition.
This aspect mainly lies in the income composition of the domestic market. Mobile games have completely occupied the mainstream, accounting for nearly 80%, while the proportion of mobile games in the overseas market is not high.
However, the convenience of mobile games and the way of fragmentation determine that it will be the first market of games, which has gradually begun to appear overseas, and more and more heavy games begin to replace match 3 and other games on the mobile screen.
Based on this, overseas is still worth paying attention to, and Tencent's continued strength in overseas markets is worth paying attention to.
After the establishment of Tencent's overseas publishing brand Level Infinite last year, Tianmei Studio officially announced in June this year that the international edition of Honor of Kings, Honor of Kings, will be launched in many global markets this year. Currently, it has opened the test in Brazil, Mexico, Turkey, Egypt and other places. It will be extended to more countries and regions later.
In addition, the international edition of Tower of Fantasy, published by Level Infinite, went live worldwide on August 11. As of 12 noon on August 12, Tower of Fantasy had topped the free list in 32 countries around the world, including the United States, Japan, South Korea, Hong Kong, Macao and Taiwan, and was among the Top10 bestsellers in 24 countries, including the United States and Japan. VALORANT hit a new high in monthly active users and quarterly sales, its European developer Miniclip acquired Metro Runner developer SYBO to increase daily active users by 3,000 to 7,000, and the Rise of the Night Tribe pre-beta reached 200 million sales in its first month.
Self-research, agency issuance and investment and acquisition of the company together, three pronged to accelerate the development of the international market.
Social responsibility and exploring more value in games
Domestic stability, overseas strength, this is Tencent games a significant feedback on the current market environment.
Outside the market, Tencent's actions in social responsibility are also worth paying attention to, because paying attention to the uninsured, taking more social responsibility, and exploring the cross-border value of games have become the clear consensus of the industry forward.
Why is it relevant to tightly control costs while investing heavily in the development of game technology?
The Game Axiology mentioned earlier, the game to cross the boundary to break the wall is the industry development inevitable choice. For the game industry as a whole, breaking the ceiling to create more value requires the introduction of new variables rather than just the product itself. Under the requirements of development, it is an inevitable choice for games to break through the original fundamental properties of entertainment and create more possibilities through the integration of breaking the wall and crossing the boundary. There are multiple values of culture, technology and business, and even in Tencent's view, the much-hyped metaverse is only one part of it.
Game Technology -- a New Population of Technologies in the Process of digital-Real Integration, published by Wang Yanyu's research team at the Institute of History of Natural Sciences, Chinese Academy of Sciences, proposes a cross-field quantitative assessment method for the contribution rate of scientific and technological progress, attempting to quantitatively analyze the driving force of game technology on other digital industries and related technological systems.
Among them, game technology contributed about 14.9% to the technological progress of chip industry in 2020, especially the emerging technology field represented by cloud games, which is expected to double the demand for cloud computing power, which is of great significance for China to realize autonomous and controllable graphics computing architecture. For 5G and VR/AR, the contribution rate of game technology is 46.3% and 71.6%.
The data report provides a visual demonstration of the role of gaming technology in the advancement of science and technology, as well as the feasibility of technology driven by gaming technology.
Besides entertainment, there is a broader market and world. Therefore, we can see that Tencent Games is willing to focus more on the exploration of game technology and game crossover value, and seize the opportunity in more fields in the future. This is the strategic direction that Tencent believes can truly break the ceiling of the game industry in the future.