2023 will be a year of recovery and a blowout in version numbers for the game industry.

For a long time in the past, competition in the domestic game market mainly focused on competition for marketing methods.

Game manufacturers use the method of launching a large number of new games for trial and error, and through frequent new pull up activities, select users with potential to pay and quickly achieve monetization, thereby maintaining the operation and maintenance of games and obtaining profits.

However, after 2018, the tightening of version policies led to a sharp decline in the number of game products, making traditional batch copying strategies unsustainable. Game makers have to shift their focus to improving game quality in order to cater to increasingly demanding players' tastes and stand out in the fierce market competition.

In this context, self-developed boutique games such as “Wang Zhe Rongyao”, which cost up to 500 million dollars, and “Genshin”, which has a five-year development cycle, have become new favorites in the game market due to their strong ability to absorb money. They not only brought rich rewards to game makers, but also provided the industry with new problem-solving ideas.

Although self-developed games face higher risks due to the long cycle and high cost development process, high-quality self-developed games can effectively extend the life cycle of games and achieve long-term operation, thereby bringing considerable benefits.

This shift has also prompted the game industry to shift from quantitative competition to quality competition, which indicates that the future development of game manufacturers will tend to diverge. For investors, this actually makes it easier to select companies that actually have strong self-research capabilities, can continue to promote high-quality new product launches and long-term operations, and reinforce trends such as global overseas travel, bringing more definite opportunities.

The recent Hong Kong stock annual report season may have provided us with a good time to observe.

Judging from Celadon Gaming's latest annual report, on the one hand, the company continues to launch high-quality new games to keep players active. On the other hand, it is also actively expanding overseas markets to further enhance the company's brand influence and competitiveness. In 2023, revenue was 906 million yuan, up 43.7% year on year; gross profit was 558 million yuan, up 32.2% year on year.

At the user level, the company's game products showed strong appeal in 2023, driving the continuous improvement of users' willingness and ability to pay. The average number of monthly active users (MAU) reached 2.48 million, up 55% year on year; the average monthly paid user (MPU) was 401,000, up 88% year on year; average revenue per paying user (ARPPU) was 302 yuan, up 15% year over year. Furthermore, the company's cumulative number of registered players reached 883.43 million, an increase of 12% over the previous year.

High-quality new games are online, and classic games have been upgraded and refreshed

Looking back at 2023, four Celadon games, including “Demon Project”, “Legend of Sword Waving Sword”, “Magic Card Girl Sakura: Memory Key”, and “Time Travel Service”, were launched one after another, contributing to increased performance. Together with games such as “The Strongest Snail” operated by the company, they supported revenue growth, and the revenue structure continued to be optimized.

For example, “Legend of Sword and Fairy”, which was jointly released by the company and China Mobile Games, immediately topped the iOS free game rankings and ranked 14th in the bestseller list on the day it went live.

According to financial reports, as of December 31, 2023, “Legend of the New Sword and Fairy” had revenue of about 288 million yuan in just 6 months after launch. Being able to break out from many similar Xianxia games and achieve good results not only depends on the game's excellent product quality and diverse gameplay, but is also inseparable from Celadon Gaming's strong operating capabilities.

Another “Magic Card Girl Sakura: The Key to Memories” is a girl-style mobile game authorized by the “The Wizard of Kuro: Transparent Card” animation. It once topped the iOS free game download list and reached the top of the iOS game bestseller list in Hong Kong, Macao and Taiwan. Its IP influence can be seen.

In addition to this, many classic games under Celadon Games have also prepared new versions during the year and will be launched one after another in 2024.

For example, “Lanterns and Dungeons” recently ushered in the biggest update since its launch, and has undergone comprehensive and detailed optimizations and upgrades in various aspects such as gameplay, style, and characters. At the same time, “Lantern and Dungeon” is also linked to Legend of Nezha. This move not only further enhanced the game's brand influence, but also attracted the attention of more users and players to join the game.

Meanwhile, the classic game “Blade Heart” released by Celadon will also receive a major version update in 2024, and its sequel “Blade Heart 2” will also be launched in early 2024.

Currently, various app reserve games such as “Knight Rally”, “Ares Virus 2”, and “Lost Light” under Celadon Games have also received editions. In addition to this, Celadon has also stocked a variety of applet games. In the future, considering Celadon Gaming's ability to create popular games, as the commercial value of the company's game reserves continues to be realized, it will also provide a steady stream of impetus for the company's growth.

The boom in gaming going overseas is surging, and global strategies are flourishing

As the diverse nature of the game industry becomes more and more prominent, it has gone far beyond the scope of simple entertainment, showing deep cultural value and driving effect on cutting-edge technology, and has become the core driving force for the development of the industry.

In the current boom in the game market, going overseas has become an irreversible trend.

During the National Conference, Guo Yuanyuan, member of the National Committee of the Chinese People's Political Consultative Conference and vice dean of the Megacities Economic and Social Development Research Institute at Capital University of Economics and Trade, pointed out, “The current society's understanding of games is vague or even biased. The game industry has both cultural and economic benefits in the field of international cultural communication. By integrating knowledge, training, and experience in various fields such as education, health, technology, etc., it can be effective on a global scale and pragmatically promote innovation and new productivity development in Chinese society.”

As can be seen, for game companies, not going overseas means they may face the risk of being out of the market. This is not only due to the saturation of the domestic market and increased competition, but also because globalization can maximize the commercial value of game products and meet the needs of a wider range of players.

In response, Celadon Gaming has already incorporated the global layout of game products as an important part of its development strategy. Overseas revenue of 258 million yuan was achieved in 2023, accounting for 28.5% of total revenue.

Take “The Strongest Snail” as an example. As a masterpiece of the long-term operation of celadon games, “The Strongest Snail” has been launched in Japan, Southeast Asia, North America, and Australia, respectively.

Judging from operating performance, “The Strongest Snail” topped the App Store and Goole Play free game rankings on the first day of its launch in Japan, and continued to dominate the Apple Store free game list for a week. After its launch in Thailand, it also topped the list of iOS free games in Thailand, and reached the top 5 of the iOS game bestseller list. In addition, the game also once topped the iOS free game rankings in the US, Canada, Australia, New Zealand, etc.

In terms of performance, the release of “The Strongest Snail” in overseas markets brought considerable revenue to Celadon Gaming. In 2023, the game recorded a cumulative turnover of about $3.259 billion at home and abroad, and generated a total revenue of about 486 million yuan.

“The Strongest Snail” has achieved outstanding results in overseas markets, demonstrating the overseas distribution and operation capabilities of celadon games. This not only further expanded the game's popularity and influence, accumulated a good reputation and loyal user base in overseas markets, but also laid a solid foundation for the product to expand overseas markets in the future.

According to reports, in the future, the company will also plan to further implement the launch plan for “The Strongest Snail” in South Korea, and will launch Vietnamese, Indonesian, German, French, Spanish, Portuguese, and Italian versions one after another this year to achieve more comprehensive coverage of Southeast Asia and Europe.

In addition, Celadon Games has also released the “Fat Goose Gym” app version in Japan. It uses synthetic gameplay to build gyms, add more areas and equipment, and attract more Fat Goose guests. Once launched, it topped both the iOS free game rankings and Google Play free game rankings in Japan.

As can be seen, a high-quality game product usually has excellent expressiveness and appeal, and can win the love and popularity of players around the world. Whether in the domestic market or overseas market, it will surely show impressive results, and Celadon Gaming's products have already given the answer.

At the performance meeting, the management of Celadon Games said that in the future, the company will also actively promote the popularization of products to overseas markets that have not yet been covered in order to reach more players. For example, the company's self-developed post-apocalyptic world SLG “Project E” was exhibited at the Australian Game Show last year and was welcomed by overseas players. The testing scale will be further expanded in 2024; the authorized RPG game “Project L” is also expected to be released in Korea.

The road ahead is long and bright, waiting for potential to be unleashed

From a longer perspective, the growth path of celadon games is also very clear.

At the industry level, the official media have repeatedly expressed a positive attitude towards the game industry.

For example, in February of last year, Xinhua Daily Telegraph published the article “Don't Ignore the Technological Value of the Game Industry”; in October, the State Press and Publication Administration issued the “Notice on Implementing the Online Game Quality Publishing Project”; in November, the documentary “China Game Chronicle” produced by the China Audiovisual and Digital Publishing Association; and in December, the State Press and Publication Administration issued the “Online Game Management Measures (Draft for Comments)”. Coupled with proposals such as “expanding the category of 'prevention of addiction' and promoting functional games” during this year's two conferences, they are all vigorously promoting the development of health standards in the game industry.

At the market level, the trend of normalizing version distribution will continue to optimize the supply side and boost the ceiling of the game market.

According to the data, a total of 1,075 game versions were released in the market in 2023, a year-on-year increase of two times compared to 2022. Entering 2024, the number distribution trend continues, and the number of domestic game versions distributed in the past three months has significantly exceeded the 2023 average. With abundant product reserves from major game manufacturers, the industry's new product cycle is steadily starting, and a new round of profit releases will drive further growth in the size of the game market.

Under the resonance of the industry and market, high-quality game products and a global perspective are critical to whether major game manufacturers can achieve continuous development and stabilize their market position in industry competition. High-quality gaming products are the key to attracting and retaining players, and going overseas is an effective way to diversify revenue sources and enhance market competitiveness.

As mentioned earlier, Celadon Gaming not only has rich and diverse game reserves, but also continues to strengthen overseas markets. It can be said that both now and in the future, Celadon Gaming has shown strong market competitiveness.

On the one hand, in the context of the transformation of the entire game industry, the advantages of Celadon Gaming's integrated research and operation have been highlighted; on the other hand, Celadon Gaming has seized the wave of going overseas, actively promoted the company's game projects to go overseas, and achieved great results.

Looking forward to the future, this will help the company explore industry opportunities from multiple perspectives and further open up the company's growth space. Based on the company's high-quality long-term IP operation capabilities and diversified game reserves, and an active overseas business layout, the market might as well look forward to Celadon Gaming.