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37 Interactive Entertainment Ranked No. 1 in 2017 Q1 Net Profit According to Chinese Listed Game Companies Competitiveness Report

Source: 37GamesDate: 2017-08-15

SHANGHAI, Aug. 15, 2017 /PRNewswire/ -- On Jul. 28th, CNG published Chinese Listed Game Companies Competitiveness Report at the 15th ChinaJoy held in Shanghai. The report makes a list of Top 10 Chinese game companies in competitiveness based on profit capability, growth, operational capability, and business architecture. 7 of these 10 companies are listed on China A-shares (Shanghai and Shenzhen stock exchanges). The report also shows that mobile games have become a crucial revenue source as well as the foothold in developing overseas business for Chinese game companies.

Leading Companies Lead in Growth Rate

By June 2017, there were 166 listed game companies in China. 85.6% of them were listed on China A-shares; 9.6% HKEx, and 4.8% NYSE.

There were 38 listed companies in China whose revenues from the gaming industry reached RMB 300 million respectively in 2016. Their total revenues in 2016 reached RMB 146.57 billion, which took up 81.9% of the whole Chinese games market. Furthermore, these 38 companies grew 32% on average over the course of the year, while the whole Chinese games market grew only 17% on average.

CNG made a list of Top 10 Chinese listed game companies in competitiveness based on profit capability, growth, operational capability, and business architecture. 7 of these 10 companies, including 37 Interactive Entertainment, Perfect World, and several more, are listed on China A-shares. During the report period, these 7 giants achieved a significant boost in their revenues from the gaming sector, and their combined net profit reached a total of RMB 2.1 billion in 2017 Q1. Incidentally, 37 Interactive Entertainment reached RMB 433 million in their 2017 Q1 net profit, which was ranked No. 1.

Ready for Overseas Markets

The report indicates that the rapid growth of mobile games has been reforming the ecosystem of the industry. The actual revenue of the Chinese games market of the first half of 2017 reached RMB 99.78 billion, up by 26.7% from last year; the actual revenue of the Chinese mobile games market in the first half of 2017 reached RMB 56.14 billion, up by 49.8%; the user base of Chinese mobile games market reached 435 million people, up by 7.5%.

Mobile games have been a primary revenue source for the listed game companies. Mobile games took up 61% of the business architecture of the aforementioned 7 companies. Each of them has had at least one or two mobile games that generate stable revenue. Clearly, the performance in the mobile games market has become crucial for a company's competitiveness.

Each of the 7 listed companies had a boost in their mobile games net profit. It is worth noting that 37 Interactive Entertainment's net profit of mobile games rose from 18.3% to 61.85%, which is due to the favorable performance of its mega hit Yonghengjiyuan (Blades & Rings), as the report suggests. Yoozoo and Ourpalm also reached higher than 50% in their mobile games net profit. Giant Network saw a decrease in net profit, but it is still ranked No. 1.

The actual revenue of Chinese games in overseas regions throughout the first half of 2017 reached USD 3.99 billion, up by 57.7% from last year. The report suggests that the globally growing mobile games market offers a golden opportunity for game companies from all over the world to bring their products to overseas regions. According to the report, among the aforementioned 7 listed companies, Chinese Media's overseas mobile gaming business took up 97.2% of its total revenues, while Giant Network's number on this category is 0.6%, which is the lowest. Both Ourpalm and 37 Interactive Entertainment had a growth rate of higher than 100% in their overseas mobile gaming business. During the report period, their mobile games revenues reached RMB 820 million and RMB 747 million respectively.

Marketing Strategies & User Acquisition

During the first half of 2017, the user base of Chinese games reached 507 million people, up by only 3.6% from last year. The demographic dividend of the market will soon be a thing of the past. This means that the competition over user acquisition, and retention, will become increasingly tight.

The report indicates that "homogenized" products have been presented to existing users over the past few years, which not only raised user acquisition cost, but also led to the decrease in retention and pay rates. With a sluggishly growing user base, progressively severe competition over user acquisition, and decreasing methods of conventional operation, new users are now more accessible from android mobile phones built-in storefronts and emerging popular apps. Game companies must update and upgrade their marketing strategies as soon as possible.

 

Since advertising has become an indispensable and principal marketing method for almost every game company, developing a precise and effective advertising strategy is crucial in order to recover costs and generate profit. The report remarks on the marketing strategies of listed game companies, noting that the leading companies have already developed their own unique marketing strategies to maximize revenues from their products.

The report emphatically points out the marketing strategies of 37 Interactive Entertainment. On the basis of extensive experience and practices, the company has developed a mature portfolio of marketing strategies centering on a wide assortment of products and marketing channels. By virtue of accurate advertising method selection and abundant capital, 37 Interactive Entertainment has been successful in acquiring target users and gaining profit at reasonable costs. Furthermore, the virtuous circle continues to bring in valuable data such as device models, types of users, etc., which help reduce costs, raise marketing effectiveness and accuracy, and even bring about cross-promotion among existing users. Moreover, the data can also provide the basis for development and optimization of future products, which will no doubt improve their success in an increasingly competitive mobile gaming industry.

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