** Overall, the game industry will experience more difficulties and twists and turns in 2023 than in the past. Globally, the tech layoffs triggered by the Federal Reserve's interest rate hike have severely affected the gaming industry, with tens of thousands of employees losing their jobs and the industry shakingFocusing on China, after the version number was restored, there were many new tours with great ambitions, but only a handful of them achieved good results. Therefore, even without the Measures for the Administration of Online Games (Draft for Solicitation of Comments) (hereinafter referred to as the "New Online Game Regulations") released on December 22, investors who have been expecting a big recovery in game stocks since the beginning of the year are now likely to lose money from the perspective of the whole year. Especially in the second half of the year, in terms of A-shares, the game industry index ended as of November**265%, and the CSI 300 fell only 6 in the same period6%；In terms of H-shares, with the exception of NetEase, several major game stocks have not performed well. For no other reason, the domestic mobile game market has entered the stage of high-intensity competition of "stock + homogeneity", and new games cannot get aheadRelying only on those old games to support the scene can't support the long-term prosperity of the entire industry。Now, the growth of users in the gaming industry is far behind the actual sales revenue, and it is difficult to say that such growth is benign from a practical point of view;Users' acceptance of game content such as Forced Liver (which requires users to invest more time) and Forced Krypton (which requires users to recharge more) is getting lower and lower, and the call for high-quality games is getting higher and higher. Looking at the "New Rules of Online Games" from such a perspective, you may come to some different conclusions:It ends the five-year-long state of "having a competent authority but no clear regulatory rules" in China's game industry, and continues the regulatory thinking of the game industry over the past decadeAlthough there is still a lot of room for improvement in the timing and method of release, there is a clear thinking about the current situation and future direction of the game industry. This is undoubtedly good news for an industry that needs to be transformed urgently. So, after a wave of panic, we're not worried about how gaming stocks will perform going forward. Worries under growthIf you look at the performance of the market after the promulgation of the "New Regulations on Online Games", people who do not know the game industry are likely to come to the conclusion that the game industry is good, and a document will not work immediately. And then began to be rhythmically directed at some of his compatriots and the relevant authorities. But in fact, this year's industry-level growth data can only be said to be happy and worried, if you have to say, I am afraid there are still more worries. Domestically, the China Game Industry Conference held some time ago disclosed that the actual sales revenue of the domestic game market in 2023 will be 30296.4 billion yuan, an increase of 14% year-on-year, breaking through the 300 billion yuan mark for the first time in history;The user scale is close to 6700 million people, a year-on-year increase of 06%, although it also hit a record high, but it has not increased significantly for three years. Internationally, Chinese game manufacturers have accelerated their overseas expansion, with overseas sales revenue of self-developed products reaching 1636.6 billion US dollars, the scale of more than 100 billion yuan for four consecutive years, but a year-on-year decrease of 57%。It is difficult to conclude whether the momentum of the game industry will be reversed from here, but it is certain that there has been a bottleneck in China's game going overseas. In our view, this bottleneck is not unique to overseas markets, but is a problem faced by the entire Chinese gaming industry. In 2023, under the superficial growth data, there are also many problems in the domestic game market:Phenomenal new tours are scarce。Throughout the year, the vast majority of new tours did not meet expectations, especially the phenomenal new tours with the ability to continue to attract money were fewer than in previous years. Referring to the TOP20 ranking of the iOS best-selling list in the last day, only 2 of them are new games this year, and one of them is "Yuan Dream Star", which has just been launched recently and is still in its infancy. 
Data**: Dotted data, the red game is the new game of the year, due to the comparison of the annual revenue data, it is unfair for the new games released in the current year, we choose the iOS best-selling list on the last day of the past few years and compare it with the recent day. Although there is some randomness to this comparison, even if you add this year's TGA (Oscar of the gaming industry) mobile game of the year "Honkai: Star Railway", only 3 new games can make it into the top 20 best-selling list, compared to 6, 7 and 6 in the past three years. You must know that due to the liberalization of the version number, a large number of new games have been launched this year, and in previous years, many of them have the potential to become annual hits。Such as ByteDance's "Crystal Nucleus", Tencent's "Metal Slug Awakening" and so on. But this year, in addition to the initial popularity of the launch, with good statistical performance, they were quickly defeated by those old games. At the same time, whether it is two-dimensional or e-sports games, and even those casual games that are considered to have little technical content (such as chess and cards, fishing, etc.), have a very obvious head effect. Especially in terms of two-dimensional games, except for the head games (such as "Genshin Impact", "Ark of Tomorrow", etc.), the revenue of the rest of the products is not ideal. It turns out that the tastes of users have changed。Those games that used to be able to be purchased online cannot be made now. However, the games that should be issued still have to be sent, and the amount that should be bought should not be less at all, causing the domestic mobile game market to enter a vicious circle of "stock + homogeneity" competition: game manufacturers know that their gameplay is not new, in order to get more users, they must spend more money to buy, according to dataeye statistics, the number of games purchased throughout the year reached an astonishing 7500, an increase of nearly 88% over last yearPlayers see promotions coming in and playing games from various channels, but they taste the old wine in new bottles with a fresh mentality, and over time they lose trust in various promotions. Without good content as a basis, a large number of skin-changing and repetitive games can only rely on various inducing recharge and play information to begin to crowd the screen, and players may not have played for two days before they encountered the charging point of Krypton. This approach can only make users more and more disgusted with domestic games;The cost of buying volume raised by these games also squeezes out the profit margins of high-quality games. This is also why, when we look back at the entire A-share and H-share game sectors this year, we will find that the first class of the entire game sector in the first half of the year is not really driven by the recovery of the industry, but thanks to the expected cost reduction brought by AI;In the second half of the year, most game stocks were very volatile, and most of them were in a downward state. This trend is definitely not a recovering and good industry should come out, only by facing the problems of this industry can we have a more rational perspective when evaluating it. The era of insider regulationAt this point in time, the first step to face up to the problems of the game industry is to take a closer look at the "New Online Game Regulations" to see what kind of role it has: it cannot make the industry truly move towards a high-quality development stage on its own, but it can draw boundaries for many of the chaos in the game industry;At the same time, it shows that the regulators are indeed experts enough, and we have higher expectations for the prospects of the industry. First of all, it should be noted that due to the change of the competent authorities for gaming in 2018, the previous Interim Measures for the Administration of Online Games (hereinafter referred to as the "Interim Measures") were repealed in 2019, and the new regulatory authorities need new regulations to sort out the industry. The promulgation of the "New Regulations on Online Games" means that the rules are clear, and it also means that the expectations are clear. Any industry needs support and encouragement from policies, as well as a clear system of supervision. In addition to taking into account the actual situation of enterprises in the game industry, the "New Rules on Online Games" also needs to take into account the feelings of players and their parents。Such a policy is beneficial to the industry in the long run. Looking at the specific contents, it is not completely out of expectation, and many of them are a continuation and improvement of the previous Interim Measures. Taking the controversial Article 17 as an example, in the New Online Game Regulations, it is stated as follows:
The expression of this content in the Interim Measures is ".It is not allowed to set up forced battles in online games without the consent of the online game users, which caused a huge controversy even back then。However, the game company's response is to ask the user to agree to the game in the user notice before the game starts, and if you don't agree, the game will not start at all. Since most players don't actually take a closer look at this user notice, this method of the game company can be regarded as a loophole. The problem with this regulation is that a large number of MMORPG games have been modeled after the faction settings in World of Warcraft, and after entering some maps, players must fight and can only obtain resources through battles. Obviously, this setting is not reasonable, and World of Warcraft has gradually reduced the proportion of this content in subsequent versions until it has almost disappeared. However, PvP (Player-to-Player) is one of the great joys of online gaming, and even if the new regulatory content is quite decisive, games such as SLG, Legends, and eSports, which emphasize confrontation, can continue to circumvent this rule by claiming that their gameplay is not forced to play, but rather drills, competitions, etc. What's more, in many public statements, the regulator obviously has an attitude of encouragement and support for the type of game that emphasizes PVP like e-sports;After the release of the "New Regulations on Online Games", the competent authorities also publicly stated that they would study and improve them. Therefore, it is clear that Article 17 did not appear to disappear all PVP content in a blanket manner, and it is likely that there will be clear and widely accepted provisions in the end. With this perspective in mind, and then looking at the provisions such as the cancellation of induced rewards and the regulation of in-game currency transactions, we can find that a large number of provisions can be found in the previous interim measures. The idea of supervision actually has a certain continuity, and it cannot be completely equated with the previous rectification measures for ** education. As for whether these regulations will affect the revenue of game companies, there is no need to worry about those companies that produce good games。Daily rewards can be placed in missions;The monthly card can be used to directly obtain in-game currency, and then become a game resource that players need to exchange for in-game currencyAnd the first charge and the like can be completely rephrased and get a cheap gift package. The other controversial article about setting a deposit limit does not have specific criteria in the current text, and needs to be supplemented by a final draft later. However, judging from the content shown so far and the external statement, there is a high probability that all parties will be able to accept the regulations. Regulation sets boundaries for the industry, and the market is expected to be stable;Content doesn't have much impact on the company's revenue, and there should still be. In addition, after carefully reading the "New Online Game Regulations", it can be seen that the regulator has a clear understanding of the game content that players have great grievances and is also unreasonable, which is also a good thing for the development of the entire industry. Taking the content of article 27 as an example, it provides as follows:
You must know that this random drawing mechanism, which now attracts countless gold, was in the original "Interim Measures".It is expressly forbidden；And today's regulators, apparently considering the benefits that this mechanism brings to players and game companies, have a brilliant regulatory idea. In the early days, random drawing was a mechanism created by game manufacturers to prevent players from consuming only their favorite items. In this mechanic, players have to pay for a lot of game items that they don't want or don't need in order to buy what they want. It's like going to the vegetable market, wanting to buy fresh radish, and finally spending several times or even more than ten times the money for this radish, and bringing home a lot of vegetables that you don't want to eat at all. Back then, NetEase's "Onmyoji" was frequently scolded on the hot search because of the negative ** caused by card drawing. In daily life, such unreasonable consumption behavior will be rectified no matter what industry it is, and games will be no exception. Of course, the game also has its own peculiarities, and the sense of accomplishment that players get from random draws is difficult to replace in other ways, which is why this mechanic needs to continue to exist. The reason why we think that the supervision is good is that the implementation of this regulation will not only not reduce the sense of accomplishment brought by this **, but may even add points to this sense of achievement. Just imagine, a virtual prop or character that has been marked with a price of tens of thousands of dollars, and the sense of accomplishment obtained after being drawn by players at a lower cost or exchanged for the resources they usually accumulate must be much higher than the only probability display now. In this process, all the game company needs to do is mark the "jackpot" with a level that most players are not very acceptable. Eventually, these players will still tend to get it through **, which will become a new source of happiness;And the game company has nothing to lose, and may even get more revenue because of the sense of accomplishment with a clear standard. Therefore, we believe that although the timing and method of the current draft of the "New Online Game Regulations" are open to discussion, many of the contents can be seen by the regulatory authorities in terms of understanding and thinking about the industryThe positive impact is even greaterConclusionThere is a problem in the gaming industry, and it is a big problem, and there is no way to change it by regulation alone;In the same way, an industry in the first place, it is unlikely to collapse because of normal regulatory policies, the long-term expectation reversal depends on whether the company has a good game, and the short-term ** is the market's rational understanding of the policy. In the long-term development, the ability of China's game industry to be the best in the world is the exquisite design and colorful marketing methods, which have made the entire industry have a very high growth rate in the past ten years, and also made the process of our games go overseas smoothly for a while. However, at this point in time, this overdeveloped ability has become a stumbling block hindering the high-quality development of the entire industry
A large number of companies that have profited from this have not invested their revenues in the development of more high-quality, higher-quality games, but have chosen to continue to rely on the already successful path and continue to create duplicate e-waste. Therefore, if it is regulated and restricted, the overall benefit obtained is less than the loss. For the industry, the decisive role is still played by the companies that actually make games, operate and publish games. No matter what the "New Online Game Rules" will eventually become, it is impossible to change the general direction of restricting induced consumption and reducing those bells and whistles. The game has to go back to its essence after all:Playful. Disclaimer: This article is for learning and communication purposes only and does not constitute investment advice.