(Report producer Author: Guohai**, Yao Lei, Tan Ruiqiao).
Monetization model: IAA games have a "hit" effect
Mini game monetization models can be divided into IAA (In-App Advertisement), IAP (In-App Purchase) and hybrid monetization.
The "hit" effect of IAA games. IAA gaming revenue is primarily generated from the sale of inventory generated by in-game advertising (primarily incentives) by users**. For IAA game manufacturers, the core is two aspects, one is to increase the saleable advertising inventory through user growth, retention, time improvement, etc., and the other is to sell advertising inventory to advertisers to obtain revenue. IAA games are generally provided by the platform with an advertising monetization component, with the R&D & publisher share of 50-70% and the platform share of 30%-50%. Since the main profit of IAA games comes from the difference between ** advertising (user growth) and selling advertising (monetization), the general profitability is weaker than that of IAP games, and if you want to get better profits, you can only rely on low-cost social fission methods to obtain large DAUs, so as to improve the turnover, and successful cases include "Sheep is a Sheep" and so on.
The platform side improves the monetization ability of IAA manufacturers by improving the advertiser ecology and innovating advertising forms. According to WeChat advertising, the IAA turnover of mini games will increase by more than 40% in 2022, assuming that the IAA revenue of 13.2 billion yuan in 2021 accounts for 20%, 50%, and 80%, it is estimated that the IAA revenue of mini games in 2022 will be 379214.8 billion yuan. However, at present, WeChat Mini Games cannot be embedded with advertisements on other platforms except WeChat ads, which will affect the monetization income of IAA manufacturers (also known as traffic owners) to a certain extent. WeChat advertising has increased the revenue of IAA traffic owners by innovating advertising forms and introducing more industry advertisers.
Innovative advertising formats: Launched gift package interaction, rewarded advertising, mini game trial functions, increased advertisers' conversion rate, and increased IAA traffic main ECPM (revenue per thousand impressions).
Bringing in more advertisers: By introducing e-commerce and other industry budgets and increasing the eCPM of female gamers, the ECPM of female gamers in incentivized advertising increased by 17% from March to May 2023, which is conducive to driving the overall revenue of **, and for developers, it will also stimulate their enthusiasm for creating women-oriented games.
Monetization model: Hybrid monetization mini games have become a new growth point
Hybrid monetization expands Mini Games revenue**:
Mini Games are equipped with the huge user volume advantage of the WeChat platform, and setting up incentive ads in medium and light IAP games can improve the game experience of light and zero-krypton players, and increase revenue by increasing the frequency of ad impressions and increasing ECPM. For in-app purchasers, you can avoid being affected by ads by purchasing "ad cards", which has an additional commercial payment point compared to pure IAP games.
Hybrid transformation is conducive to improving retention and increasing the payment rate. Although the proportion of first-day payment in hybrid mini games is 40%-50%, which is lower than the 70%-80% of IAP mini games, due to the introduction of advertising models to improve user retention, it is expected to increase the probability of user payment and increase LTV in the medium to long term as the time invested in the game increases.
Rapid growth in the scale of hybrid mini games: In the early stage of the development of mini games, there were more IAA games, and since 2019, the number and quality of IAP games have been increasing, and since 2023, the hybrid method has become more and more common. According to DataEye data, in the first half of 2023, the consumption of hybrid mini games increased significantly, with a 200% increase in turnover from February 2022 to June 2023, and the number of users exceeded 100 million.
2018: A large number of WeChat users were introduced, and the mini game ecology began to take shape
Scale: According to the Aladdin Index, the size of the mini game market in 2018 was about 6 billion yuan. Users: On December 28, 2017, the mini game was officially launched on the WeChat platform, and 15 first games were launched simultaneously, among which "Jump" became popular out of the circle, with a daily activity of 1700 million. According to the WeChat public course, in less than 20 days after the launch, the cumulative number of trial users of the mini game reached 3100 million, 22% of whom are users who have never played a game. Products: Representative products include "Hop a Hop", mainly IAA casual to light games. Platforms and developers: Open access to third parties from April 2018, and start the creative encouragement program in November, creative mini games can enjoy a 70% share of the Android side. In 2018, the number of mini games increased significantly, from 2,000 in July 2018 to more than 7,000 by the end of 2018.
Market size calculation: Under the neutral assumption, the market size of WeChat mini games in 2 0 2 3 years is about 30 billion yuan
Method 1: Calculate according to the market size and growth rate. According to the Aladdin Index, the commercial scale of WeChat mini games in 2018 was 6 billion yuan, and according to the growth rate of the commercial scale of small games disclosed by WeChat open classes over the years, the growth rate is estimated according to optimism, meso, and conservative, among which according to Tencent Advertising, in 2022, the IAP mini game turnover will increase by more than 100%, and the advertising realization turnover will increase by more than 40%+, and the proportion of IAA games and IAP games in 2021 will be 2:8 5:5 8:2 respectively, and the commercial scale in 2022 will be 201 225 respectively 24.8 billion yuan. According to the twelfth quarter of the WeChat Open Class WeChat Mini Game Developer Conference in June 2023, "the commercial scale of medium and heavy games in 2022 has achieved a 100% growth compared with 2021, and the growth rate in the first half of 2023 will be maintained", assuming that the growth rate of mini games in 2023 is 50%, corresponding to the market size of WeChat mini games in 2023 will be about 30,137.3 billion yuan.
Method 2: Calculate based on casual game data. According to gamma data, the size of China's casual game market in 2022 will be about 34.4 billion yuan, and the user scale will be 5200 million yuan, corresponding to 66 yuan of ARPU per year. In the first half of 2023, the MAU of WeChat Mini Games exceeded 400 million, and in 2020, it exceeded 500 million MAU, according to which the market size of Mini Games in 2023 is estimated to be 28,134.2 billion yuan according to the scenario assumption. In 2021, the APP game market size will be 2255400 million yuan, and the user scale is 65.6 billion people, corresponding to an ARPU of 3438 yuan a year, much higher than the casual game market. In the process of re-emphasizing mini-games, ARPU has a greater potential to be improved.
Method 3: Calculated based on Tencent's social network revenue data. According to Tencent's 2023H1 financial report, Mini Games contribute a single-digit percentage of revenue to its social network and advertising business, assuming that Tencent's social network revenue from the Mini Game business is mainly platform share revenue, and the WeChat platform has a revenue share ratio of 40% for Android Mini Games IAP, and the iOS side does not share for the time being, then the contribution of Mini Games to social network revenue comes from Android share. We assume the proportion of Android IAP turnover and the proportion of Android in the size of the Mini Game market, and we can calculate the overall market size of WeChat Mini Games.
Mini game industry chain: Publishers and developers are in the bonus period
For developers, the R&D cycle of mini games is relatively short and the R&D cost is low, so there is an opportunity to make a big deal with small games. For publishers, the publisher share of Mini Games is higher than that of App Games. Taking WeChat Mini Games as an example, the IAA game platform shares 30% to 50%;The Android platform of IAP games is divided into 30% and 40%, and the iOS platform is not divided. Assuming that the ratio of in-app purchases on iOS to Android is 1:3, the share ratio of IAP game manufacturers can reach 70%-775% (Ordinary Mini Game: 25%*100%+75%*(1-40%)=70%, Innovative Mini Game: 25%*100%+75%*(1-30%)=77.)5%), while the share ratio of app game manufacturers is 55% (25%*70%+75%*50%=55%, note: Android self-operated channels are not considered), and the share ratio of mini games is 15-22 higher than that of app games5pct。Considering policies such as incentive funds, the share of the issuer is higher.
WeChat: Advertising monetization sharing and incentive policies
The basic advertising monetization revenue of the Mini Game manufacturer is divided into 50%-70%. By accessing rewarded ads, banner ads, interstitial ads, native template ads (lattice templates) and other components in WeChat Mini Games, Mini Game manufacturers can obtain advertising monetization revenue, and manufacturers can share 50% of the basic advertising revenue of ordinary Mini Games, and 70% of the part of the daily advertising turnover of creative Mini Games that does not exceed 2 million. WeChat also gives advertising incentives to the part of the advertising monetization revenue of Mini Games to encourage Mini Game developers to attract new users, and the advertising funds can be used for advertising in Mini Games. According to the length of registration time of advertising users, Weixin will allocate 10% and 40% of the advertising turnover to developers as advertising funds, and incentive advertising funds will be issued once every half month, which can be used for advertising in Mini Games within one year from the next month after receiving the advertising funds.
Douyin: Puzzle and IAA mini games are the mainstay, with rapid growth
Development history: In 2019, Douyin released its first mini-game "Yinyue Qiuqiu", and in 2020, it opened the mini-game to developers. Rapid growth in user scale, business scale and delivery scale: In 2022, the DAU growth rate of Douyin Mini Games will be 43%, and the growth rate is expected to be 150% in 2023. With the growth of active users, the commercial scale and delivery consumption of Douyin Mini Games continue to expand, with the commercial scale of Douyin Mini Games increasing by more than 100% year-on-year in 2022 and more than 10 times in the first half of 2023. IAA products are the mainstay, and hybrid products are increasing. In 2019, the Douyin platform released its first mini-game, "Yinyue Qiuqiu", and in 2020, it opened the mini-game to developers. The mini games on the Douyin platform are still dominated by puzzle puzzles, with IAA products accounting for 74%, and moderately mixed mini games such as "The King of Salted Fish", "Seeking the Dao Daqian" and "Three Kingdoms Brothers" have entered the Douyin mini game market. The entrance to the Mini Game is relatively hidden: The entrance to the Mini Game on the Douyin platform is folded on the side, and for players who do not have the Xi habit of using the Douyin Mini Program, they need to spend time paying attention to the entrance and cultivating their game Xi habits.
Publishers: Mini Games have a large number of users and a strong ability to acquire volume
The growth rate of the amount of materials placed in the mini game can be seen in the strong acquisition ability. According to Dataeye, since 2022, the total amount of materials invested in mini games has shown a step-by-step trend. The number of games and materials released in mini games has maintained a higher growth rate than that of mobile games. In terms of the amount of deduplicated materials, the number of materials in the first half of 2023 will exceed 5 million, an increase of about 5 times compared with the second half of 2022. According to the WeChat open class, in the second half of 2022, the average daily consumption of mini games will account for up to 40% (more than 50% in the Tencent system and 30% in bytes).
Users: low-tier cities, low- and middle-income people, and low overlap with app players
Gender: The proportion of men among Mini Game users has increased. According to the statistics of Gamma Data on May 31, 2023, the gender ratio of Mini Game users is 6:4, compared with 5:5 in Tencent Advertising's 2022 report. Region: The proportion of users in lower-tier cities is relatively higher. Among the first- and second-tier users of mini games, 50% are first- and second-tier users, and 56% are app games. Age: The proportion of people over 30 years old among Mini Game users is increasing year by year. From 2019 to 2021, the proportion of users over 30 years old in mini games was 66%, 67%, and 69%, which was about 20pct higher than that of app game users. Income: The proportion of low- and middle-income users in Mini Games is relatively large. According to the huge calculation, in 2022, low-income users in mini games will account for 274%, which is higher than 68pct, the proportion of middle-income users is smaller than that of app users.
Haoteng Jiake: Click and play the game faucet
Founded in 2010, the company has developed a number of game products that continue to dominate the list after the launch of the mini game in 2017, and became the first in the industry in terms of mini game publishing capacity in 2021. "The Pirates Are Coming" was launched in April 2018 on WeChat Mini Game, mainly attracting players through social fission. In the second month after its launch, it became the first third-party mini game with a monthly turnover of more than 100 million yuan, with an initial retention of 40% and a peak DAU of over 20 million. In January 2019, the number of users exceeded 2500 million. In August 2020, the daily activity was maintained at the level of 60-700,000, the ARPU was around 1 yuan, and the calculated monthly turnover was about 18 million-21 million. The retention rate of active players is 80% on the next day and 75% on the 7th day. Since then, the company has successively released games such as "King of Salted Fish", "Crazy Knights" and "Fat Goose Gym", all of which have become popular games. According to QuestMobile, in March 2023, the MAU of the Knights of Madness and the King of the Salted Fish mini-games were 8496140,000 and 7381730,000.
Jianyou Technology: Continuing the user's fission idea to achieve the popular match-3 mini game
In 2021, Zhang Jiaxu, the producer of "Pirates Are Coming", established Jianyou Technology, and as of December 5, 2023, Zhang Jiaxu directly and indirectly holds a total of 79% of the shares, and Gigabit indirectly holds 20% of the shares through Thunder Network. According to Gigabit's financial report, the company's investment income in 2022 and 2023H1 is 774341.37 million yuan respectively. Focusing on casual mini-games: Jianyou has made a lot of attempts in the field of mini-games, and has developed a number of mini-games such as "Beginning Nursery", "Eliminate the Shell Lang", "Rescue the Big Watermelon", "Crazy Rubbing", "Moon Village", "Family Cat House" and other mini-games, but they have not performed well. Continuing the idea of social fission, simple gameplay + the most difficult achievement of match-3 explosion in history: Producer Zhang Jiaxu continued the idea of "Pirates Are Coming", aiming at user fission, and set his sights on match-3 games with simple production and verified gameplay, and made "Family Cat House" against the popular match-3 game "Zen Match" in North America, with mediocre domestic data (15%-25% of the second stay), and then adapted into the game "Cozymatch" to go to sea, once again experiencing low retention (less than 20% and the high cost of buying (CPI over $7), and then the team added a one-day-a-level gameplay, and strengthened the core of Zen Match's success, generating the "hardest topic in history" to successfully create the hit IAA game "Sheep is a Sheep".
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