Statement |This article does not include commercial co-authors |It is quite common for a Night Wind game company to choose to go public after achieving a certain size. But it sounds a bit surprising that an art outsourcing company can go public. When Winking Studios Limited started in Shanghai, it was still a game company focusing on self-developed projects. However, art outsourcing gradually became their main business, and it developed into a boom, with large customers all over the world. Two weeks ago, they successfully went public in Singapore as the third largest game art outsourcing studio in Asia. From the company's business changes, we may be able to see a certain trend in the entire gaming industry - especially when Tencent, NetEase, and miHoYo are all on their customer lists. In fact, in the early days, the game business of KINGKING Technology and its predecessor also had good results. Perhaps no one expected that it would eventually embark on the road of a professional art outsourcing company. The predecessor of VEKING Technology dates back to 1997. The company's founder, Zhan Chenghan, was just 21 years old at the time, and founded the Wind and Thunder group in Taiwan, which is affiliated with the Japanese company TGL, and leads seven to eight artists, animators, and game developers in research and development. He was already the head of R&D at that time, leading the team to create the best-selling Japanese RPG game "Sword of the Guardian" and its sequel. 
Three years after the Sword of the Guardian series, he founded his own company, Windthunder Studio, which is still focused on developing his own games. In 2002, the company launched the smash hit "Song of the Holy Maiden", and the following year it launched a sequel. These two games continue the team's successful experience in the Japanese RPG genre and show a very high level of art. Zhan Chenghan once said in an interview in Taiwan's ** Bahamut that when the company later undertook the art outsourcing business, as long as it showed the scene of "Song of the Holy Maiden" to foreign manufacturers, the other party said that it was OK. 
Although the sequel "Song of the Holy Maiden 2" was also successful, at that time, ** games were on the rise, and the stand-alone game market was facing a decline. In September 2003, Zhan Chenghan cancelled the original company, and then established the current Weijing Technology in Shanghai and also opened a studio in Nanjing. Relying on the golden sign of "Song of the Holy Maiden", the company began to develop game development outsourcing business in addition to its own research projects to supplement its income. The location was selected in Shanghai in order to absorb outstanding talents from the mainland and to penetrate into the mainland market. Forming a new company and launching a new brand name is, on the one hand, a desire to have a new look;On the other hand, because Zhan Chenghan felt that it was strange to use the name of Fenglei, a team famous for self-development, to do OEM. However, in the following years, the company failed to come up with any successful self-developed works, let alone open up the market. On the contrary, the art outsourcing business, which was a side business at the beginning, became more and more prosperous, became the main source of revenue, and opened a new studio in Hong Kong. Seeing that self-developed games are better than outsourcing to make money,In 2008, the company officially took art outsourcing as its main businessDetermines the course of development of the company until today. The rest of the story makes some sense of the story. Relying on the reputation accumulated before, once the development idea is finalized, there will be more orders from large manufacturers. The first to attract is the more geographically closer Asian manufacturers, such as South Korea's NCSOFT and NetEase. Later, well-known manufacturers such as Ubisoft, Bungie, and EA also came to cooperate, so that the company's business scope expanded to the world. As you can imagine, the company has participated in many well-known game projects, including many well-known works from major manufacturers: Ubisoft's "Assassin's Creed", NCSOFT's "Sword & Soul", Bungie's "Destiny 2", EA's "FIFA Online 4", "Madden NFL 22", and the more familiar "Genshin Impact", "Honkai Impact 3", "Onmyoji", "The Day After Tomorrow", "The Fifth Personality", "Honor of Kings", "Tower of Fantasy" ......And so on and so forth. Of the world's top 25 game development companies, 19 have partnerships with KINGKING. At the same time, the self-developed business is not completely stagnant. In 2009, the MMORPG "The Cold Rice Fried in the Year of the Heavenly Law" and the VR game "Unearthing Mars" launched in the year 0 of the Song of the Holy Maiden have all made gains, but there are not many projects that have been successfully completed, and they are far from keeping up with the revenue growth brought by outsourcing business. 
The company also expanded its issuance business by the way. In 2016, they officially reached a publishing cooperation with Epic in the Taiwan market, and in the following years, they successively obtained game publishing qualifications on their respective console platforms under Sony, Nintendo, and Microsoft. However, the income in this area is so small that it is almost negligible. At present, the vast majority of the company's revenue comes from art outsourcing business, which can account for more than eighty percent of its revenue in the past three years. The company has seven studios in Nanjing, Shanghai and Taipei, with more than 700 employees, 600 of whom are design and art staff. Despite the dream of developing its own product, it is now undoubtedly a professional and well-known art outsourcing company – and the third largest game art outsourcing company in Asia and the fourth largest in the world. Excellent business ability, as well as a good and stable international reputation, have also won the favor of capital. Up to now, the company has attracted investment from 4 banks and financial institutions. In 2021, the company moved its headquarters to Singapore in preparation for the listing. Last year, Acer Gaming acquired the company 444% of the shares, and in January this year, it was strengthened to 55%, becoming the majority shareholder of KINGKING Technology. With the continuous development cost of games in recent years, more companies choose to outsource part of their work to control costs, and the art outsourcing business is becoming more and more promising. For nearly three years, the company's revenue has maintained a leading trend and remains profitable in the general downturn in the gaming market. Compared with self-developed game companies that are self-financed, WEIJING Technology, which mainly focuses on art outsourcing business, does face much less risk. 
After finally going public, the company has set its sights on the longer term. They believe that while there are still various risks around AI, such as intellectual property infringement and copyright issues, AI can improve work efficiency and enhance the visual quality of fine art. As a result, the company intends to use 15% of the proceeds raised from this listing (approximately US$1.2 million, or approximately RMB8.57 million) to explore the application of AI in the art outsourcing business. Despite the dramatic nature of the process, WEIJING still found a path that it excelled in. Observing the survival of these upstream and downstream industry companies can also give us a deeper understanding of the current situation of the game industry. In WEIJING's IPO filings, we can also find some interesting things. The Company showcased customers who accounted for 5% or more of the Company's revenue from fiscal year 2020 to the first quarter of fiscal 2023. NetEase and Tencent are on the list. On average, NetEase spends about 25 million yuan a year on this outsourcing company alone, while Tencent spends about 13 million yuan a year. 
It's also important to consider that they obviously won't work with just one outsourcing company, and even the same game product won't necessarily work with just one outsourcing company. It can be roughly imagined that the annual expenditure of these two large factories on art outsourcing will definitely not be less. Orders from these two giants account for two to three percent of the company's revenue every year, and also contribute a large part of the revenue from mainland China and Hong Kong. In the company's revenue in the last fiscal year, the mainland, Hong Kong and Taiwan accounted for about 67% of the revenue, and it seems that the Chinese language area is still the company's main market. 
Of course, these figures are also affected by large orders, which may vary from year to year. For example, in fiscal year 2021, Tencent awarded a major project to our group, so the contract revenue from this giant increased significantly compared to the previous year. Maybe Tencent has something else hidden?Changes in the market and even policies are also subtly reflected in the company's revenue. For example, contract revenue from NetEase decreased significantly in FY2022 compared to the previous two years, due to the suspension of the issuance of publishing licenses for game developers in China at the end of 2021, which affected our customer base. In 2023, the license suspension policy was relaxed, so our revenue also increased. Large art outsourcing expenses, first and foremost related to cost control, are common all over the world. According to reports, game development spending in the global gaming industry has grown from $24.4 billion in 2017 to $33.1 billion in 2022, with a CAGR of 63%。Among them,Global game development spending related to game programming and game art is expected to grow at a higher CAGR between 2022 and 2027reached $17.2 billion and $16 billion, respectively. This growth is due to rising labor costs for programmers and game artists, as well as the need to produce higher-quality games. The total global development expenditure for the gaming industry is expected to grow to $50.8 billion by 2027, growing at a CAGR of 89%。
Among the various stages of game development, art is the one with the highest percentage of people seeking to outsource. Easier coordination and acceptance may be one of the reasons. 
Another example is Force Digital, which hit the A-share market in 2021, an art outsourcing company with a 3D animation business, and Tencent, NetEase and EA are among its top five stable customers. Judging from the revenue situation in those years, the contract revenue from the game industry has maintained a growth trend in terms of amount and proportion. This can be confirmed from one side that the art outsourcing demand of game companies is indeed in the first place. 
The document also presents some representative cases of the company's business, and the game news has selected the parts related to domestic game companies here. Judging from these descriptions, the outsourcing order is still very technical and does go down to the important details of the game. Art outsourcing companies are deeply involved in game production. 
Of course, this is also related to the development of the industry. More and more game companies are handing over art work to outsourcing companies, which also means that the game art outsourcing business has grown into a mature and large-scale industry, and has become an indispensable chain in the entire game industry. The so-called game industrialization is not only reflected in the increasingly detailed job arrangements within the game giants, but also in the development and growth of upstream and downstream enterprises. We are fortunate to be witnessing this milestone. This trend can also be seen in the situation of the Friends business. As mentioned above, VEKING Technology has achieved the first place in Asia among game art outsourcing companies.
3. Fourth in the world, so what are the companies before and after it?
Virtuos, who ranked first, earns about $44.6 million (about 3.) a year1.9 billion RMB), with about 1,500 art staff. The Singapore-based company started in Shanghai in 2004. It has received four rounds of funding before and after, and just in 2021, it also received a sum of 1$500 million (about 10.)RMB 7.1 billion) and is currently acquiring new studios on a global scale. The second-ranked Force figure earns about $39 million (about 2.) a year7.9 billion RMB), with about 1,400 artists. It is a young company based in Jiangsu that was founded in 2010. As mentioned above, this company submitted an A-share IPO prospectus in 2021. Although affected by the big loss of the original animated film "Mamma Mia Duck", the listing plan ended in the voluntary withdrawal of the application, but the company's outsourcing business volume has been seen. Chengdu Shire, which ranks fourth, earns about $16.7 million (about 2.) a year7.9 billion RMB), with about 800 artists. Founded in 2005, the company has already raised two rounds of financing in 2016 and 2020. In July this year, the company established a new Guangzhou Mengling Technology *** may start to explore the possibility of self-developed games. The booming game art outsourcing industry proves that the game industry is still alive and well, perhaps a piece of good news in the cold winter. We can also see that two of the top five game art outsourcing companies in Asia are Chinese companies, and two started in China. In the process of industrialization of the game, we have caught up with the pace this time. Speaking of which, I only hope that the future of WEIJING Technology will also go well. After all, in the wave of game industrialization, it can make money, which means that the entire game industry can still make money, and new games are still being developed, brought to players, and profited.