Reporter Liu Wang reports from Beijing.
The card game with small cards as its main business is the card game, hereinafter referred to as the "card game"), is impacting the capital market.
Not long ago, Card Game officially submitted a prospectus to the Hong Kong Stock Exchange, and also officially disclosed its specific performance. In 2022, the company's revenue once exceeded 4 billion yuan. To a certain extent, it also proves the strong appeal of trading cards among young consumers.
Its prospectus disclosed that the top five companies in China's trading card industry accounted for 76% of the total time share7%, card game with 710% market share ranks first in China's trading card industry.
The reporter of China Business News observed that most of the audiences in the card market are young consumer groups, and as consumers grow older, many people in the industry are worried that their enthusiasm for cards will fade, which will affect the development of the market. How to continuously mine card IP and innovate gameplay is particularly important to the entire industry.
"The deterioration in the recognition and popularity of existing IPs in our IP matrix, or any failure of us to discover, develop or commercialize new IPs, could have a material adverse effect on our business, financial condition and results of operations," the prospectus also admitted. ”
The IPO that young people "gathered" out
The last time people paid attention to the trading card industry was in October 2022, when Pokémon Chinese Simplified Chinese trading cards officially entered the Chinese market, once again bringing a boom in domestic trading cards. At that time, a Pokémon rare card was auctioned for 1.22 million yuan on Xianyu.
Also hot is Ultraman cards, "Elementary school students make a wish in Qianfoshan and hope to get a set of limited edition Ultraman cards" and other news, it is a young company that is sprinting for IPO - card games.
According to the prospectus, in 2021, 2022 and the first 9 months of 2023, card games will achieve revenue of 229.8 billion yuan, 413.1 billion and 195.2 billion yuan, of which the revenue of trading cards was 21700 million yuan, 39300 million yuan and 167.5 billion yuan, accounting for the proportion of total revenue1% and 858%。
The reason why the card game can sit in the first position in the industry is not unrelated to Ultraman IP. Ultraman cards are obviously the most "out of the circle" product of card games, card games can carry out IPOs, and Ultraman and other IPs have contributed a lot. According to the prospectus, from the acquisition of Ultraman IP authorization in 2018 to September 30, 2023, the card game has launched a total of 274 trading card series based on more than 50 Ultra heroes, accounting for 65% of its total trading card series.
In addition, Cardgame currently has 44 IPs, including Ultraman, Cardgame Three Kingdoms, Egg Boy Party, Naruto, Harry Potter, etc. IP licensing is also the main cost of card games, and in 2021, 2022 and the first nine months of 2023, the IP fees paid by card games are 16.6 billion yuan, 21.1 billion yuan, 11.3 billion yuan, but they only accounted for the total revenue1% and 58%。
In contrast, the gross profit margin of card games is higher. According to the prospectus, in 2021, 2022 and the first nine months of 2023, the company's gross profit will be 133.5 billion yuan, 284.2 billion yuan, 131.4 billion yuan, and the corresponding gross profit margin was .8% and 673%。Trading cards have higher gross margins, reaching2%。
Song Xiangqing, vice president of the ** Management Research Institute of Beijing Normal University, said: "From the perspective of social and economic background, social diversification and economic modernization have extended young people's consumption interest, increased their consumption power, and increased their enthusiasm for Sino-Italian consumer goods, especially trading cards with cultural entertainment and trading. ”
At the same time, the trading card pattern is concise, the design is exquisite, and has the characteristics of collection, trading, exchange and appreciation, on the basis of meeting the individual needs of young people, it is helpful to realize property appreciation and social friendship, and it is easier to stimulate their desire to buy and spare time. If you collect all the cards, it is easier to form a special status among the card holders, satisfying their sense of accomplishment and self-esteem. Song Xiangqing said.
As mentioned above, the reporter noticed that Cardgame has established a complete rarity system for its authorized IP products: according to the difference in production, it is usually divided into ordinary cards, conventional rare cards, super rare cards, super rare cards, super rare cards, raster rare cards and extremely rare cards. Some sets also introduce more subtle rarity levels, such as the Platinum Reserve and Q Edition Rare cards, which vary in appearance, texture, and craftsmanship.
Prior to the IPO, Cardgame also received pre-IPO investments from Sequoia China and Tencent. Some voices from the outside world said that at the same time as financing, Kayou also signed VAM redemption terms with Sequoia China and Tencent.
Song Xiangqing believes that the reason why trading cards are favored by capital is mainly because the trading cards are in place to promote the momentum, and they have become a symbol of success and glory in specific consumer groups. Therefore, the consumer group continues to expand, the market potential continues to grow, the market size and profitability continue to expand, especially its value conversion channels are diverse, events, economy, games, transactions, licensing and other profit models have attracted the attention of capital, coupled with its profitability of more than 30%, capital is naturally favored.
Guild Wars Card Market
Although card games are currently the company with the highest market share in the industry, it should still be noted that it is facing a lot of competitive pressure. Especially in 2023, Pokémon Lite Chinese will enter the Chinese market and set off a boom, and there are many voices who think that this will be the biggest challenge for card games.
For example, Holley Technology (301011SZ), which has obtained the global or regional rights of a number of IPs in the field of game and amusement equipment, including "Minecraft", "Pokémon", "Ultraman", "Mario", "Halo", "Transformers", etc.
In addition, Yunyong Holdings holds trading card game IPs such as Pokémon, Yu-Gi-Oh, and Magic Storm. In terms of market share, it ranked first in the distribution of trading card games in the Asia-Pacific region in 2020, with a market share of about 1% in the Asia-Pacific games and collectibles market.
It is worth mentioning that capital is constantly entering the card market, including Sequoia Capital, Source Code Capital, Yaowei Investment, and many other institutions, as well as related companies such as Bilibili, Bubble Mart, miHoYo, and Yao Ji Technology. Holley Technology has also successfully landed on the A-share market, and the investment targets include card trading platforms Katao, Fansimao, as well as card design and sales enterprise card games, hitcard, suplay, etc.
In fact, around a small card, companies need to compete in all directions. Some practitioners told reporters that in order to create a successful card product, it is necessary to pay attention to many aspects: first of all, big IP, each set of products has the endorsement of big IP, which is a feeling and a trend in itself. The second is the setting of rules, and the cards are divided into levels, including high-level, rare, and ordinary cards. If you want to get rare cards, you have to buy them in large quantities, bet on probability, or trade and exchange them with others. It is social again, and the cards have fine game rules, such as Pokémon cards, which truly restore the operation of the ** game and have a strong social interest. Finally, there is competitiveness, such as card games, which often hold offline competitions in various cities to drive consumer passion.
Chen Ge, vice president of Tiantu Venture Capital, once concluded that from the perspective of core capabilities, obtaining IP authorization, in-depth understanding of IP, building a product content system, and building sales channels are all very important capabilities.
He believes that in terms of the ability to obtain IP authorization, whether it is a star card or an animation IP card, the driving force for players to enter the pit is often the attention and love for the star or IP. However, card publishers in China are not fully competitive, and the acquisition of IP is of great benefit to card publishers to gain a first-mover advantage. The product strength is reflected in the publisher's in-depth understanding of IP, the development of IP products and the creation of content systems, including the understanding of card characters, the design of the rarity system, and whether new cards or characters can be continuously introduced to supplement the original product system. Domestic cards are still in the stage of user education, and it is very important for publishers to reach and convert users, so it is also an important factor for card publishers to win in the future by familiarizing users with the product through different channels, that is, the construction of an online and offline sales system.
The prospectus of Kayou mentions that the licensing of its existing main IP expires between 2025 and 2029. Among them, Ultraman expires in 2029, Ye Luoli expires in 2033, and Douluo Dalu Animation and Egg Boy Party expire in 2025.
Cardgame also admits that if it fails to obtain, maintain or renew the IP licensing arrangement on favorable terms, or if the IP partner fails to maintain and protect its IP, the company's business, financial condition and results of operations may be materially and adversely affected.
Obviously, as an industry that obtains IP authorization in the upstream and operates and sells in the downstream, the focus of the card business cannot be just on a small card, and the upstream and downstream cannot get out of control, which is the most important focus of card games.
For related questions, the reporter contacted the card game for an interview, but did not receive a reply as of press time.
Editor: Yu Haixia Proofreader: Yan Jingning).