Viewpoint focus
Investment advice
Under the strategic deployment of cultural power, it has become a clear trend for Chinese game manufacturers to continuously improve their product strength and brand strength, increase the exploration of overseas markets and realize global layout. In the short term, the progress of Chinese game titles is still unclear, and the overall growth rate of mobile game market slows down; In the medium and long term, China Mobile Games has the global leading competitiveness in terms of quality and playing methods, and has the ability to expand the increment of overseas market. The game has fully entered the era of going to sea. In this report, we try to review the development history of the global game market and identify the current situation, manufacturer competitiveness and challenges of Chinese hand travel to the sea; China mobile travel to the sea puts forward higher requirements for the R & D and operation capabilities of manufacturers. Head game manufacturers with stronger competitiveness in R & D / operation are expected to occupy a leading position in the wave of game going to the sea by virtue of core barriers.
Reasons
The mobile process of the global game market has accelerated, and the penetration rate has obvious room for improvement. With the popularity of smart phones, the global mobile game market (especially in the Asia Pacific region) has achieved rapid development, and the market growth engine has gradually shifted from host games to mobile games, driving the scale of the global game market to exceed the threshold of $150 billion in 2020, and the proportion of mobile Games will exceed 50% in 2021. In terms of subregions, in 2020, the mobile game market of Japan, South Korea and other Asian countries accounted for more than 50%, while the penetration rate of mobile games in the United States, Europe and other regions was basically about 40%, with great room for improvement.
The competitiveness of Chinese mobile game manufacturers is improved, and the policy encourages nuggets to explore global opportunities. There are many reasons for Chinese mobile travel to the sea: first, Chinese mobile travel manufacturers have global competitive strength, and their global product power / brand strength provides competitive barriers to the sea; Second, the overseas market has a wide exploration space and can continuously tap the demographic dividend in emerging regions and the increment of game mobility in mature markets. The compound growth rate of China’s overseas revenue of self-developed games from 2016 to 2021 reached 20.0%, which is 3.3ppt higher than the growth rate of China’s revenue of self-developed games Third, the policy encourages high-quality games to go to sea to provide support for the dissemination of high-quality culture.
The sea is still in the early stage of development, and the research and transportation capacity and adaptability need to be enhanced. We believe that despite the increasing global influence of Chinese manufacturers and the improvement of the diversification of game categories, they still face many challenges.
On the one hand, the proportion of head products is relatively low, according to data AI, in the top 250 mobile game revenue of each region, China’s market share only reaches 50% in Southeast Asia, and does not exceed 30% in South Korea / Japan / the United States and so on; Moreover, the characteristics of the sea market are different, and the degree of refinement of the issuance needs to be enhanced. On the other hand, there are differences in infrastructure and institutional levels in various regions of the world, and the objective environment brings uncertainty to the sea. We believe that the head game manufacturers with the integration of research and transportation and fine and appropriate localized playing methods are expected to take the lead in the sea competition.
Profit forecast and valuation
Maintain the profit forecast and rating of each company. A shares are optimistic: Perfect World Co.Ltd(002624) (strong R & D heritage and multi-terminal international layout) / Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) (outstanding issuance advantages and breakthroughs in overseas products) / G-Bits Network Technology(Xiamen)Co.Ltd(603444) (outstanding long-term operation ability and actively explore going to sea); Hong Kong stocks are optimistic about: Netease (outstanding product strength, active innovation of diversified new tours) / heart company (game content community taptap and self-developed games are actively expanding in the world) / ZuLong Entertainment (strong R & D gene, steadily promoting globalization) / friendship time (women lead the game and steadily promote going to sea) / celadon game (high-quality content has the potential to go to sea); It is recommended to pay attention to IgG.
Risk
The risk of changes in policy environment, intensified industry competition and exchange rate fluctuation.
