2024 is a time of some watershed significance.

From the market perspective, the technology of game manufacturers has reached a new height every year, and the market's preferences have experienced several rounds of changes. In addition, small games have emerged, making it increasingly difficult to keep up with industry trends in real time. From the perspective of capital, the entrepreneurial boom and investment boom in the past few years have also become a temporary history. Starting a business has become difficult and finding the investment targets you like has become difficult. This is the most common feeling for gamers who have communicated with new knowledge of the game.

Under multiple influences, game companies, both old and old, have been tested for years. And 2024, which has just begun to precipitate, is a period of concentrated verification of past judgments and strategies.

Games Xinzhi compiled the financial reports of listed game companies in 2024 and found a total of 30 companies that were impaired by shareholders of listed companies. Some of them are invested or acquired by listed companies, while others are simply established by listed companies. Often, the team and project have their own advantages and reasons to be favored. The impairment was set aside last year, which means that there was a certainty problem in the operating conditions and the company's goodwill value was reduced.

Looking closely, the situation of each company is different, but it seems to be in a similar dilemma.

This article is the first article of the entire topic, including 17 startup companies that have been desperately staked, most of which have been newly established in recent years. They are basically led by celebrity entrepreneurs or star core teams, and aim to a popular and good field, bet on one or two important products, and launch an impact on the top hits. But judging from the results, these gamblers failed to achieve an ideal ending.

Note: Due to the limitations on the disclosure of financial reports, the shareholders in the statistics only include A-share and New Third Board listed companies, that is, they do not include Hong Kong and US listed companies.

Challengers of popular tracks

Among them, the second-dimensional track may be the one we pay the most attention to.

Guangzhou Zhuoyou is a very representative company. In its annual report, it was impaired by shareholder Jibitt for approximately 26.66 million yuan. It was founded in 2015. The boss Hu Chunliang has worked at NetEase for ten years. He was the general manager of NetEase Games Business and was responsible for the agency distribution of NetEase Games.

Guangzhou Zhuoyou signed a 51% equity investment agreement with Aofei Entertainment as soon as it was established, with a price of 120 million yuan at that time. In 2021, Aofei Entertainment's 30% stake was acquired by Thunder Games, a subsidiary of Jibit, which became the major shareholder of Guangzhou Zhuoyou. Currently, the company has an undisclosed "Zero Million Arthur King" under development.

The most direct reason why Guangzhou Zhuoyou was impaired this time may be that "One Man: Dream Pointer" launched last year was poor. This game was developed by Byte's Wushuang Studio. In 2022, Wushuang Studio was adjusted by personnel and the game was once shelved. In September 2023, the game's research and development party became Chihiro Society, which is said to be composed of the core backbone of the original R&D team.

Guangzhou Zhuoyou registered the soft book "One of the Navy: The Dream Pointer" in April last year. "One of the Navigation: Dream Pointer" was finally jointly released by Guangzhou Zhuoyou and Thunder Games. It was launched in April last year, but its performance was not good and it was removed from the shelves in April this year.

At the same time, Guangzhou Zhuoyou's impairment this time may also be affected by its subsidiary Guangzhou Plane. This is also a celebrity startup, and its Ether Game Studio was founded in 2019 and is led by husband-and-wife producer T2he. T2 entered the game industry in 2005 and has worked in Giant Network, Youzu Network and Shanghai Yiyu. He entered the industry in 2007 and was the first to be responsible for the PC game project with T2. In 2017, he was responsible for the production of the second-dimensional game "Girls' Gunfight". The plane game is basically composed of a group of two producers who have led each other before.

The second game of space opera-themed war chess "Galaxy Realm Line" in the Guangzhou plane was launched in July 2023, and the results were not very good. The game was originally expected to be launched in the Hong Kong, Macao and Taiwan markets in 2024, but suddenly the issuer broke the contract and the company's funds broke. The game eventually stopped operating in May last year and the company went bankrupt.

Chengdu Vanpas is also a company with a high attention last year. In its annual report, it was impaired by shareholder Jibitt for about 4.31 million yuan. The team was under Chenzhike in its early years and was independent in 2018. It then received investments from Jixiang Capital and Novi Capital, a subsidiary of Jibit, respectively in 2019 and 2022, and received investment from Tencent in 2020. The company launched a two-dimensional horizontal screen ARPG "VGAME: Eliminate the World" in 2019, but the results were not good.

The reason for the impairment this time should be that the company's second game, "Leaping Rainbow Mirror", failed again. This is a two-dimensional vertical screen ARPG, which was launched in June last year and its results are still not good. Just a week after the game was launched, news of the disbandment in Chengdu Van Pas was reported, but "Leaping Rainbow Mirror" is still online now, and the company may have left a few people to maintain its operations.

"Leaping the Rainbow Mirror"

In Jibit's annual report, a total of 5 game companies it invested in were impaired, and the other three will be described in detail later. The annual report described these five companies (including Guangzhou Zhuoyou and Chengdu Vanpas) that they "have no clear subsequent equity financing plans, and the equity held by the company is difficult to be realized through direct transfer, and the subject matter continues to lose money, and the future cash flow inflow is expected to be less than the outflow amount", so impairment is set aside.

This is the general situation of companies that have been impaired in this article. Guangzhou plane and Chengdu Vanpas are the two worst cases, but looking at the future, they may not be the only two cases. Because for these small teams who are desperately betting, the failure of an important project that has infused all resources may mean that it is more difficult to find investment and support the research and development of new projects, and it will be quite difficult to turn things around in the future.

Another tragic track is SLG, which is also rich in celebrity entrepreneurs.

In its annual report, Shanghai Mumu was impaired by shareholder Century Huatong for approximately 16.79 million yuan. This is a company established in 2016. It received investment from Longchuang Yuedong in 2017 (later withdrew from shareholders in 2021) and received investment from Century Huatong and Tencent in 2021. The core members of the team come from giants, Tencent, NetEase and other major manufacturers.

In his early years, the company participated in the overseas operation of the medieval war-themed SLG "War of Kings", but this game, which was launched in 2016, was removed from the shelves only after more than a year of operation. The company then developed a zombie-themed SLG "Doom Evolution". The game was launched in July 2019 and was released by Huiyao Interactive Entertainment, one of the company's shareholders at that time. Its results are average and it is not a famous product. Huiyao Interactive Entertainment withdrew from the ranks of shareholders in November 2020.

Investments from Century Huatong and Tencent should have given the company a big breath. The company tested a science fiction SLG "Age of Nova" in 2022, featuring a spherical large map. In 2023, the game was renamed "New Home" and tested again, and it is still on the shelf, but Play has only been downloaded more than 5,000 times so far. There is also news that the company had a "Dune" mobile game project in 2023. In terms of theme style, it conforms to the characteristics of "New Home", and perhaps it refers to the game. The results of this project are obviously not in line with expectations and are likely to be the reason why the company was impaired this time.

"Age of Nova"

:New Home

Another possible reason is that the dinosaur-themed SLG "De-:" which the company started testing in June last year has received poor response. The game's performance in the United States is not good, it is slightly better in India. It has reached the highest ranking of 68th on iOS best-selling list, but its ranking fluctuates greatly and is continuing to decline.

Ranking of iOS bestsellers in the Indian market

The situation in Beijing Ningqu is relatively similar. In the annual report, the company was impaired by its shareholder Shanda Technology for approximately 36.73 million yuan. The company was established in 2021 and received investment from Shanda Technology just one month after its establishment, accounting for 20% of the shares. It is said that the team members are also from large manufacturers and have experience in developing many products with monthly turnover of over 100 million.

The company launched a gangster-themed SLG "City of Crime: Gang Wars" in 2022, released by Shanda Technology and was once the first finished SLG of Shanda Technology. The game is still online now, but the results have not been outstanding. In July last year, the company tested another version of "City of Crime" (another version called "Gang War:"), which is also a gangster theme, and the art UI directly applied "City of Crime: Gang Wars".

: City of Crime

This game is still online, but the results are not good, iOS basically has no sound, and Play has more than 100,000 downloads worldwide. Diandian data shows that it was just taken off the shelves recently. Related projects have been repeatedly adjusted for several years, which probably has become the reason why the company was impaired.

The above two popular tracks are basically launched with mature products from major manufacturers during the period when the competition is the most intense, but they failed to beat the top competitors. Even if there are investments from celebrity teams and large manufacturers, there is still a certain possibility of failure, which is also a manifestation of the increasingly saturated market.

As for the next few companies specializing in MMOs, they encountered the downward period of the entire track. These startup teams not only have rich product experience, but also found leading manufacturers as backers for issuance, and some even obtained authorization for high-value IP. However, the high-investment products developed by large companies are still uncertain, and these startup teams are struggling.

In its annual report, Shanghai Wuwei was impaired by shareholder Sanqi Interactive Entertainment for approximately 56.14 million yuan. The company was registered and established in 2019. CEO Wang Pengfei has served as vice president of Youzu, general manager of the studio, and senior game producer. Shanghai Wuwei was founded by Daxia Studio, one of the four major studios of the Youzu. His team experience includes "Age of Angels", "Grave Robbers", and "Birth of the Great Heroes". The company received investment from Sanqi Interactive Entertainment and Youzu in 2021.

The direct reason for the company's impairment this time may be that "Ragain: Conquest" which was launched in the second half of last year was poor. This is a magical MMO, issued by shareholder Sanqi Interactive Entertainment. Considering that the company has registered a small number of soft games and has similar names and styles, this "Ragainst the Gods: Conquest" may be a project that the company values ​​more. After the game was launched, the ranking of iOS best-selling list declined rapidly. For such a game type that values ​​the social ecosystem, it is probably difficult to turn over.

Ragnarok: Conquest

In its annual report, Shanghai Yuelong Zhiyu was impaired by shareholder Perfect World for approximately 37.55 million yuan. The company was established in 2017. The core members are from major manufacturers such as Changyou, Perfect, NetEase, Xishanju, Tencent, etc., with an average experience of more than ten years. The projects they have participated in include "Sword Heroes", "The Legend of the Condor Heroes", "The Deer and the Cauldron", "Onmyoji", "Cross Fire", "Legend of Sword and Fairy 5". The company received investments from Perfect World and Puman Venture Capital in 2020.

The company has had at least two self-developed projects, one is the MMO "Floating Life Demon Painting Scroll" with domestic art films, and the other is the mobile game "Tianlong Bazi 2". "Floating Life Demon Painting Scroll" was tested between 2020 and 2021 and was published by Sanqi Interactive Entertainment. It seems that it has not been officially launched later.

"Floating Life Demon Painting Scroll"

"The Legend of the Condor Heroes 2" will be launched in April 2023. This MMO won the Jin Yong IP authorization and was issued by shareholder Perfect World. It was once a star competitor in the MMO track. The game's performance in the early stages of its launch was pretty good, and it once reached 5th place in the iOS best-selling list, but its performance declined significantly afterwards, especially since last year, it has rarely entered the best-selling list. The failure of these two key products is important reasons that may lead to the company being impaired.

In addition, the company Perfect Time and Space Qijia, jointly invested and invested by Perfect World and Seventh Avenue, was also fully impaired this time, with a total impairment amount of approximately RMB 30.3 million. The company is said to focus on developing multiplayer online mobile games with well-known IP support and innovative gameplay, but no projects have been exposed so far. Perfect World said in this financial report that it "expected to be recyclable in the future to be 0 yuan."

An explorer towards the alley

Unfortunately projects have their own misfortunes. The difficulty in making a breakthrough in popular tracks is because the competition is too fierce. In relatively unpopular tracks, startups' new projects face not only the difficult confrontation with leading products, but also the despair of fewer users and low product profitability.

In Perfect World's annual report, the reasons for the provision of impairment losses are written in detail: "In order to expand the industrial layout, the company has invested in many gaming industry companies, most of which are small and medium-sized enterprises. During the reporting period, due to factors such as changes in the industry environment, product layout and business progress of the invested enterprises, many of the invested enterprises performed poorly." The confirmation of impairment losses mainly considers three factors: "Based on the 2024 operating data of the invested enterprises, comprehensively considering the market competition pattern and future development trends of the relevant enterprises." Among them, three companies need to fully set aside long-term equity investment impairment provisions because they "are expected to be 0 yuan in the future".

The previous article has mentioned that Perfect Time and Space Qijia, and the other one is Guangzhou Zhengwan, which was impaired by shareholder Perfect World in the annual report of approximately 4.25 million yuan. The company was established in 2018. The core members of the team came from domestic Sanqi Interactive Entertainment, NetEase, etc., and obtained Perfect World Investment in 2021. Judging from its registration soft work, the company seems to have tried many categories such as placement and SLG, and adopted a low-cost and multi-product iteration approach, but not many products will be successfully launched in the end.

One of the goals was to set up the auto-chess track and made a dark-themed auto-chess game "The Road to Reconciliation". The game was quiet when it was launched in February 2023. It had never entered the iOS best-selling list and was eventually removed from the shelves in April this year.

"The Road to Reconciliation"

A company with a relatively similar situation is Guangzhou Alfa, which was impaired by shareholder Jibit this time of about 16.95 million yuan. The company's founder Qing Liang was once the CEO of Ming Dynasty Network. Most of the team members were from 4399 at that time. Guangzhou Alphas was registered and established in 2020 and received Jibit Investment 4 months after its establishment.

Qingliang once stated in his personal public account that his entrepreneurial direction is to build survival, mobile games, and undermine the end of the world. After the company was established, it has registered several soft books, but there is basically no news, including a research project called "Synthetic and Exploration", with the keyword "Chinese style modern exorcist, placement of RPGs, exploration and cultivation". Perhaps because many projects have no results, the company also "continuous losses" according to Gibit's annual report, so it was impaired.

Only one "Adventure of the Strange Adventure" just received the version number at the end of last year and will be released by Shiyue. Another good news is that the company also received Shiyue Investment at the end of last year, hoping to get out of its loss in recent years with this product closest to being launched.

Shanghai Dongtitanium was impaired by shareholder Kaiying Network this time of impairment, and its current net assets are about minus 1.06 million yuan. The company was founded in 2019 and its core members are from Media (AGM), a Japanese game company. It has participated in the distribution of many domestic independent games in Japan. After the outbreak of the epidemic, their work was greatly affected, so they left their jobs and started their business together to develop games, and set their directions on women's AVG games, which later expanded to suspense. The company received investment from Kaiying in 2021.

After the establishment of the company, it has successively developed several AVG games such as "Strange Tale Event Book", "Soul Moving Detective", and "Mobius' Radio Wave". A recent public project is the Chinese horror theme AVG "Transfer House". The game launched a free demo on the Steam platform in March 2023. The latest news of the official account was stopped at the end of 2023, and the official version has not yet been launched.

"Transfer House"

Kaiying’s online annual report describes the current situation of Shanghai Titanium: “Due to policy adjustments, the game track has been changed, the R&D progress is slow, the team is small, and the operation is more difficult.” The AVG category has always been difficult to monetize, which may be more stressful for small teams.

Hangzhou Shengxu Miracle was impaired by shareholder Kaiying Network this time of impairment. It stated that it "has poor operating conditions, shareholders do not intend to continue to inject capital, and liquidate them at the right time." The company was established in 2022 by joint capital injection of Kaiying Network and Zhongxu Future. Both parties each hold 49% of the shares, and an investment company controlled by natural persons accounts for 2% of the shares. In 2023, Zhejiang Xuwan, an investment company jointly controlled by Kaiying Network, Zhongxu Future and other companies, acquired a total of about 10% of the shares from each shareholder. This company's products are mainly legendary games, and have tried mini games, which seem to be ineffective.

Hangzhou Shengxu Miracle Official Website

Similar companies are Hangzhou Nuzhan, which was established in 2021. Four months after the company was established, it received investment from Kaiying Network, and its product research and development direction is also legendary games. Kaiying Network stated in this annual report that its "operation is facing adjustments in business direction and the revenue of old products continues to decline", so it has set aside an impairment of about 280,000 yuan.

Another big player in legendary games, Century Huatong, also has companies under its genre, including Chongqing Yiliang and Chongqing Naishi. Both companies were established in 2018 and obtained investment from Century Huatong in 2022, developing the legendary games "Red Flame Dragon Slaying" and "Red Salon City". The two companies were impaired for approximately RMB 92.14 million and RMB 41.86 million respectively, and the products were estimated to be lower than expected.

In addition, there is a company called Xiamen Ruilianglong that received Huaqing Feiyang Investment in 2021, and this time it was impaired by 1.21 million yuan. The company currently only registered a soft book called "Beauty Country". It also signed a promotion service contract worth 30 million yuan with Xiamen Xinkang, a listed company on the New Third Board, but the project has not been exposed yet.

A different tester

There are also some companies that are favored by listed companies because they are relatively novel or unique in directions, which can fill the vacancies in listed companies' business. New business also inevitably means risks. After a period of attempt, the failure of some companies is reflected in the impairment provisions in shareholders' financial statements.

Guangzhou Transsion was impaired by shareholder Jibit this time by approximately RMB 710,000. The company was established in August 2022 and received a 49% equity investment in Gibit in January last year. Two months later, Gibit nearly doubled its capital, but its shareholding ratio has not changed. In October of the same year, Jibit transferred all its shares back to the founder. This company has not exposed any products, and the Douyin account is currently testing the barrage game.

It was also in January last year that another company called Guangzhou Youqu Interactive Entertainment received Jibit Investment, which also accounted for 49%. The company was established in September 2023 and specializes in game live broadcast promotion business. It is said that the founder has entered the live broadcast industry since 2016 and has experience in live broadcasting promotion and creating personal IP. However, in August last year, the company decided to dissolve it. In this financial report, Jibit set aside an impairment of approximately RMB 750,000.

Shenzhen Yiteng, as a company that devotes itself to the short drama track, was favored by Glacier Network. The company was established in 2021 and operates the Douyin account "Bingrong Theater". The company received investment in Glacier Network in December 2023 and signed a framework cooperation agreement with it to authorize its works to Glacier Network's subsidiary. Glacier Network's subsidiary "is responsible for providing technical support for authorized works so that end users can use authorized works, recharge authorized works, and pay licensing fees to Yiteng Network for the use of authorized works." The share collected by Glacier Network's subsidiary only accounts for 5%.

This is Glacier Network's first attempt to get involved in the short drama business. The relevant announcement of Glacier Network summarizes its strategic intentions in this way: "The company has always been focusing on online games as its main business. The company continues to pay attention to the development trends of game forms, user needs, and distribution models in the industry to maintain the company's competitive advantage. This cooperation is the company's attempt in a new business field. Through this cooperation, the company can deepen its understanding and understanding of related fields and explore the development of relevant high-quality content combined with the company's main business. Yiteng Network also uses the platform, technology and distribution experience of the company and its subsidiaries to achieve complementary advantages and reasonable allocation of resources with the company."

To gain an in-depth understanding of the short drama business, to grasp user preferences in a timely manner, and further try the combination and linkage of short dramas and games, this is probably the original plan of Glacier Network. However, Shenzhen Yiteng's business development seems to be not smooth. The number of fans of "Bingrong Theater" is only 19,000, and the number of likes per episode of paid dramas that have been broadcast recently is basically only between 100 and 200. In this financial report, Glacier Network made an impairment of about 2.71 million yuan.

There are also two startup companies that have also won the favor of listed companies because of their expansion value, but they are not very lucky to choose their business direction.

Beijing Hashiqi is a company that produces AR and VR games. It was founded in 2015 and also gained popularity with the concept of the metaverse at that time. It also received two investments from Baotong Technology in 2017 and 2021 (a total of three shareholders, both of which are affiliated companies of Baotong Technology).

However, the VR gaming industry later cooled down rapidly, and it was difficult for the company to stick to it. In this financial report, Baotong Technology stated that "As of the end of the reporting period, Beijing Hashiqi Technology Co., Ltd.'s business has stagnated, and there is no possibility of recovery of investment, and there are obvious signs of impairment, so the full impairment of this investment was set aside", with a total of approximately 10.25 million yuan.

Hangzhou is pretty good, and chose offline script killing business. Its CEO Qian Lei once founded a blockchain company. Hangzhou Manwei was founded in 2021 and received investment from Dianhun Network and three other capitals the following year. The company has created an offline script killing brand "Myster Hotel", which includes script games, immersive theaters, script distribution, IP derivatives, immersive education and training, and offline immersive stores.

Last year, the offline entertainment industry was generally cold, and the company was probably affected. In this financial report, Dianhun Network stated that the company "has difficulties in operation, so the company has fully set up impairment provisions for the asset at the end of the period" and has a total of approximately RMB 2.16 million in impairment.

It is worth mentioning that in this financial report of Dianhun Network, more than 20 companies have recoverable amounts of 0, but only conducted impairment tests, and no impairment was set aside in this period. As a result of Dianhun Network's large-scale investment in previous years, the operating conditions of these companies may not be optimistic.

Conclusion

On the other hand, the investment ideas of each listed company can also be seen from their stage strategic tendencies. Some investments are about expanding their advantages and focusing on areas where they are good at, aiming to expand their dominance. Another part of investment has turned its attention to areas that they are not good at, seeking to achieve business breakthroughs. The performance of these two ideas can be seen at the same time from the investment targets of Kaiying Network mentioned in this article.

As the investment market tends to cool down, these two ideas may have their own reasons for shrinking.