Text: Wang Huiying

Edit/Midnight

In 2017, when "Genshin Impact" was first established, there were only 600 people in miHoYo; Today, there are 1,400 people in the Genshin Impact project alone, more than 6,000 employees worldwide, and the founder Cai Haoyu is on the Hurun Rich List.

In the past few years, miHoYo has grown rapidly, from a small game factory to a large game factory, the founder has developed a set of mature office software, made a lot of organizational structure adjustments, and also began to explore the game track outside the second dimension, and started to invest in the second curve.

In various explorations, miHoYo gradually adapted to the rhythm of becoming the head of the industry, and it was also accompanied by some adjustments.

Source: miHoYo official website

First of all, after experiencing rapid growth, miHoYo has become more realistic and attaches more importance to the performance itself. According to Game Grape, at the beginning of this year, Liu Wei, founder and CEO of miHoYo, specifically asked each team to align their goals, asking everyone to find the most direct business that helps the company's revenue and user growth.

If revenue growth does not rise, it is difficult to guarantee profits. Although miHoYo's revenue and profit are still at the highest level in the industry, as more projects are launched and costs are disbursed, they will also have to be balanced by reducing expenses.

Recently, according to Leifeng.com, miHoYo has significantly reduced the procurement budget for external cloud computing. It has shrunk from about 1 billion yuan a year to less than 600 million yuan. According to the Shanghai Securities News, a person close to miHoYo said that the news was untrue.

Behind this, "Genshin Impact", which has been popular for four years, is facing a new growth period, and the new projects "Broken Iron" and "Jeopardy Zero" failed to replicate the grand occasion of "Genshin Impact".

Since the beginning of this year, the market has repeatedly reported that the turnover of several games under miHoYo has declined to varying degrees, and some media have reported that within miHoYo, reducing costs and increasing efficiency is also the main theme.

miHoYo's growth rate has slowed down, external competition has intensified, and how to find more potential growth points is a top priority for miHoYo.

Continuing to make money and maintaining stability is the market's unified expectation of unicorn companies. As the founder, although Cai Haoyu stepped down from the position of chairman, he still shoulders the heavy responsibility of leading miHoYo to find the next "Genshin Impact".

1, took Mihoyou to run wildly, and Cai Haoyu rushed into the rich list

In this year's game circle, those who have watched the popularity of "Black Myth: Wukong" will definitely think of "Genshin Impact" back then. Although the former has set some records, it has not yet reached the height of Genshin Impact in terms of influence and business.

In 2020, the two-dimensional game product "Genshin Impact" was born, according to the data of the research agency Sensor Tower, "Genshin Impact" has repeatedly ranked first in the monthly revenue list of China's mobile game market, with a revenue of 558 million US dollars in 2020, and the champion of domestic mobile game overseas revenue in 2021, 2022 and 2023.

In the past four years, the mobile turnover of "Genshin Impact" has exceeded 9 billion US dollars.

"Genshin Impact" has become a product that can compete with "PlayerUnknown's Battlegrounds" and "Honor of Kings", and miHoYo has also broken the pattern of "two superpowers and many strong" in the domestic game market, narrowing the gap between startups and Tencent and NetEase.

It is rare for a game company to gain a firm foothold in the market with a single product, and miHoYo is one.

In the game circle, miHoYo is not a young company, and 12 years ago, several "otaku" who were interested in ACG started the road of game entrepreneurship.

From the initial 6 yuan a copy of "Honkai Academy" to "Honkai Impact 3" with a turnover of 1.1 billion yuan in one year, several founders, including Cai Haoyu, took miHoYo to run wild on the road of the game.

If miHoYo was a well-known startup before, the appearance of "Genshin Impact" gave miHoYo the opportunity to straighten his back.

"Genshin Impact" game, source miHoYo official website

When "Genshin Impact" exploded in 2020, the competition between the two giants Tencent and ByteDance was in full swing, and getting "Genshin Impact" undoubtedly meant that they were ahead of their opponents in the game track, and both companies threw olive branches to miHoYo.

But Cai Haoyu rejected the invitation of the two giants and decided to be self-reliant, because he has long regarded his hobby as a career, and making money is no longer the first place, making a game that he really likes.

On Zhihu, "Should I treat my hobby as a career?" Under the question, there was a high praise answer.

"This meow is to take interest as a career, and I feel very happy. As a person who can do the things he likes, do things well, and don't like things that he doesn't want to do, only this choice has a solution. The only downside is that the break is boring, so it's better to go to work! This answerer is Cai Haoyu.

To this day, Genshin Impact continues to pay off miHoYo and its founding team.

On October 29, the Hurun Report list showed that the number of entrepreneurs under the age of 40 on the list increased to 127, of which the number of post-90s reached 30. Among them, the 37-year-old founder of miHoYo made Cai Haoyu the "richest man" under the age of 40 with a personal wealth of 73 billion yuan, an increase of about 9% over last year.

Cai Haoyu has also become the founder of the company in the game industry, second only to Ma Huateng and Ding Lei. The other two founders of miHoYo, Liu Wei and Luo Yuhao, are worth 40 billion yuan and 38 billion yuan respectively.

In addition to its strong ability to attract money, Genshin Impact has become a representative of Chinese cultural output in the hearts of overseas game enthusiasts.

At foreign comic conventions, the number of cosplay characters, "Genshin Impact" topped the list; On the best-selling list of overseas games, in October 2020, "Genshin Impact" swept eight countries including the United States, Canada, and South Korea.

Looking back at the project stage of "Genshin Impact", this project was not favored by everyone; After the explosion of "Genshin Impact", there were some unconvincing voices in the market, and many people felt that they could make the same successful product if they established the project.

The final result was that only Cai Haoyu took miHoYo to "win". Many manufacturers tried to replicate the success of Genshin Impact, but they were unsuccessful.

However, even miHoYo itself seems to be stuck in the difficult problem of how to solve the bottleneck period and how to develop the next "Genshin Impact".

2. How to extend the vitality of popular games is the core proposition of miHoYo

In August this year, at the FES 2024 carnival of Genshin Impact, Liu Wei, the founder of miHoYo, said that in the past year, he and the Genshin Impact project team have experienced anxiety and confusion, and heard a lot of sharp voices.

"Some voices are particularly sharp and belittle the Genshin Impact project team to nothing." Liu Wei mentioned.

The outside world is questioning and miHoYo is anxious, but in the final analysis, "Genshin Impact" is falling into a growth bottleneck.

According to a research report released by BOCOM International in September, Genshin Impact ranked tenth among the top 10 mobile games in China in terms of turnover from January to August 2024, with a year-on-year decline of 52%.

The downward trend of Genshin Impact has been evident since last year. Qimai data shows that since April 2023, "Genshin Impact" has dropped from the previous TOP20 to outside the top 30 in the iOS free game list.

The ranking has slipped and the number of users has decreased, and the revenue of Genshin Impact has also declined. According to data from platforms such as Sensor Tower, Genshin Impact revenue will be $940 million in 2023, down 40%; In the first half of this year, Genshin Impact earned $320 million.

The vitality of popular games is weakening, and new games have failed to become hits.

At the beginning of July this year, miHoYo's new two-dimensional game "Jeopardy Zero" broke the global pre-order record of miHoYo with 46 million, and was predicted by the market to be the next "Genshin Impact". As everyone knows, on the day of the launch of the service, ""Jeopardy Zero" is boring" rushed to the hot search. On the other hand, "Crashing Iron", which has been performing well this year, is also obviously lacking in stamina.

The game characters of "Jeopardy Zero", the picture source is Jeopardy Zero's official Weibo

In August this year, according to the data of the "August Global Mobile Game Revenue List" released by Sensor Tower, "Genshin Impact", "Crashing Iron" and the new work "Jeopardy Zero" launched this year failed to squeeze into the top 20.

The competitiveness of several games is not as good as before, the turnover is declining, and in order to keep profits, miHoYo has begun to reduce costs and increase efficiency.

In September, some media broke the news that due to the decline in overseas revenue, miHoYo's team in charge of overseas operations and communities was also laying off employees to varying degrees. In November, according to media reports, miHoYo significantly reduced its procurement budget for external cloud computing.

Correspondingly, miHoYo built its own computer room. According to China Entrepreneur, miHoYo will start to build its own server room in 2022. Reflected in the user experience, the previous free experience time of the cloud version of "Genshin Impact" was only 15 minutes, and after the self-built computer room, its free time was increased by 300 minutes during the limited-time event in August. This also reflects the cost control of miHoYo's self-built computer room.

Back to the essence, it is a question of how miHoYo can extend the vitality of popular games like Genshin Impact.

To be clear, for phenomenal games like Genshin Impact, most of the target users have been attracted in the explosion stage, and the significance of retention at this stage is greater than attracting new users.

From the perspective of update cadence, in order to bring freshness to users, the update frequency of "Genshin Impact" is not slow. According to miHoYo, the Genshin Impact version is updated stably every 6 weeks, and thousands of people are involved in the production. In February this year, Liu Wei mentioned that miHoYo now has the ability to produce games industrially, and the key to this is to improve efficiency, because the accumulation of industry chain and experience can greatly shorten the product development time.

This year, in order to retain players, Genshin Impact has also been updated with an in-game price reduction for the first time. On the one hand, the "Capture Light" event has been added to increase the probability of the game character extracting items. At the same time, it also reduces the cost of weapon extraction, which is about 10% cheaper than the previous guaranteed extraction price.

However, the above-mentioned data proves that the pull effect of updates and price reductions is not obvious. Another core problem is that two-dimensional games are different from competitive games, with the upgrading of different versions, the pleasure of users upgrading and fighting monsters is continuous, but in a story-based game like "Genshin Impact", the user's experience is often one-time, and the new cool point is not obvious.

What's more, after the launch of "Jeopardy Zero", miHoYo has three two-dimensional game products of "Genshin Impact" and "Crashing Iron", in addition to facing the competition of external products, the competition for users of its own products is also inevitable, and miHoYo needs to transform.

In September last year, 36-year-old Cai Haoyu ceased to serve as miHoYo's legal representative and chairman, and both positions were replaced by Liu Weilai. On the front line of business, perhaps Cai Haoyu can concentrate on being a "genius producer", prolonging the vitality of popular models such as "Genshin Impact", and looking for the next "Genshin Impact".

3. Breaking the wall of the second dimension and making investment, miHoYo is looking for new growth

The success of "Genshin Impact" has driven miHoYo to stand in the third position of domestic game manufacturers, and it has also verified the market of two-dimensional games, allowing the market to see this cake again.

Tencent's "Glory of Kings World", miHoYo's "Crashing Iron", Eagle Horn Network's "Tomorrow's Ark End", Xishanju's "Dust White Forbidden Zone", and Station B's "Slude...... Grasping industry trends, players are trying to get a piece of the pie.

According to the "2023 China Game Industry Report", the actual sales revenue of the two-dimensional mobile game market in 2023 will be 36.77 billion yuan, a year-on-year increase of 31.1%.

A big problem is that the revenue of miHoYo's "Genshin Impact" and "Crashing Iron" has 13 billion yuan, accounting for more than one-third. Most of the increase in the scale of two-dimensional games comes from miHoYo, and the games of other manufacturers can be described as thunder and rain.

This year, manufacturers' attitudes towards two-dimensional games have begun to change. At the Tencent annual meeting at the beginning of this year, Ren Yuxin, president of IEG, also mentioned two-dimensional games, saying: "Competitive battle games are still the crown jewel, this is our basic market. We must keep the fundamentals and not be shaken by some popular MMOs and ACGs."

The focus of manufacturers has shifted, and the popularity of two-dimensional games in the market has also declined. According to Gamelook data,

In January 2024, the monthly revenue of domestic ACG games will drop by more than 20% compared with the summer of 2023, and even the revenue of the domestic ACG market in January this year will be 20% lower than the monthly turnover in the off-season of 2019.

According to the "China Game Industry Report from January to June 2024", the total revenue of two-dimensional games in the first six months of this year was 15.845 billion yuan, a year-on-year decrease of 5.39%.

Looking at the growth bottleneck of miHoYo, it is also synchronized with the cooling of the two-dimensional game market. For example, "Crashing Iron", which was at its peak when it debuted, but lacked stamina - the turnover was as high as 6 billion yuan in one month after it was launched, and the total turnover decreased by nearly 65% year-on-year a year later.

As the market cools down, miHoYo, which once dominated the world with two-dimensional games, faces an acute question: can miHoYo only do a good job in two-dimensional games?

To answer this question, miHoYo needs to break the two-dimensional dimension and look for a new growth curve.

In September this year, miHoYo announced a long picture for recruitment, announcing five new games in the pipeline. In addition to familiar labels such as "open world", "stylized rendering", and "Honkai IP", there are also new entries such as "animal anthropomorphism" and "modern city".

Among them, the one that has attracted the most attention from the outside world is the animal anthropomorphic game, which corresponds to the product "Xingbu Valley" that miHoYo got the version number in July. According to previous revelations, the gameplay of "Star Cloth Valley" is similar to the previous popular "Animal Crossing", although the painting style is still two-dimensional, miHoYo clearly mentioned that the game contains elements such as "life simulation" and "socialization", which is miHoYo's first attempt.

In addition to games, miHoYo has quietly increased its investment and financing business.

In June this year, the Shanghai Yuanchuang Future Private Equity Fund, with a registered scale of about 512 million yuan, landed in Shanghai, and the main investment direction of the fund is in the field of hard-core technology such as artificial intelligence and metaverse.

Since 2021, miHoYo has invested in 4 institutions. In addition to the PMQ Future Fund established this time, miHoYo also invested in Boyu Capital and Wu Yuefeng Science and Technology Innovation in 2021, and Tongge Venture Capital in 2022.

It is worth noting that, according to industrial and commercial information, miHoYo has 31 public investment events, of which 25 investments were made after 2020.

2020 is a dividing point, before that, miHoYo focused on the upstream and downstream investment of the game industry, and after 2020, it has obviously injected capital into cutting-edge technology and hard technology.

Last year, after Cai Haoyu stepped down, miHoYo said: "Cai Haoyu will devote more energy to the research and application of cutting-edge technology, the research and development of new projects, and the connection of domestic and overseas R&D resources." ”

At present, miHoYo's road to investment has been completed, but it is still unknown when the two-dimensional wall will not be broken.

Recalling that when miHoYo was first established, when Cai Haoyu and his team took 100,000 yuan in start-up capital and shouted "Tech nerds save the world", they must have imagined miHoYo's status in the game circle.

However, at that time, they could not have imagined that miHoYo had grown up to this day, and everything had become complicated. They must accept the scrutiny of the market, rush forward with miHoYo, and even give up their dream of only doing two-dimensional back then.

(The header picture of this article comes from miHoYo's official Weibo.) ）

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