撰写Original, Tongyao Ren, Yuanchuan Research Institute
In December 2017, Apple CEO Tim Cook went to Shanghai to visit the headquarters of game publisher Hero Entertainment and symbolically experienced a game called "Art of War: Red Tide", saying that his brief visit to Shanghai had turned him into an "e-sports fan".
The developers of "Red Tide" are the game science that produced "Black Myth: Wukong", and Hero Entertainment is their earliest investor.
In 2017, Cook was in Shanghai
Cook is obviously not a true "e-sports fan". After 2020, the destination of Cook’s trip to China has changed from the office of Hero Entertainment to the headquarters of miHoYo. Game science began to devote itself to the development of "Black Myth", which lasted more than six years.
According to the official caliber of game science, the sales volume of "Black Myth" has exceeded 10 million copies, and it is very likely to enter the top sales threshold of 20 million in the future [1].
The market success of Yiqi Juecheng has not only made game science come to an end, but also the Chinese game industry can probably breathe a sigh of relief.
From the first promotional clip igniting social media to the "first domestic AAA game" label attached to the body, every sales of "Black Myth" has a strong wind vane meaning. Ma Xiaoyi, senior vice-president of Tencent, said in Moments: "Finally waiting for this day, it belongs to the destiny of the day, the hope of the whole Huaguoshan."
Behind the success of "Black Myth" is a business model that is being gradually abandoned by the global game industry, so every deal it makes affects the direction of this industry in China.
Big gamble without end
Before forming the game science team, CEO Feng Ji worked at Tencent Games’ Quantum Studio, where he produced the MMORPG game "God of War" with the theme of Journey to the West.
This game was once regarded by Tencent as the next generation of self-developed flagship, giving general products two to three times the investment cycle, and all kinds of resources are also the most invested in each project. However, the market performance of "God of War" was far worse than expected, and it finally left the market.
The loss of "God of War" has prompted Tencent to adopt a more conservative product strategy and start to reverse direction to promote mobile games. In 2014, its main creative team produced a self-deprecating MV work, which included the sentence "What has been done for five years is not as good as Blade and Soul in one day."
Blackmythology was not the first project in game science. Before that, they developed the card game Baijiang and the real-time strategy game Red Tide, targeting the mobile game market they did not like, and achieved small-scale success.
It is said that at the beginning of the establishment of Game Science, the team still aimed at large-scale games, believing that the performance limitations of mobile phones could not make high-quality games. But the founder Feng Ji said [12]: "Make a product to make money first, and then survive."
The "3A game" represented by "Black Myth" does not have a very clear standard, and belongs to the conventional concept of the industry, which means a lot of money, a lot of resources, and a lot of time.
If only measured by this scale, then games like "Original God" are obviously more "3A". According to the official caliber of miHoYo, the development cost of "Original God" is more than 100 million US dollars, and the "annual cost" of subsequent content development and maintenance is as high as 400 million US dollars, which has exceeded the vast majority of "3A games".
What makes AAA games increasingly dangerous commercially is its business model: buyouts.
Much like movies, most AAA games go through a long development, testing and promotion cycle before they are released. With the exception of a few evergreens like GTA 5, more than 80% of a game’s sales are made in the first month of release. Game companies cannot predict the popularity of their products, so all AAA game development is a bet against the market.
In the product development stage, the game company actually has no revenue or even cash flow. Once the product sales are poor, the outcome is self-evident.
Even if the product is a success, manpower-based expenses will continue, so game companies must start the next project development and enter a new betting cycle.
The same is true. Since the start of the "Black Myth" project in 2018, Game Science has not been profitable for four consecutive years [6]. Since then, "Black Myth" has continued to develop for another two years. According to Feng Ji, the overall development cost of "Black Myth" is about 3 to 400 million yuan.
This explains why Game Science did two mobile games before Blackmythology – they would have had almost no cash flow without Baijiang and Red Tide.
In the six and a half years since the development of "Black Myth", the global game industry has further moved in a direction that is not conducive to 3A games.
One is the rapidly increasing development costs.
In 2015, Jiayang Yang, chief level designer at Warner Games Montreal, wrote [2] that the development cost of 3A games "must be kept below $50 million", and once this amount is exceeded, it will be difficult to make a profit.
However, the game industry apparently did not listen to the designer’s words. In 2023, when the US government reviewed Microsoft’s acquisition of Activision Blizzard, Sony’s testimony leaked the development costs of some 3A games [4]:
Horizon: Desperate West, a 300-person development team, cost $212 million; The Last of Us 2, a 200-person development team, cost $220 million.
The money can be used to make 2 "Avengers", 8 "Wandering Earth", or 43 episodes of "Game of Thrones".
The second is to lengthen the development cycle.
In terms of console generations, Naughty Dog, a developer owned by Sony, developed three Uncharted and one Last Survivor in the PS3 era (2005-2013); in the PS4 era (2013-2021), they only made one Uncharted and one Last Survivor.
Four years after the release of the PS5, neither company released a new game. In fact, one of the biggest controversies caused by the PS5 was that there were not enough "new games" under the long production cycle [3].
In September 2021, former Sony Interactive Entertainment CEO Shawn Layden (Shawn Layden) in an interview, clearly criticized the development trend of 3A games [11]: every game console iteration, will lead to game development costs doubled. PS4 large game development costs are $100 million, and PS5 generation will increase to $200 million, this model is not sustainable.
However, in hindsight, Sean Linden obviously came with a mission to mobilize public opinion: after the PS5 was released, almost all 3A games tacitly raised their prices collectively, from $60 to $70.
Welcome to the world of subscription packages
From 2000 to 2020, the development cost of a AAA game rose more than tenfold, but the market’s customary pricing has remained at $60.
For 20 years, game companies have used the expansion of the market to hedge against rising costs. Today, this road has come to an end. This is why Sean Linden believes that the business model of AAA games with buyout system as the core is no longer sustainable.
The increase in the cost and cycle of game development will inevitably lead to a decrease in the total number of products, and correspondingly, there are fewer games that players "can buy". According to a survey by Gamediscover, more than half of the console player accounts have fewer than 10 games [5].
According to Sony’s leaked documents, more than 1 million players on PS consoles only play Call of Duty and never touch other games.
The problem that 3A game developers need to solve is how to reduce the huge risk exposure during the game development stage and turn 3A game development from a black box gambling into a business with healthy cash flow.
The card-drawing game represented by "Original God" essentially solves the dilemma of the "purchasing power limit" faced by 3A games: ordinary players and Musk only need 268 yuan to experience the entire content of "Black Myth"; but ordinary players may use 10 consecutive draws in "Original God" for nothing, while Musk will 1 million a month.
Even traditional AAA game developers have followed the trend and started to transform their business models. The core of this can be summed up in one sentence: the transition from buyout to subscription.
While most AAA games appear to be "one-time buyouts", their core is a Netflix-style subscription service.
In the case of Football Manager, the developer Sports Interactive releases a new game every November, but apart from changes to the database, a few UI and graphics technology updates, the game content and gameplay have hardly changed, and the development cost has actually been greatly reduced.
Players seem to "buy" a new game every year, but in fact, like Adobe Family Bucket and Netflix users, they "subscribe" to a game service called Football Manager for an annual fee of $60 a year. Year after year, the Football Manager series has sold more than 30 million copies.
Ten years ago, "Football Manager 2014" and "Football Manager 2024" saw little change in the interface
Another example comes from Swedish developer Paradox, whose "Europa 4" was released in 2013 for 188 yuan. But over the past decade, Paradox has launched expansion packs totaling 2,200 yuan.
Suppose a traitorous P club player bought "Europa 4" in 2013 and bought all the expansion packs for the next 10 years without falling, then he is actually "subscribing" to this game at 240 yuan/year or 20 yuan/month, which is very close to the pricing logic of video websites.
In 2018, Ubisoft, a well-known 3A game developer, put forward a concept with a big brain: Game as a Service (GaaS), the core of which is to keep players spending in a game through updated content. According to Ubisoft, the revenue of traditional 3A games in the second year is only 13% of the first year of release, while service games can maintain more than 45%.
No matter how much players resent subscription packages packaged as buyout games, it can’t stop capital markets from welcoming service-oriented games.
In 2022, Microsoft acquired game publisher Activision Blizzard for $68.70 billion, more than the sum of all game industry mergers and acquisitions in history, because Activision Blizzard’s product structure is too sexy:
"World of Warcraft" itself is a subscription game, "Call of Duty" is a one-year phenomenon subscription package, "Candy Crush" is a mobile game that is extremely popular in Europe and the United States, contributing more revenue than the famous "World of Warcraft".
The success of "Black Myth" so far has nothing to do with almost all the development trends in the game industry, or even goes against it. Therefore, this unexpected success has been repeatedly dismantled and chewed.
Where did Black Myth win?
In 2018, a game called "Gu Jian Qi Tan 3" was released, priced at 99 yuan, which was almost one-third the price of "Black Myth".
In addition to not alerting the elderly, the labels on "Gu Jian Qi Tan 3" are roughly similar to those on "Black Myth", such as "domestic production", which is based on traditional culture and faces the industrial nationalism bred by Western advantageous industries.
However, three years after the release of "Gujian Qitan 3", sales barely broke through 2 million, and it is difficult to say success.
Gu Jian Qitan 3
The success of "Black Myth" can hardly be attributed entirely to the dominance of certain emotions. In fact, during the more than 6 years of development of "Black Myth", the market space of 3A games in China has actually been expanding rapidly.
According to founder Feng Ji, when "Black Myth" had its initial idea in 2016, the market size of stand-alone games in the United States was around $10 billion, while in China it was less than $100 million. According to this data, if it is released in 2016, its sales have exceeded the upper limit of the market size.
By 2023, according to Statista’s statistics, China’s game market revenue is as high as 112 billion US dollars, more than a quarter of the total global game market revenue, of which the single-player game market size is 2 billion US dollars.
Although the proportion is very small, the absolute value has increased by 20 times in seven years. In China, it is almost rare for the market to grow 20 times in the past seven years.
During the same period, a series of events promoted the rapid growth of the 3A game market.
The first was the popularity of "PlayerUnknown’s Battlegrounds", which allowed Chinese players to have the platform account of Steam, the world’s largest game publisher, for the first time. By the way, Internet cafes updated a wave of chicken-eating equipment. This time, a similar thing happened to Black Myth.
In 2015, Steam listed China as a "low-cost area" and added Alipay payment. Most of the 3A games priced at $60 in China were collectively reduced by 50% overnight, and the purchase cost of Chinese players fell sharply. Rockstar was the first to borrow the downhill donkey, and "GTA5" was priced at $30 in China. Chinese players reciprocated, buying China’s sales into the second place in the world after the United States.
One aspect can reflect the popularity of console games: counterfeit products steam on the Chinese Internet have emerged in recent years. You know, the cultural and entertainment content that people all over the country love to see is generally disseminated in the form of piracy.
In 2020, "Cyberpunk 2077" will be as popular as today’s "Black Myth", with a large number of players spending money on equipment to purchase the game for the first time.
Social media is a key variable in this process, and it is not the discussion heat between Tieba and the NGA that is positively correlated with game sales, but the discussion heat of Xiaohongshu. From "The Legend of Zelda", "Cyberpunk 2077" to "Black Myth", it is proved that those "light players" who "don’t understand games" are precisely the silent majority that determine the performance of game companies.
After 2015, the biggest enemy of Chinese AAA games has changed from pirated games to overseas games. This is a factor in the failure of "Gujian Qitan 3" and one of the reasons for the success of "Black Myth".
After the appearance of "Original God", mobile game manufacturers that were caught in high-intensity competition began to put 3A games back on the thinking list.
Taking the opportunity of the suspension of the superimposed version number of "Yuan Shen", the domestic mobile game research and development and operation costs began to exceed the traditional 3A game. The production spell of "hard work for two or three years, players play for two or three days" was rarely broken by companies. Copy "Mingchao" of Yuan Shen’s work, the developer behind Kulo’s net loss in 2023 reached 190 million, which is still a successful mobile game "War Double Parmish" to support the family.
In 2021, Tencent invested in the domestic 3A "Shadow Blade Zero", which was once regarded as the same as "Black Myth: Wukong". Producer Liang Qiwei shared that when it came to the end, game companies were willing to see 3A as a new way out [10]:
"The situation in the industry is at a critical point. On the one hand, many stand-alone works are coming out; on the other hand, the cost of making mobile games is not low, but the success is getting less and less. So instead of making a mobile game that may die as soon as it is released, it is better to take the same amount of money and try to make a 3A."
The success of "Black Myth" may be mixed with cultural and national narratives, but over the past decade or so, Chinese players have cheered for Made in China countless times, and most of them have failed to live up to the former’s expectations. "Black Myth" is actually a natural match between market trends and idealism. Game Science has created an excellent work with a business model that is opposed by everyone.
Larian Studios founder donned a pair of medieval armor to promote Baldur’s Gate 3
Larian, the developer of "Baldur’s Gate 3", which won numerous annual awards last year, had only three people left in the company at its worst, and was on the verge of bankruptcy several times. He relied on bank loans and player crowdfunding to operate. In 2020, Larian put "Baldur’s Gate 3", which was working in progress, on the platform for sale, and returned funds in advance to support subsequent development. The game was finally released in 2023 after many delays.
In his acceptance speech at the TGA awards ceremony, Swen Vincke, the studio’s founder, said: "A lot of creators don’t care too much about financial rewards. Money is a means to bring more creation, not a goal, and more importantly, what they want to make."
Black Myth is not a perfect game, nor is it destined to be a replicable success template, but a good work is never because of its perfection, but because of its preciousness.
Author: Ren Tongyao
The original title: "Black Myth": The Most Profitable Work Under the Worst Business Model
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