This Alibaba, Tencent backed mobile game veteran is another Chinese studio to go...

This Alibaba, Tencent backed mobile game veteran is another Chinese studio to go public, and aboard- PingWest

This Alibaba, Tencent backed mobile game veteran is another Chinese studio to go public, and aboard

Aron Chen

posted on July 5, 2021 9:55 pmEditor : Wang Boyuan

The 9-year-old Qingci Games is about to lure global mobile gamers with a snail and many more.

Chinese game developer/publisher Qingci Games, whose major backers include Tencent, Alibaba, and Bilibili, plans to expand overseas expansion while filing its IPO prospectus with the Hong Kong Stock Exchange.

As one of China's earliest mobile game developers, Qingci's IPO application has drawn wide market attention because of its shining investors and its exponential increase in revenue and size throughout the years. 

Founded in 2012, the Xiamen-based company had capitalized on the rapid rise of China's mobile game sector, cementing its leading position in the niche genre - mobile casual games.

In 2013, Qingci released its first self-development game called GRID RPG. This turn-based strategy game helped Qingci to secure an early investment from G-bits Network Technology, which is still the company's second-largest shareholder at the moment with nearly 22% stake, only next to the founder and chief executive Yang Xu.

However, Qingci underwent a stagnation period since then and struggled to find another title to hit until 2017, when it unveiled Gumballs & Dungeons, a mobile puzzle RPG that topped China's highest-grossing mobile games for two consecutive months.

In June 2020, Qingci expanded its brand reputation again by releasing Marvelous Snail. The roguelike role-playing video game racked up nearly 400 million yuan ($61.9 million) in the first month of the launch. According to a report released by Frost & Sullivan, the game about snails now ranks as China's second most popular casual game, with an average of 4.4 million monthly active users by the end of 2020.

Qingci‘s the Marvelous Snail is China's second most popular casual game. Credit: Qingci Games

Driven mainly by the massive success of the Marvelous Snail, Qingci booked revenue of 1.27 billion yuan ($196.5 million) in 2020, increasing tenfold from 2019. 

The Marvelous Snail remains its popularity in 2021. It alone has raked 167 million yuan ($258,334) in profit in the first quarter of 2021, which is higher than its yearly profit in 2020.

Despite its high revenue growth, one apparent deficit shadows Qingci's growth prospect - Qingci relies too much on the Marvelous Snail, which accounts for more than 90% of its total revenue.

In its IPO prospectus, Qingci noted that it would press ahead with a plan to release ten new titles in the near future and shift its strategic focus to overseas markets where Japan and South Korea will be the primary targets. The company will bring its business to Europe and the United States as long as it succeeds in its venture in Asia.

Indeed, Chinese game developers and publishers are looking beyond the domestic market and accelerating their efforts to seek opportunities abroad as competition in the domestic market grows fiercely.

Tencent, the world's largest gaming company by revenue, is actively expanding its portfolio through investments in recent years.

According to Niko Partners, Tencent had invested in 31 deals related to the game industry in 2020, three times more than the number of deals it made in 2019.

The most significant investment Tencent made in 2020 was the $1.5 billion acquisition of Leyou Technologies, the owner of Splash Damage and Warframe developer Digital Extremes.

Others, like Bytedance, who doesn't inherit a gaming nature but dares to challenge Tencent's dominance, have been making bold moves in the game. The parent company of TikTok and Douyin has acquired roughly ten companies so far this year, including Moonton Technology, the maker behind Mobile Legends: Bang Bang, the highest-grossing game in Southeast Asia.   

"Going overseas has become an option for Chinese game developers to offset uncertainties in domestic gaming markets and escape from the monopoly of Tencent and Netease in China, opportunities in overseas markets are huge," independent game research analyst Xiao Feng said.

According to a report jointly released by China AV and Digital Publishing Association and CNG, in the first half of 2019, gaming revenue generated in overseas markets by Chinese publishers grew 33.25% year-over-year to 15.4 billion yuan ($2.4 billion), the annual growth rate was the highest over the past four years, and the annual growth rate in overseas markets is higher than that of the domestic market.

The overseas success of Tencent is boosting the confidence of others in their ability to go abroad. Netease Games, for example, have nearly 15% of its total revenue in 2020 from overseas segments. Netease Games continue to recruit talents globally, and it is also exploring investments and merger & acquisition of foreign game studios. 

Smaller players like MiHoyo and Lilith Games have a similar global vision as well.

Shanghai-based MiHoYo, the developer of the popular fantasy game Genshin Impact, is ramping up global hiring in four particular countries and cities, including Singapore, Montreal of Canada, Seoul of South Korea, and Tokyo of Japan.

Lilith Games, the developer of Art of Conquest, AFK Arena, begun its overseas venture as early as 2015 with its first overseas-focused mobile title, "Soul Hunters." 

The uprising Chinese game studio now partners with US-based marketing agency CloutBoost to run an influencer campaign for AFK Arena in North America.

Image Credits: Camila Sánchez on Unsplash