Is it OK to have fun with each other?


Welcome to the wechat subscription number of chuangshiji
By Zhou zhehao
Source: Yuanchuan Business Review (ID: ycsypl)
Production: consumption group of Yuanchuan Research Institute
Jackie Chan’s endorsement of Sabre
Li Yifei, the boss of Sanqi mutual entertainment, is an easygoing person who loves running. He likes to associate the operation company with “keeping pace”. However, in the mouth of some company employees, Li Yifei has an alias – “Li Jui”.
Employees speak anonymously and complain in the company forum, and Li Yifei will also fight back. Some employees want to know whether there is a sunshine award in the annual meeting. Li Yifei replied: do you make a great contribution? If you are big enough, you should strive for the best employee of next year. If you are not big enough, you should at least have your real name and anonymity. You should wash and sleep quickly.
Sanqi entertainment does not hide that it is a wolf company. At the beginning of this year, after moving to Guangzhou financial city, known as the second CBD in Guangzhou, the company upgraded its cultural system and added the word “respect” to its values. Li Yifei’s explanation is thought-provoking: “I hope that the team will maintain the wolf nature, and at the same time, respect the internal colleagues and external partners.”.
It was a good time to talk about respect. In the past 2019, Panax notoginseng has enjoyed great success, with an income of 13.2 billion, a year-on-year increase of 73.3%, and a net profit of 2.11 billion, a year-on-year increase of 109.7%. The share price doubled in a year. It started as an obscure company and is now the third largest company in China’s game market. The office has also been upgraded from a room less than 60 square meters to a building. When Metro Line 5 announces its station on Keyun Road, it will say, “you can go to Sanqi mutual entertainment building”.
In July this year, the market value of Sanqi mutual entertainment once exceeded 100 billion yuan. But three months later, a phone call disrupted the euphoria.
On October 12, Sanqi mutual entertainment market collapsed, and the total market value evaporated by 8.8 billion in one day. The A-share game leader also brought other kids to collapse. That week, entertainment fell by 15%, gibbet by 7.5%, and perfect world by 10%.
Speculation about the collapse points to a meeting of brokers over the weekend. Some people have expressed concern about the buying behavior of game companies, believing that high costs will lead to lower return on investment. Although there is no roll call, but the discerning eye knows that the three seven mutual entertainment has been targeted. After all, no game company is more closely connected with buying volume than Sanqi entertainment. Since the era of page games, the amount of buying has been deeply embedded in the company’s DNA. It’s no exaggeration to say that the entertainment of Sanqi depends on the amount of buying.
So, what kind of role does buying volume play in the game industry and why does Sanqi entertainment become the third place of domestic game companies?
Savage growth
When Sanqi mutual entertainment was founded in 2011, its name was 37 play. Its office was located in a bungalow less than 60 square meters on Tangshi road in Guangzhou. I’m afraid the sense of existence is not as good as McDonald’s next door. It started from page game operation, sandwiched between R & D manufacturers and traffic companies (mainly search engines and video websites at that time) to help R & D companies promote games and find players.
Sanqi is a kind of company that is willing to take on any job, and even loses money by spending money on games with no potential. But the other side of the company’s relationship is the flow. It also often pays advertising fees in advance, so traffic companies are willing to leave good advertising space for Sanqi. The friendship with the flow company will make Panax notoginseng fruitful in the future.
After accumulating some funds through its agency, Sanqi founded its subsidiary Aurora studio in October 2013. Half a year later, “sword of Archangel” won 320 million running water in 60 days, setting a new industry record. This is based on the “miracle” legitimate license adaptation of the game, also won the Chinese animation game industry “best web game” award.
Sanqi mutual entertainment then launched the “legend overlord” which opened the first buying volume. The core of buying volume is to buy traffic to attract users. Page tour era, all pervasive pop-up advertising is the most simple and crude means of promotion. Sanqi mutual entertainment has found Lin Zicong, a Hong Kong star who has made comedy films such as Kung Fu and Shaolin football with Zhou Xingchi.
Even if they haven’t played legendary overlord, many people have been brainwashed by Lin Zicong’s “I’m playing a game called legendary overlord recently”. In the face of such a propaganda offensive, many people feel insulted mentally. Wang Sicong runs to Lin Zicong’s microblog and scolds him: “I have to say that you’re too stupid to receive your mother’s advertisement. Please open your mouth and eat shit.”.
But the publicity effect is really outstanding – within 80 days of the game online, the running water has exceeded 300 million.
In 2015, Sanqi entertainment became China’s second largest manufacturer in the field of page games, with a market share second only to Tencent. Li Yifei said a year ago that “the growth rate of page game in the next three years will be a little better than GDP”. However, the company is not ambiguous in the field of mobile games. It has become one of the top ten mobile game issuers in China by acting as the exclusive agent of “blade of Cangyi”, “hero of Tianjiang” and “light of adventure”.
Sanqi mutual entertainment continues the logic of paying attention to the amount of buying to the field of mobile games. From the perspective of the environment at that time, its strategy was prescient: in the cooperation between game manufacturers and platform channel, the discourse power of the platform was gradually strengthened, but with the adoption of the rating system for the game, the works of some small manufacturers could not be promoted. Coupled with the disappearance of mobile user dividends, buying has become the consensus of game companies.
In recent years, with the emergence of new traffic pools such as byte beating and Kwai Fu, 37 mutual entertainment has taken aim at these new purchasing channels. Many years later, when Sanqi entertainment mentioned the purchase volume in the company’s financial statements, it always said with pride that the company had established contact with the channel early and enjoyed preferential treatment.
However, the hidden danger is also buried here.
Industry clearance
In the game industry, sales expense is an important reference for publicity expenditure. In the context of the Internet, it reflects the purchase cost of the game.

In 2015, the Internet sales cost of Sanqi mutual entertainment was less than 1.5 billion. By 2019, this figure expanded to 7.7 billion, an increase of 131.15% over the previous year. During this period, Sanqi has become the third largest game company in China after Tencent and NetEase. In 2016, Li Yifei, 39, was listed on Forbes’ list of China’s 40 business elites under 40. The name of Zhang Yiming, the founder of “ally” byte hopping, also appeared on the list.
Changjiang Securities Research Report shows that the 37 main platforms for mutual entertainment are Baidu information flow, huge engine and Baidu 100%. Mobile phone Baidu, tiktok and jitter are the main media software. In order to occupy the flow pool, both the purchase of materials and the frequency of update are increasing.
The exaggerated buying behavior of Panax notoginseng has attracted the attention of the outside world. In 2019, the sales expense rate of the company is as high as 58.49%, far higher than the 15% of perfect world and century Huatong. The net profit rate of the two companies is between 19% and 19%.
The profit margin is still the company’s own business, but if the company changes the industry ethos, it will be the attention of the public.
As more and more companies enter the buying market, the cost of buying is rising. Today’s “greedy play the moon” please zhangjiahui, tomorrow’s “a knife handed down” please Jackie Chan, the day after tomorrow’s “legendary World 3D” please Xie Tingfeng The game company’s buying volume is gradually involution, it seems that if you don’t get the spokesperson of the movie emperor level, you will lose first.
According to the statistics of more than 20 listed companies in the game industry (excluding Tencent and Netease), Tianfeng securities found that their marketing expenses in the first half of the year amounted to 10.95 billion yuan, an increase of 24.18% year-on-year, while the revenue growth of game manufacturers was only 14.41%.
Some of the smaller companies have surrendered. Compared with the same period last year, in the first half of 2020, the number of main IOS buyers decreased slightly, with 172 companies with daily average purchase volume. The average daily number of Android end buying companies is 503, which has sharply reduced to 350 in a month since the late May. Under the heavy pressure of cost, many companies have reduced investment, suspended investment or even written off.
In other words, only the leading companies in the industry can buy and buy. Now Chinese game companies have formed a gathering scene. Tencent is far ahead, Netease ranks second, behind is Sanqi mutual entertainment, century Huatong (Shengqu game), perfect world. The status of the five companies seems to be hard to shake, with a market share of nearly 60% for two consecutive years, and it is still improving.
From the perspective of large companies, it can be said that it is a good thing to get rid of rivals. In fact, it also benefits from industry regulation.
In 2018, the nine month long freeze on the approval of version number has cast a cloud on the game industry. Layoffs and bankruptcies have become a high-frequency word in the game industry. Keyun Road, which can lead to the mutual entertainment building, has gathered thousands of game companies at the beginning of 2019, and hundreds of them closed down at the end of the year because of the edition number.
On August 30, the Education Bureau, together with the National Health Commission and other departments, formulated the implementation plan for comprehensive prevention and control of myopia among children and adolescents. In this plan, there is a sentence in the plan: “the General Administration of press and publication of China will investigate the number of online games online, explore the age appropriate prompt system in line with the national conditions, and take measures to limit the use time of minors.”.
It is such a sentence less than 100 words in the industry caused a stir. On August 31, the online game sector fell 2.01%, and the stock price of Sanqi mutual entertainment fell to the limit.
Li Yifei was in Ordos this day. He posted nine landscape photos through his micro blog, along with a light and cloudless text: “the most beautiful scenery in life, I have seen it all the way. A ten-year agreement can be expected in the future. It’s better to have fun with each other Ten years ago, Li Yifei left his hometown of Sichuan and came to Guangzhou, which led to the story of three seven mutual entertainment.
Even though the industry is in a cold winter, Sanqi Entertainment’s revenue has increased by 23% in 2018. Its cost of sales increased by 75%. This winter is not cold for the entertainment of Sanqi. So, who on earth, and why, are they buying entertainment games and brainwashing ads?
Middle aged feelings
There is such a question: is the legendary mobile game played by middle-aged people really fun? I asked my father the same thing. He replied that I allow you to talk about feelings in the circle of friends every day, and not allow me to have them?
The feelings of middle-aged people were ignited 20 years ago. In 2001, Shanda introduced “blood legend” from South Korea, which changed the lives of countless students. They know a kind of thing called “point card”. They want to buy it when they save their meal money, just to enjoy the fun of forming teams and killing monsters on the Internet. At that time, there was a saying that 8 out of 10 people in the whole Internet bar were playing legend, and two people were playing QQ and CS.
Instead of forgetting the beauty of childhood, middle-aged people are more willing to pay for their feelings when they have financial resources.
In July of this year, Sanqi entertainment released a detailed list of users and flow in response to regulatory inquiries.
From January to December, the number of new users and paid users in each month were similar, while ARPU value increased significantly. In other words, the effect of buying volume is to continuously filter out a group of loyal users who are very willing to spend money.
According to the Research Report on October 30 of the merger and acquisition of Youshu, the 600 yuan / person of the legendary “Yidao” and the miracle “spirit grand ceremony” is much higher than the 200-300 yuan / person of the two-dimensional game and the 100-200 yuan / person of Tencent department.
So, for the cost of external doubt will lead to a decline in the rate of return on investment, what is the performance of three seven mutual entertainment?
From the perspective of “single user income / single user acquisition cost”, Sanqi entertainment will be stable between 1.3 and 1.4 in 2018, 2019 and 2020. This data is not as bright as arppu monthly, but at least it shows that players at this stage can still support the crazy purchase of entertainment.
The end

A few days ago, the southern tiktok’s report on more than 90 false Qing Dong in the trembling voice triggered many discussions. Before that, several news reports about real Dong Qing mentioned that she was in good condition, “like an 18-year-old girl.”.
Men always like 18-year-old girls. If you can understand this sentence, then you can understand the core competitiveness of three seven mutual entertainment — using legend & miracle games to seize the heart of middle-aged men who are too lazy to update their aesthetic views and game preferences.
However, it is also a fact that Sanqi entertainment is lazy on the road of legendary miracle games.
Li Yifei once said that the company’s highest revenue employees are in the R & D department, and the company’s R & D personnel are also increasing year by year. However, in 2019, the company’s R & D cost was 810 million yuan, accounting for only 6.16% of revenue. In terms of R & D cost rate, Sanqi mutual entertainment is less than 10%, while perfect world is around 15%.
No matter how strong the feelings are, if you find out that the other party is just a fake Dong Qing, the middle-aged man may also wake up one day. Therefore, the future of Sanqi mutual entertainment still depends on more solid research and development. After all, it is not Maotai.
reference material:
[1] Changjiang Securities: Sanqi mutual Entertainment – company in depth report: Sanqi mutual Entertainment: the entertainment of middle-aged people “wolfberry”, besides legend & miracle, it achieved category breakthrough for the first time
[2] Tianfeng Securities: in depth report of the game industry
[3] R & D feedback matrix of R & D investment
[4] Guojin Securities: the purchase volume has entered a new era, and high-quality products have opened a new journey
[5] Merger and acquisition of Youshu: perfect world vs. Sanqi vs. century Huatong game industry leading companies
(statement: This article only represents the author’s point of view, not Sina’s position.)