Why the game concept is low valuations, the game industry will be warmer?

Recently, the perfect World announced that its board of directors had received a 20-dollar privatisation offer from its chairman, Chi. The proposal has now been evaluated by the perfect World Special Committee. If the privatisation offer is finally achieved, the perfect will become a giant, grand game after another from the United States retreat from the city of the Games company.

With the perfect privatization, Blue Harbor before the launch of the lack of subscription power and other events, the concept of the game is receiving outside torture. Touch Technology CEO Chenhao, said in an interview with reporters, the game industry valuation is lower and market development stage, fund managers ' investment preferences and other factors, but the concept of the game is not not recognized.

Touch is the first launch in the United States to officially raise capital of the Hand tour company, but because of macro market factors and the concept of the engine is not recognized and other factors, is not listed. However, Chenhao is also changing the touch of the income model to its perceived "American market bullish business model" in the direction of change.

Chenhao to the 21st century Economic report reporter revealed that the current gaming business accounted for more than 80% of the total touch, this proportion than the early 2013 98% has dropped a lot, 2015, based on the engine platform services will begin to have a considerable income scale.

Why the game concept is undervalued

Reporter: So many years, game companies in the U.S. capital market valuation is relatively low, this is why?

Chenhao: Taking valuations as a core factor, the United States is mainly Zynga and king for the opposite benchmark. These two companies are platform-dependent companies that are fundamentally different from most gaming companies in China. In this perspective, the vitality of Chinese companies is still better than the two target objects.

Today, EA, also a gaming company, has seen its share price rise 3 times-fold over the past two years. EA as a few of the United States, not dependent game independent companies, in the serialization of unit products and mobile IP strategy, capital acquisition strategy is quite successful, and on Facebook or Google and other platforms, products and IP is very active.

Chinese gaming companies are relatively early today, including the understated perfection. Perfect in the host market layout than other domestic companies are early, if the host game has been online product model, analysis of the next 5-10 years have a great opportunity, but indeed this valuation is far less than he has.

But the fund manager is very realistic, capital market and fund manager have no direct correspondence relation. What I invest in today is more suitable for his investment strategy, I think more is the macro-economic decision, not entirely by the nature of the company is not a good decision.

Journalist: does valuation have anything to do with the industry?

Chenhao: In the final analysis and the market has a relationship. For example, hand tour concept, today's hand tour market mature process too fast, but the market quality products are not available, can not meet the needs of users. In fact, more hand travel did not keep up with this rhythm or the market is not good, this is two problems.

The same is true for overseas markets in America, where established companies account for only 1/3 of the old, and the rest are start-ups, and established companies are not really adapting to the rapid changes in the mobile market today. Whether it is the beginning of China's travel companies today, the United States established game companies in the mainframe market monopoly but in the mobile market weakness, in fact, that the market has evolved too fast, we do not really follow up.

Just like the 2014 hand-operated game market, the supply is very large, but the whole year except "fishing up to 3", "Bear haunt" and other products can not think of other products. A 400 million users of the market really well-known products only two or three, this is an unreasonable thing. and mobile games a year's supply is also very large, but the most successful products, such as "The Legend of the Sword", it actually covers the real user tens of millions of levels, far from the whole user group as the entire hand. So now it's still a contradiction between the supply and the user's needs, but the contradiction between the supply and the user's needs is obvious, and to be honest, all the companies have not been able to really adapt to the industry that has evolved so quickly and matured so quickly.

Game Concept Warmer

Journalist: Does the capital market not recognize the business model of the game?

Chenhao: The American market prefers business models, no more than three species, the first is like the Tencent or the MO, the management user's social relations, this is the most sexy, it has the infinite imagination space; the second is 360 this in the PC age is the equipment occupancy, the equipment occupancy scale, the actual implication is the flow diversion ability Third, like YY, new Oriental member fees or corporate services membership fee model, this model is very stable.

The reason why ads and games in the United States market PE is not high, partly because its volatility is not the capital market like, because the high unpredictability. And the industry immature, stage trough, coupled with its volatility caused today's PE is underestimated.

For touch, our engine business is a typical to B service business. In a recent developer survey, we currently have 400,000 developers in China, and about 30% of our mature teams are willing to pay for engine based technology services, which can be accepted for an annual fee at a level of 10,000 to 50,000 yuan. The second is training, including Alipay, Huawei Cloud, Aliyun and so on through our service to developers, this is a service platform model.

All of our business today is underway and we are starting to offer a paid service model. 2015, will start to have a more visible revenue scale, based on the 2B business model is our 2015-year business model is an important support.

In addition, some time ago we have been promoting cocosplay, so many mobile games, the original is needed to download, to wait or have wastage rate, now we and 360, 91, Youku many partners to provide technical services, promote the need to download the point is to play the way, So we upgraded from just the engine to the technical standard. It is releasing some of the flow resources in the industry that cannot be freed.

Journalist: Does the concept of game have a warmer day?

Chenhao Zhi: Although some companies now PE has fallen to 5 times times, down to 7 times times, but there are also some game shares of PE is still strong. For example, the giant's PE never fell 15 times times. So it is not that Americans do not understand the game, but we today put some low valuation areas of the company, phased business is the consolidation period of the company enlarged, good companies like EA, NetEase, perfect, there is room for development, I think the future market will not always see light.

After we submitted our prospectus, we became very awed by the capital markets throughout the process. The capital markets are really smart, and the market pressure on the company's so-called stock price performance has been fully reflected in today's user dividend and market pressures.

For many companies, although today to see the listed companies are under pressure, but we think that in fact, before the next wave of market or market size growth, these companies if the completion of the listing is actually ready to save the best advantage of resources, after the listing is not too easy to die, the reserve of talent is easier to do, The investment structure can be healthier.

For a company, you can't easily do all sorts of so-called layouts without having all the money before the IPO. After today's listing, from the amount of listed capital to the investment layout easier to do, which requires a precipitation period.

For example, today's video industry is 2006 after the outbreak of hundreds of video sites, by 2010, 2011 potatoes, Youku, cool six listed, Tencent and Sohu also killed into the battlefield. But the market is really the most brutal time is not 2006 and 2007, but 2011 and 2012, and today's video site Youku stable standing in the market pattern.

Today's gaming industry is the same as the video industry of the year, the game industry into the 2013 years, 2014, the rapid integration. Integration period Everyone is facing is the IP access, game development, research and development success rate, market flow costs this series of so-called cost of crazy rise. With the gradual completion of market integration in the 2015, the market will emerge from the excessive competition, the scarcity of resources gradually return to the balance of the state, will appear today's fun, Blue Harbor these listed companies, including the future of touch, will reflect the expected performance of today's investors, which is the industry cycle problem.