China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

MD, Blue Lotus Research Institute

Gu Jun, CFA

Equity Bottom-Up

Since 2015, ACG mobile game has been developing rapidly in China. With “Fate/Grand Order”（命运冠位指定）, “Onmyoji"(阴阳师), " Honkai Impact 3"(崩坏3)", “love and producers”(恋与制作人) getting so popular in the domestic market, many game companies begin to launch ACG mobile games because of the high consumption ability of ACG fans. However, there are only a handful of popular ACG mobile games currently even when the market is so active.Although the characteristics and attributes of ACG users are very distinct, it’s still very elusive and difficult to make one successful ACG mobile game. Is there a standard methodology for the success of ACG mobile games? We think it does. By a preliminary analysis with three cases, we think ACG mobile games are not elusory and it has a methodology, which is quite different from traditional mobile games because of the different user demand, community operating. We believe that its initial success is mainly due to the painting style of game picture, voice actors performance and game storyline/plots, which can touch ACG mobile game players in the beginning. The IP is a double-edged sword (IP can bring traffic and content, but it also can be a limitation for user expanding and high requirement from IP fans) and gameplay are not so important currently.In addition, the long-term stability of ACG mobile games lies in the content R&amp;D, marketing and operation and the establishment of fans cultural community(同人文化社区). Compared to traditional MMO and other competitive genre games use esports competition to keep game popular and active, ACG mobile games more focus on forming fans culture and on core ACG users (one game should satisfy core ACG users demand first in terms of R&amp;D, operating, then it can easily expand user groups). In terms of the future successful opportunity in ACG mobile game market, we think: Bilibili&gt; Netease &gt; Tencent.

Since 2015, ACG mobile game has been developing rapidly in China. With “Fate/Grand Order”（命运冠位指定）, “Onmyoji"(阴阳师), " Honkai Impact 3"(崩坏3)", “love and producers”(恋与制作人) getting so popular in the domestic market, many game companies begin to launch ACG mobile games because of the high consumption ability of ACG fans. However, there are only a handful of popular ACG mobile games currently even when the market is so active.Although the characteristics and attributes of ACG users are very distinct, it’s still very elusive and difficult to make one successful ACG mobile game. Is there a standard methodology for the success of ACG mobile games? We think it does. By a preliminary analysis with three cases, we think ACG mobile games are not elusory and it has a methodology, which is quite different from traditional mobile games because of the different user demand, community operating. We believe that its initial success is mainly due to the painting style of game picture, voice actors performance and game storyline/plots, which can touch ACG mobile game players in the beginning. The IP is a double-edged sword (IP can bring traffic and content, but it also can be a limitation for user expanding and high requirement from IP fans) and gameplay are not so important currently.In addition, the long-term stability of ACG mobile games lies in the content R&amp;D, marketing and operation and the establishment of fans cultural community(同人文化社区). Compared to traditional MMO and other competitive genre games use esports competition to keep game popular and active, ACG mobile games more focus on forming fans culture and on core ACG users (one game should satisfy core ACG users demand first in terms of R&amp;D, operating, then it can easily expand user groups). In terms of the future successful opportunity in ACG mobile game market, we think: Bilibili&gt; Netease &gt; Tencent.

Bilibili(BILI): ACG Mobile Games: Really Elusory?