From the perspective of investment activity, the peak of the domestic game market occurred in 2015.

Public information shows that during 2014-2015, there were over 400 investment cases in the gaming industry annually, with a total investment amount of around ten billion yuan. However, since 2016, except for well-known game giants like Tencent, Bilibili, NetEase, and miHoYo, mainstream investment has gradually moved away from the gaming industry.

Especially in recent years, after achieving certain milestones in game licensing and anti-addiction measures, although the gaming industry is no longer universally criticized, game developers are still treading carefully and maintaining a low profile.

Now, after the hype surrounding "Black Myth," people can finally breathe a sigh of relief. This globally adored "monkey" has not only boosted sales of PS5-related hardware products but also ignited the stagnant game market, significantly stimulating the entire gaming industry and reigniting enthusiasm and confidence among investors.

What exactly has "Black Myth" changed?

Looking back at the history of domestic game development, it's not difficult to summarize a pattern: every time the game market undergoes a qualitative change, it's usually supported by a phenomenal product, with a cycle of approximately five years.

For instance, Legend of Mir and MU Online dominated the gaming landscape in the new millennium; World of Warcraft swept through online games around 2005; League of Legends emerged in 2011; and with the explosion of mobile internet, Arena of Valor became the undisputed king in 2015.

However, the iteration of classic games halted abruptly in the subsequent decade, with only PlayerUnknown's Battlegrounds briefly making waves. This stagnation isn't limited to the domestic market but is a global phenomenon, as the top-selling games globally remain the same old titles.

While the game market hasn't seen a new king ascend the throne, countless projects have failed. Media statistics show that from 2022 to the present, at least 75 game projects have announced their cessation, with many having been online for less than two years. Notably, these include projects from Tencent, NetEase, Bilibili, ByteDance, and miHoYo.

The emergence of "Black Myth" may finally bring a glimmer of hope to the entire gaming community. Beyond the game's popularity and 3A status, its greater value lies in "changing" some ingrained rules of the domestic game market.

Firstly, the most obvious change is in domestic game pricing. Indeed, the pricing of "Black Myth" sparked widespread discussion on social platforms. The debate over whether the RMB 268 price tag is reasonable exposed the embarrassment of domestic game pricing.

Media statistics show that among the 525 domestic games with over 10 Steam user reviews in the 2023 domestic game sales ranking, the average price was RMB 32, with a median price of RMB 28. Games priced below RMB 70 are considered the mainstream pricing for domestic buy-to-play games.

However, this doesn't mean that "Black Myth's" pricing is too high. Globally, top 3A games like Baldur's Gate 3, Wolong: Fallen Dynasty, Elden Ring, and Cyberpunk 2077 are priced at RMB 298 for the standard PC version in China.

The RMB 268 pricing of "Black Myth" signals that domestic buy-to-play games will break through the low-price bracket and begin transitioning to a higher tier. This positive change can directly alleviate the cost pressure on game developers. After all, in the first quarter of this year, nine of the 25 A-share game stocks experienced losses, totaling RMB 859 million.

Secondly, games are no longer solely about technology. In recent years, game developers seem to have fallen into the trap of excessive "technological competition." Especially with the emergence of AI, the gaming market once believed it had found a new competitive edge, prompting game giants like Tencent and NetEase to follow suit. Smaller studios are prone to making misjudgments under this trend.

However, the popularity of "Black Myth" serves as a reminder to many game developers overly focused on technological competition. While "Black Myth" is commendable in terms of technology, it has clearly prioritized game content amidst technological homogeneity.

In other words, the success of "Black Myth" proves that the global gaming industry has moved beyond pure technological competition and is advancing towards diversification, embracing content, culture, IPs, and more.

Of course, "Black Myth" also faces numerous challenges in its early stages of popularity: pirated versions of "Black Myth" have emerged endlessly on various platforms, with some priced as low as a few yuan. Past experience tells us that the losses caused by piracy are substantial. Data shows that several well-known Japanese games have suffered from piracy, with estimated losses of up to RMB 300 million if calculated based on 10% of total game sales in Japan.

"Black Myth" serves as both an inspiration and a warning to the entire game market. Whether it can alter the industry's future trajectory remains to be seen over time.

How far is "Black Myth" from becoming a super IP?

Interestingly, after the popularity of "Black Myth," it seems that the happiest parties are not the game market but other brands eagerly awaiting the opportunity to capitalize on the hype.

To date, at least 17 companies have partnered with "Black Myth: Wukong" for IP collaborations, spanning figurines, gaming hardware, and even tourism markets in Shanxi and Gansu provinces.

Bolstered by the legacy of Journey to the West, the IP value of this game has already begun to emerge, with various industries eagerly anticipating "Black Myth's" transformation into a gaming legend.

The game market's ability to create IPs is evident. Data shows that over 80% of the top 100 most popular overseas single-player games in 2023 had IPs, and at least half of the 50 domestic game companies listed on the stock market mentioned IPs in their financial reports over the past two years.

Why is the value of game IPs so high?

Firstly, the game market has struggled in recent years, with early user growth dividends gradually fading, ushering in a prolonged period of internal consumption. A classic cultural symbol can help a game project smoothly enter the next "stock era." Additionally, in a sense, "Black Myth's" breakthrough is the result of the intense collision between IP charm and traditional culture.

Of course, the most noteworthy aspect of IP value lies in its immense earning potential. Taking Pokémon as an example, this IP spans games, animations, movies, toys, trading card games, electronic devices, theme restaurants, and various licensed products, generating a staggering USD 100 billion in revenue in 2023.

So, what does a game developer need to do to create an IP for a project?

Analyzing the world's classic game IPs reveals five key elements of an IP brand: first, high-quality and unique content; second, continuous innovation and updates; third, diversified content and licensing projects; fourth, effective marketing and promotional strategies; and fifth, building a loyal player community.

At this stage, "Black Myth" may have successfully achieved the first point, but whether it can continue with the subsequent critical steps to evolve into a super IP remains uncertain. However, the world's top game IPs generally follow this pattern of IP creation, with the aspect of "diversified content and licensing" being endless.

Public information shows that by 2023, Minecraft had over 180 licensing partners worldwide, including long-term collaborations with Lego, Mattel, CAA, and Centric Brands. Angry Birds was released in 2009 and had related IP products by 2010.

It is reported that by 2022, Angry Birds had been downloaded over 5 billion times globally, with licensed product sales reaching 2 billion. Leading domestic game developers have their own IP incubation factories, such as miHoYo's Houmei Technology and Jimihua, NetEase Games' Boguan Information and Yipinzhenshan, Yostar's Muyuan Network, and Shenlan Interactive's Guziziguzi Network.

After all, licensing IPs also requires consideration of timeliness, balance, control, and sustainability. Tencent has even directly established a professional licensing team, with team members coming from IP giants like Disney. Notably, IP exploration holds natural cultural advantages for domestic game developers.

Newzoo released a survey showing that two of the top five highest-grossing mobile game IPs globally belong to China—Journey to the West and Romance of the Three Kingdoms—with the other three being Marvel, Star Wars, and Onmyoji from the US and Japan, respectively. From 2015 to 2021, the net income from games derived from Journey to the West reached USD 5.4 billion.

Today, "Black Myth" has once again strengthened the value of the Journey to the West IP in its single-player format. In the coming days, more and more game developers and capital will likely become interested in traditional cultural treasures like Journey to the West and Romance of the Three Kingdoms. While "Black Myth" may not maintain its sole dominance, this is its first "ordeal" after becoming a legend.

Why did "Black Myth" emerge only this year?

A question on many people's minds is why the game market was quiet for so long until "Black Myth" appeared in 2024.

Gamma Data shows that the operating time of top game products has been increasing for five consecutive years, with some headlining projects averaging 4.4 years online by 2022.

This means that with a concentration of old games occupying the market, the chances for new games to stand out are increasingly slim. Statistics show that among the top 100 revenue-generating games, the proportion of new game revenue decreased from 25% in 2019 to 10% in 2022.

Meanwhile, the capital landscape of the domestic game industry is becoming increasingly stable. Tencent has maintained a 40% market share for seven years, and NetEase's market share has risen sharply with the launch of games like Ni Shui Han and Party Animals in recent years. Without exceptional luck and ambition, it's challenging for smaller studios to surpass these two giants that lead in every aspect. Moreover, due to fluctuations in the gaming industry over the years, these two game giants have become relatively conservative. Even if they have the capability to create a "Black Myth," they may lack the determination to take such a risk.

Furthermore, the game market has fallen into the anxiety of "excessive marketing" in recent years.

In the first quarter of this year, nine out of 25 A-share game companies reported net profit losses, which were directly attributed to significantly increased sales expenses. A typical example is Glacier Network, whose sales expenses reached RMB 855 million in the first quarter of 2024, a year-on-year increase of 168.36%.

Among these expenses, internet traffic costs for just five games totaled RMB 683 million, accounting for 79.93% of total sales expenses. This is not an isolated incident; four of the nine loss-making companies saw an increase in sales costs in the first quarter of this year, with the highest year-on-year growth of 297% at RMB 485 million.

Before the next blockbuster game emerged, everyone wanted a piece of the pie, spending lavishly on marketing. "Black Myth's" emergence reignited hope in the market for game developers but also left some feeling disappointed that their long wait had come to naught.

Of course, as the first domestic 3A game, "Black Myth" also truthfully exposes the challenges in producing 3A games globally.

Firstly, 3A games have consistently struggled to overcome the high cost of development. There's an industry standard that the development cost of a 3A game must be kept within USD 50 million. Once this cost is exceeded, profitability becomes uncertain.

However, currently, almost no 3A game manages to control costs effectively. In 2023, Sony disclosed the development costs of some 3A games, with Horizon Forbidden West costing USD 212 million and The Last of Us Part II costing USD 220 million. "Black Myth's" total development cost is at least RMB 300 to 400 million, which is relatively low among 3A games.

Will there be more domestic 3A games after "Black Myth"?

In fact, the current gaming environment is much more relaxed than before, presenting abundant opportunities for 3A games. A user report from the Game Era Institute shows that China became Steam's largest market as early as 2022, with an annual revenue of approximately RMB 66.625 billion. This is an opportunity not only for overseas games but also for domestic games.

Currently, simplified Chinese users account for the largest proportion on the Steam platform, providing a substantial user base that drives domestic games. In the first half of this year, the actual sales revenue of the domestic game market was RMB 147.267 billion, up 2.08% year-on-year. This figure outperforms revenue from industries like movies within the entire entertainment sector.

Last year, the total box office of the Chinese film market was only RMB 54.915 billion.

In 2024, the gaming community has been significantly more active than in previous years. In the first quarter, the number of domestically licensed games increased by 28% year-on-year. Multiple public reports indicate that global game investment in the first quarter of 2024 nearly tripled year-on-year.

Against this backdrop, the emergence of another "Black Myth" doesn't seem far-fetched. However, how much courage investors have to challenge 3A games and whether "Black Myth" can sustain its popularity may become crucial factors.

Daotmt (formerly known as Waidaodao) is an internet and tech media outlet. Same-name WeChat official account: Daotmt (daotmt). This is an original article. Please refrain from reproducing it in any form without retaining the author's information.