Top of the big era

When it came to games, Zhou Buqi became interested. One of his most important tasks during his business trip to Japan was to target the Japanese game industry.

Zhou Buqi asked: "Is it really a game?"

Chen Dong said with a smile: "It's really a game, but the income model is different. One is Jingtao's self-operated products, and the sales of the products are counted as Jingtao's income; the other is the third-party products of agents, and the products are Commission is considered Jingtao’s income.”

Zhou Buqi is no stranger to this.

That’s the case with JD.com.

JD.com’s income far exceeds that of Taobao because JD.com has self-operated products. If a product is sold for 100 yuan, it is 100 yuan in revenue for JD.com.

If it is a third-party product, like on Taobao, you will earn commission. If a product is sold for 100 yuan, the commission may be only 10 yuan, which is 10 yuan of income for Taobao.

It can be seen that self-operated products have high revenue but low profit margins; third-party products have low revenue but high profit margins.

Jingtao now has both self-operated products and third-party products for sale through Jingtao. The income Jingtao obtains through third-party products is actually the platform’s commission income.

Because virtual products have lower marginal costs, they are more suitable for small profits but quick turnover, especially games. This results in games often being the products with the highest commission ratio.

Jingtao earns commissions from game manufacturers by helping them sell games; then, it pays the commissions earned in proportion to the up owners who help promote them through Niconico videos.

Zhou Buqi asked: "What's the commission ratio?"

Chen Dong said with a smile: "Minimum 50%."

"What?"

Zhou Buqi was slightly startled.

Chen Dong smiled and said: "Yes, it is 50%. This is the minimum standard. There are also some unpopular games or new games with higher commission ratios. For example, Konami has launched a new shooting game "Undead" because It is a new game that has just been launched and needs to open up the market as soon as possible, so the commission rate reaches 75%.”

Although Zhou Buqi had been prepared, he couldn't help but take a deep breath when he heard this, "Isn't this too high? In the United States, for example, the game platform Steam acquired by Ziweixing International, the proportion of games sold here It’s only 30%. It’s the same as Apple tax and Facebook tax, which are generally 30%.”

You know, in the domestic market in later generations, because of the 30% Apple tax, many mobile phone manufacturers are jealous. Coolpad, Gionee, Lenovo, Huawei, OPPO, Meizu, vivo and other mobile phone manufacturers have cooperated to form a "hardcore alliance" based on the Android system ".

All mobile phone game purchases through the "Hardcore Alliance" will be taxed 50% by the mobile phone side, which is 20 points higher than Apple's tax.

At one point, Penguin wanted to cause trouble and struggled, not wanting to pay.

Later, I found that I couldn't defeat them at all, and I was scolded for being unpatriotic, so I acquiesced to a 50% commission.

But what Chen Dong said was too evil.

The minimum is 50%, and some game commissions even reach 75%!

Chen Dongdao: "The national conditions are different. The cost of channels in Japan is too high. In the past, game sales were all about selling game cards and game discs. Game manufacturers had to find manufacturers to produce game cards and game discs, and then sell them to First-tier suppliers. First-tier suppliers sell to department stores or second-tier suppliers, and second-tier suppliers sell to some small shops... In some small towns, they are all third-tier and fourth-tier suppliers. Every A channel must maintain employment without cutting jobs, and must generate profits. In fact, these are all sucking blood from game manufacturers.”

"Nothing has changed now?"

Zhou Buqi is not surprised by this, because the European and American game industries followed this model in the early years.

However, the channel cost of this model is too high, and the money earned in each link actually belongs to the output of the game. Therefore, Europe and the United States have gradually shortened the industrial chain and verticalized operations.

Through a series of industrial adjustments, game manufacturers have eliminated many unnecessary intermediary channels and gradually recovered the profits that originally belonged to intermediary channels.

This is the general situation of the entire industry.

Not just the gaming industry, but all industries.

For example, the Manchester United store used to be an authorized store and cooperated with third-party stores, but now more and more directly-operated stores are opened; including Disney stores and Apple retail stores, they have eliminated intermediary channel dealers and are directly operated by manufacturers.

Chen Dong shook his head, "Nothing has changed. Japan's social structure is relatively rigid. They pursue stability more and don't change unless it is absolutely necessary. Such a complex channel system in the downstream of the game industry has eaten up too much of the profits of game manufacturers. , a game disk costs 5,000 yen, maybe 3,000 yen, all fell to middlemen at all levels, and the game manufacturers can only get 2,000 yen. But this system has been in operation for 30 years, and many of them are cooperation between generations. , it has been maintained until my son’s generation. How can we just break it off? As long as we can maintain it and endure it through hard work, we will not change it.”

"This social system is really stagnant and lifeless."

I have a headache without Zhou Qi.

This is really a troublesome matter.

If Changyou comes to Japan and acquires several major game companies, will it also have to deal with this situation? That would be terrible.

Chen Dong smiled and said: "Yeah, but this is a good thing for Jingtao."

Zhou Buqi nodded, "Well, the traditional giant companies have this kind of relationship that has lasted for decades, and they have formed a gold-eating beast that can't be lost. No wonder those giant companies' sales are so high and their profit margins are so low. It was divided up layer by layer. Before I came here, Ren Yuxin told me that the profit margins of gaming giants like Scarlett and Konami were only 10%."

Chen Dong asked: "How much can you swim?"

"Changyou?" Zhou Buqi snorted, "There is no comparison with Changyou. In the past fiscal year, Changyou's business revenue was 2.2 billion U.S. dollars, business profits exceeded 1.4 billion U.S. dollars, and business profit margin reached 64%."

Chen Dong was stunned, "So many?"

"It's business profit." Zhou Buqi smiled, "Last year, didn't Changyou acquire the game division of Ziweixing International? It spent too much money on business restructuring and layoffs, and it also expanded rapidly around the world and increased R\u0026D investment. The net profit seems to be just over US$700 million. But even so, the net profit margin is only 32%."

The profit margin of the game industry is too high. In the new era, the gross profit margin of PC games can reach 90%, and the gross profit margin of mobile games can also reach 70%.

The so-called new era refers to the digital era.

Games are completely virtual products.

Unlike Japan, game cards and game discs have to be produced, and then sent to various department stores and convenience stores through channel vendors, and sold to players through physical transactions.

This model is the same as it was decades ago.

The cost is too high and all is wasted on channels.

A virtual product is a set of code.

Players download the game installation package online, install it on their computer, and then enter the genuine serial number. Even if the transaction is completed, there is almost no additional cost.

Zhou Buqidao said with emotion: "In the United States, Netflix model streaming media will become more and more popular, and Silicon Valley can go to Hollywood to get a piece of the pie. The reason why this phenomenon occurs is because streaming video is For digital products and virtual products, traditional Hollywood still has to produce optical discs and game cards, and then send them to various retail outlets through suppliers to sell to consumers."

Chen Dong smiled and said: "Yes, this is the dimensionality reduction attack of the digital economy on the traditional economy."

Zhou Buqi glanced at him, "The digital promotion of Japanese games is not good?"

"No, it's very bad. The traditional power is still too strong." Having said this, Chen Dong was very happy. "This has become an opportunity for Jingtao. Normally, 60%-70% of the sales of a game may be lost to middlemen. The dealer took the money away. Jingtao’s offer was relatively cost-effective, only taking 50%. For game manufacturers, it was a good deal. They were very happy. I just received a call from the CEO of a game company, saying that I am very grateful to me. In just three weeks this month, I have helped them create 200 million yen in revenue. In fact, they earned 200 million yen, and Jingtao earned 220 million yen."

Zhou Buqi felt a bit dumbfounded.

In the United States, game sales channels such as Steam, Apple Store, Facebook Open Platform, and Microsoft Store all charge a commission of 30%.

Even a 30% commission still caused strong dissatisfaction in the gaming industry.

Japan is really weird.

Chen Dong went to take 50% of the commission, and he was very happy and grateful.

However, most of the commissions from Jingtao still have to be paid out.

Chen Dong continued: "General up owners also have a high commission rate for recommending games, generally 10%-20%. In addition, Jingtao also pays a commission to Niconico."

Niconico is a video website owned by Ziweixing International Japan Branch. Of course, Zhou Buqi also supports it, saying: "It is right to pay commission to Niconico. Only with the guidance of interests can Niconico's subjective initiative be stimulated and let them further develop Technology development to complete the drainage of this kind of content e-commerce.”

Chen Dong said: "Yes, just like Taobao customers."

Zhou Buqi smiled and said: "Yes, it's Taobao. I really learned this content e-commerce model between Niconico and Jingtao from Alibaba."

"Learned it from Ali?"

Chen Dong was somewhat surprised.

He thought this was an e-commerce idea created by the omnipotent Boss Zhou.

The concept of content e-commerce was originally proposed by Mr. Zhou. Now the mainstream in the world is search e-commerce, which mainly imports traffic from search platforms.

Zhou Buqi nodded, "I got some inspiration, so when you have time, you should study Alimama's business model and some business ideas. It's best to go to Alibaba specifically to investigate and talk to them. Face-to-face communication with the middle and high-level managers. Anyway, Alibaba is also an important shareholder of Jingtao, so they have no reason to refuse. Alibaba will definitely develop an international strategy next, and they also value Jingtao’s overseas operating experience. You can do more business. comminicate."