Monkey King defies heavens
Blockbuster success based on Chinese mythology signals new era
The SuperJoost Playlist is a weekly take on gaming, tech, and entertainment by business professor and author, Joost van Dreunen.
I’m on the road this week on an adventure with the big kid. We’re driving down from Brooklyn to Myrtle Beach, SC, so you’ll forgive me for keeping this one brief. ❤️
On to this week’s update.
EVENTS
If you’re attending Gamescom this week, please go say hi to Andre from team ALDORA. He’s fully armed with information on the new data startup.
My keynote for THIS 2024 in Aarhus, Denmark, is live. It’s one of my favorite European conferences because it brings together a broad range of creatives and strategists from different media industries. And last year was a blast!
BIG READ: Monkey King defies heavens
The release of Black Myth: Wukong marks a pivotal moment in the games industry, shattering records and challenging long-held assumptions.
For one, within hours of its launch across Steam, the Epic Games Store, PlayStation 5, and WeGame, the game has become the most-played single-player narrative title in Steam's history, with an unprecedented 2.4 million max concurrent players. Developed by Game Science, a relatively young Chinese studio founded by ex-Tencent employees, Wukong’s estimated development budget of $60 to 80 million is considerably lower than comparable Western productions. It is an achievement that both surpasses recent breakout hits like Elden Ring (Bandai Namco) and Cyberpunk 2077 (CD Projekt). It defies the established industry trend of prioritizing multiplayer games for their network effects and online communities. Based on Chinese mythology and the classic novel "Journey to the West," Wukong's success demonstrates the global appeal of culturally rich, narrative-driven experiences.
More so, the game's triumph showcases China's evolving role in the global gaming landscape. While China's massive gaming market (723 million gamers spending $50 billion annually, according to Niko Partners) is well-known, Western developers and investors have long underestimated Chinese game studios' creative potential. Black Myth: Wukong's success proves that Chinese developers can both compete at the highest level technically (utilizing Unreal Engine 5 impressively) and set new industry standards. It’s a milestone that is likely to inspire other Chinese studios to pursue ambitious AAA projects, with companies like Tencent potentially accelerating efforts to build on similar high-profile IPs.
Beyond development, Wukong's success also carries the promise of reshaping investment strategies within interactive entertainment. Chinese firms like Tencent and NetEase, which have invested heavily in Western studios to gain AAA development expertise, may now focus more on nurturing domestic talent and IPs. It is a shift that promises a more diverse and competitive global gaming market, with Chinese developers establishing themselves as leaders in both mobile and PC gaming realms. As the industry evolves, we may see a new era of gaming that blends Eastern and Western influences, offering players richer, more culturally diverse experiences.
Lastly, the release highlights how global market dynamics have been shifting for some time now. Historically, European and North American game makers have relied heavily on international markets, with European firms generating only 42% of their revenue domestically. In contrast, Asian game companies, particularly in China, have seen their domestic market reliance increase from 47% to 78% in recent years. Wukong's global appeal, despite its deep Chinese cultural roots, suggests a potential reversal of this trend. It demonstrates that games with strong cultural identities can resonate worldwide, potentially allowing developers to balance domestic and international market success. A broader familiarization with mythology and lore from a country as large and as capable as China has far-reaching implications for how creative firms approach cultural content and market strategies in the future.
True to the legend’s story, Wukong’s success is a brilliant act of defiance.
MONEY, MONEY, NUMBERS
Embracer had a lackluster quarter, with both revenue and profits coming in below expectations. Revenue was 6% lower than expected, while adjusted operating profit missed forecasts by about 13%. The company's PC/Console games division actually performed better than expected, but this was offset by weakness in the Mobile Games, Tabletop Games, and Entertainment & Services segments.
Perhaps the biggest disappointment was the delay of a major game release, Kingdom Come: Deliverance II, from late 2024 to February 2025. This pushes an important source of revenue and cash flow further into the future. Embracer is cutting costs to maintain its appeal in the meantime. According to CEO Lars Wingefors, the firm is “still in the process of optimizing the PC console business and to have a rigorous cost control and control of all our processes within that business."
In addition to focusing resources on “owned and controlled IPs” Embracer expects solid growth in its Tabletop Games division and stable performance in Mobile Games for the next quarter. However, the PC/Console and Entertainment divisions are expected to remain weak in the short term. The company is sticking to its full-year profit forecast, aiming for a similar adjusted operating profit compared to last year. Embracer is also moving forward with plans to split into three separate public companies, with the first spin-off (Asmodee) planned for later this year.
Embracer generated $775 million last quarter, down -24% y/y.
PLAY/PASS
Play. The Epic Games Store launched on iPhones in the EU and on Android globally, prompting Sweeney to say “ the tide is turning and the mobile ecosystem is finally opening up to competition.”
Pass. The movie release of Borderlands gets an early streaming release due to disappointing box office sales. Bummer.
UP NEXT
I’ll be finalizing my syllabus for the coming semester next week. The line-up of guest speakers from Xbox, CD Projekt, Activision Publishing, and Evercore is shaping up to be the best one yet!
A little too early to call it a global hit (almost 90% of players are from China). It hopefully the network effects will kick in and bring in more global players
There's no demographic nor any filtering on the current players, so no indication it's not mainly domestic. But now that it's the middle of the night in China, the current players amount to 28% of today's peak.
I wouldn't draw hasty conclusions.