Summary of the Conference Call on Gaming Industry and "Delta Action" Industry Overview - The gaming industry is witnessing a significant evolution in shooting games, categorized into three main phases: traditional FPS (e.g., CS, CF), battle royale (e.g., PUBG, Peacekeeper Elite), and hardcore looter shooters (e.g., Escape from Tarkov, Delta Action) [2][6][16]. Key Concepts and Arguments - **"Search and Extract" Gameplay**: This high-risk, high-reward model requires players to enter the battlefield with external gear, scavenge for resources, and defeat enemies to successfully extract and gain rewards. Failure results in the loss of all equipment, akin to gambling psychology [2][3][5]. - **Evolution of Shooting Games**: The transition from traditional FPS to battle royale and now to hardcore looter shooters reflects changing player preferences and gameplay complexity. The hardcore genre, while initially difficult to access, is gaining popularity [6][16]. - **Classification of Looter Shooters**: Looter shooters are divided into three categories: hardcore (e.g., Delta Action), mid-light (e.g., Super Burn Action Group), and X+ looter shooters (e.g., Sausage Party, Egg Party). Each category caters to different player demographics and preferences [7][16]. Delta Action Specifics - **Core Gameplay Mechanics**: Delta Action features three main gameplay modes: Fire Zone (simplified Tarkov), Full Battlefield (PVP), and Black Hawk Down (single-player narrative). Players can choose from 12 operators across four classes, each with unique skills that influence combat strategies [8][9]. - **Teamwork and Strategy**: The game emphasizes teamwork, with AI-controlled NPCs providing auditory cues to locate other players. Players can choose to avoid combat or ambush others for valuable loot [10][11]. - **Economic Mechanisms**: Players can purchase larger insurance boxes to secure high-value loot, promoting an economic cycle within the game and enhancing user retention [12][15]. Market Potential and Trends - **X+ Looter Shooter Growth**: The X+ looter shooter category is expected to grow significantly due to its combination of hardcore gameplay with broader appeal, particularly attracting female players. Current leading titles like Super Burn Action Group demonstrate innovative gameplay and market potential [14][16]. - **Comparison with Other Titles**: Delta Action is less hardcore than similar games like Dark Zone Breakthrough, making it more accessible to new players. This accessibility is crucial for expanding the player base [13][16]. Additional Insights - **Psychological Appeal**: The "Search and Extract" gameplay's gambling-like risk-reward structure is a major draw for players, contributing to its rising popularity [3][5]. - **Future Trends**: The gaming industry is likely to see continued innovation in gameplay mechanics and player engagement strategies, with X+ looter shooters potentially becoming a dominant trend in the coming years [16].

Summary of Key Points from the Conference Call Industry Overview - The gaming industry is experiencing continuous innovation in game genres and breakthroughs in evergreen games, with significant growth potential despite a slowdown in user acquisition competition and gameplay innovation [2][9] - The market for female-oriented games in China is projected to reach 8 billion yuan in 2024, reflecting a year-on-year growth of 124%, driven by an increasing female user base [6] Key Companies and Performance - Notable companies in the gaming sector include Giant Network, G-bits, Perfect World, Kain Technology, Shenzhou Taiyue, and 37 Interactive Entertainment, all showing strong performance [3] - Giant Network's "Supernatural Action Group" has achieved significant daily active users (DAU) and is expected to release strong performance in Q3 [21] - G-bits has seen its profit forecasts revised upwards due to the success of its games, including "Wanjian Changsheng" [26] - Perfect World is entering a new game release cycle, with promising results from its recent titles [28] - Kain Technology is leading in AI layout and is expected to see significant profits from its collaboration on legendary games [3] Game Trends and Innovations - The "search and escape" gameplay has gained popularity due to its high-risk, high-reward mechanics, appealing to players' psychological tendencies [5] - "Supernatural Action Group" fills a market gap with its low entry barrier and strong social attributes, attracting a large female user base, with 62% of its players being female [7] - The introduction of innovative gameplay elements in "Supernatural Action Group" has improved user retention and community engagement [10] Market Dynamics - The overseas SLG (strategy) mobile game market is expected to grow, with revenues projected to reach $12.5 billion in 2024 and $7.3 billion in the first half of 2025, reflecting year-on-year growth of 17% and 25% respectively [13][14] - Chinese companies are expected to generate $18.6 billion in overseas revenue in 2024, with strategy games accounting for approximately 41% of this figure [14] Challenges and Opportunities - The SLG mobile game segment faces challenges such as high user acquisition costs and low success rates, but successful titles can yield long lifecycles and stable profit releases [15][20] - The importance of evergreen games for small and medium-sized developers is highlighted, as they offer higher profit margins and more stable revenue streams compared to short-term products [12] Future Outlook - The gaming industry is expected to maintain strong growth momentum, with companies like ST Huadong, G-bits, and 37 Interactive Entertainment showing promising Q2 results [9] - The upcoming third quarter is anticipated to be crucial for performance, with several companies poised for growth based on their product pipelines and strategic positioning [9][23] Conclusion - The gaming industry is evolving with innovative gameplay and a focus on long-term engagement, particularly among female players. Companies that adapt to these trends and leverage their strengths in product development are likely to see continued success and growth in the coming years [2][9][12]

Core Insights - The Chinese shooting game market is dominated by realistic shooting games, with Tencent being the leading player, holding a significant share of the top products [1][2][4] - Tencent has a robust pipeline of upcoming shooting games, including both self-developed and overseas licensed titles, indicating a strategic focus on diversifying its offerings [2][3] - The overall landscape of shooting games is evolving, with a shift towards differentiation in gameplay and themes, as companies explore new genres and innovative mechanics [13][30] Tencent's Position - Tencent's dominance in the shooting genre is evident, with several top titles like "Peace Elite" and "Call of Duty Mobile" under its belt, showcasing its strong market presence [1][4] - The company is actively developing new titles that avoid the saturated military realism theme, focusing instead on fantasy and unique gameplay experiences [3][5] - Tencent's upcoming titles include "Rainbow Six" and "The Division: Dawn," which are set to expand its portfolio in the shooting genre [2][3] Industry Trends - The shooting game market is experiencing saturation in the military realism segment, prompting companies to seek differentiation through innovative gameplay and thematic diversity [13][30] - There is a growing trend towards "PVE" and "PVPVE" modes, which may become focal points for future competition, as they cater to diverse player preferences [34][35] - The integration of AI technology in game development is expected to enhance gameplay experiences, leading to new innovations in shooting games [34][35] Global Market Dynamics - The global shooting game market remains dominated by realistic titles, with major franchises like "Call of Duty" and "Battlefield" achieving significant sales [14][16] - Companies like Sony and Microsoft are also exploring new gameplay styles and themes, indicating a broader trend towards diversification in the shooting genre [22][24] - The emergence of new gameplay mechanics, such as "search and rescue" combined with battle royale elements, reflects the industry's shift towards innovative and hybrid gaming experiences [19][30]

Core Viewpoint - Tencent Games has successfully tapped into industry trends, particularly with the upcoming release of "Path of Exile: Ascendancy," which has shown strong performance metrics and community engagement [5][9]. Group 1: Game Performance and Reception - "Path of Exile: Ascendancy" topped the Steam sales chart for eight consecutive weeks, achieving nearly 600,000 concurrent players across all platforms [5]. - The game reached a peak viewership of 1.23 million on Twitch, surpassing previous records for similar products [5]. - The official website for "Path of Exile: Ascendancy" has garnered over 2.25 million pre-registrations [5]. Group 2: Development and Community Engagement - Grinding Gear Games (GGG) has maintained a strong relationship with its community, continuously improving its products based on player feedback [6]. - Tencent's strategy involves providing substantial resources to top developers, ensuring that the best teams can innovate and enhance their IPs [6][9]. Group 3: Game Features and Innovations - "Path of Exile: Ascendancy" emphasizes hardcore gameplay with high freedom in character builds and complex skill interactions, distinguishing it from mainstream ARPGs [12][13]. - The game introduces a random drop mechanism that enhances player experience by breaking the predictability of rewards, similar to the popular "loot and shoot" gameplay [16][18]. - The game has removed the hard mode to cater to local player preferences for faster-paced gameplay, incorporating a sprint system and adjusting skill balances [18]. Group 4: AI Integration and Support - The game features a specialized AI assistant designed to enhance player experience by providing contextual help without restricting player freedom [23][24]. - The AI development will occur in three phases, starting with basic queries and evolving into more personalized assistance based on player behavior [24][26][28]. Group 5: Market Trends and Strategic Positioning - The resurgence of the PC gaming market, driven by successful titles like "Delta Action," has positioned Tencent to regain control over this segment [30][32]. - Tencent's dominance in the gaming industry is reflected in its significant presence in the top ten games on the internet café popularity list, indicating strong market control [33]. - The company is adapting to changing player preferences by diversifying its game offerings across multiple platforms, responding to the growing interest in PC gaming [38].

Core Insights - The "search, fight, and retreat" (搜打撤) genre has gained significant traction, with major companies like Sony, Supercell, and Tencent actively participating in this space [1][3] - Tencent is currently the leader in the domestic "search, fight, and retreat" market, with games like "Dark Zone Breakout" and "Delta Action" solidifying its position [3][6] - The gameplay mechanics of "search, fight, and retreat" present inherent contradictions, making it challenging to balance tactical execution with fast-paced action [5][6] Tencent's Dominance - Tencent's "Delta Action" achieved an average daily active user (DAU) of 20 million in July, ranking among the top five in the industry [3] - "Dark Zone Breakout" was launched in 2022, focusing on a realistic approach that creates a "high-risk, high-reward" psychological experience [7] - The company has expanded its offerings, including the recent launch of "Dark Zone Breakout: Infinite" for PC, which has maintained a top 10 position in internet café rankings [9] Market Dynamics - Despite Tencent's stronghold, other companies like NetEase are also entering the "search, fight, and retreat" arena with unique approaches, such as the "Desert Gold" mode in "Naraka: Bladepoint" [15][19] - New entrants like "No Master Star Abyss," developed by former Blizzard CEO Mike Morhaime, are exploring innovative gameplay mechanics that combine cooperative and competitive elements [17][20] - The genre is evolving, with various companies experimenting with different gameplay styles and mechanics, indicating a competitive landscape that is not solely dominated by Tencent [26][27] Future Outlook - The "search, fight, and retreat" genre is characterized by its appeal to players' sense of risk and reward, creating a gambling-like experience that is distinct from traditional competitive shooting games [27] - The ongoing development of diverse gameplay experiences suggests that the future of this genre will not be monopolized by a single product but will instead cater to a variety of player preferences [26][27]

Core Insights - The "search, fight, and retreat" gameplay has evolved from a niche concept to a mainstream trend, attracting numerous game developers eager to capitalize on this opportunity [1][39] - Tencent has emerged as a dominant player in the domestic market with successful titles like "Delta Action" and "Dark Zone Breakout," both achieving significant revenue growth and user engagement [2][39] - The gameplay's appeal is broadening, with more players engaging with the genre, indicating a growing market potential [5][39] Market Dynamics - The "search, fight, and retreat" concept was popularized by the overseas game "Escape from Tarkov," which, despite its initial limited reach, has proven to be a forward-looking gameplay style [2][39] - Tencent's "Dark Zone Breakout" has maintained a position in the iOS top 80 for two years, while "Delta Action" has quickly climbed to the top 10, showcasing the competitive landscape [2][11] - The user base for "Dark Zone Breakout" has expanded significantly, reaching over 180 million global registered users, indicating strong market penetration [5][11] Gameplay Evolution - The gameplay mechanics are evolving to cater to different player tiers, enhancing the experience for hardcore, mid-tier, and casual players [7][9] - "Dark Zone Breakout" has introduced features to reduce player loss experiences, such as limited-time modes and safety zones, making the game more accessible [9][39] - "Delta Action" incorporates various gameplay modules, with the "search, fight, and retreat" mode being the primary focus, and has introduced new mechanics to balance hardcore and enjoyable gameplay [13][39] Competitive Landscape - The domestic market has become a testing ground for "search, fight, and retreat" games, with many new titles emerging [21][39] - Other companies, such as NetEase, have struggled to achieve similar success in the overseas market with their attempts at this gameplay style [18][39] - The genre is witnessing diversification, with various adaptations across different game types, including ARPGs and casual games, indicating a shift from its hardcore roots [32][39] Future Outlook - The "search, fight, and retreat" gameplay is expected to continue evolving, with developers exploring new themes and mechanics to attract a wider audience [39] - The market for this genre is still expanding, with potential for further growth as more titles are developed and released [39]

Core Viewpoint - The new season "Breaking the Wall" of the game "Delta Operation" introduces a unique gameplay experience by combining escape elements with the traditional "search and extract" mechanics, immersing players in a prison break scenario [1][14]. Map Design - The new map "Tide Prison" features a complex structure with multiple pathways, including sewage pipes and research facilities, making it the most intricate map in the game [5][7]. - Players face numerous variables during gameplay, such as ambushes and unexpected challenges, enhancing the excitement and unpredictability of the "search and extract" experience [7][9]. Immersion and Theme - The prison break theme is emphasized through the game's entry animation and the need for players to escape without weapons, creating a strong sense of immersion [9][14]. - The map includes various Easter eggs that reference popular culture, adding layers of fun and nostalgia for players [11][13]. Team Cooperation - The design of the new boss "Raven" and associated challenges encourages team cooperation, as players must work together to defeat this formidable enemy [15][19]. - Tasks within the map require collaboration among team members, emphasizing the importance of communication and coordination to succeed [21][24]. Overall Experience - The "Tide Prison" map successfully combines risk and reward, providing players with a thrilling and enjoyable experience that stands out in the "search and extract" genre [14][26].