Phantom Parlu’s Captivating Rise: Innovation, Challenges, and Future of Chinese Gaming

What message does the 2024 sensation ‘Phantom Parlu’ convey to the gaming industry?

In 2024, the emergence of the enigmatic contender in the gaming realm, ‘Phantom Parlu’, proved to be a seismic event that reverberated throughout the global gaming community. From its outset, ‘Parlu’ exhibited a level of performance unparalleled in its domain. Debuted on January 19, 2024, the game swiftly soared to a staggering peak of 1.3 million concurrent online users by January 22. Surpassing all prior benchmarks, the game peaked at 2.1 million online users, second only to the titan ‘PlayerUnknown’s Battlegrounds’. It effortlessly eclipsed its predecessor ‘Goose and Duck’, which relied on live broadcasting to achieve its zenith, with a peak of 700,000 users.

In this analytical narrative, our primary endeavor is to decipher the factors underpinning the triumph of ‘Phantom Parlu’, and the profound implications it holds for the Chinese gaming landscape.

Why has ‘Eidolon Parlu’ emerged as the seminal gaming triumph of 2024?

Assuredly, several key factors can be delineated:

1. The strategic orchestration of its promotional campaign followed a logical trajectory. Initially championed by niche social gaming influencers, predominantly virtual personalities, the promotion seamlessly transitioned to mainstream gaming figures before culminating in a triumphant launch on the Steam platform. Presently, the game is undergoing a phase of exponential growth amongst players, facilitated by the proliferation of memes across platforms such as TikTok, Reddit communities, Bilibili’s Douyin Xiaohongshu, and private forums, swiftly transcending conventional boundaries.

2. The development prowess of Pocket Pair, the studio behind the phenomenon, is underscored by meticulous management and judicious cost control. Their previous outing, ‘Utopia’, garnered sales exceeding 500,000 units, fostering a robust user base. Prior to its release, ‘Eidolon Parlu’ had already secured a prominent position in user subscriptions and wish lists. ‘Eidolon Parlu’ represents the culmination of Pocket Pair’s experience, marking their third venture. Despite their modest size, the studio boasts a wealth of project management acumen and a refined, cost-effective operational framework. Noteworthy is the president’s eclectic background, which includes stints at Nintendo, Japan’s J.P. Morgan, and expertise in virtual currencies. This amalgamation of experiences underscores the sophistication of Pocket Pair’s operations, significantly contributing to the success of ‘Parlu’.

3. The game’s eclectic gameplay mechanics have captivated a diverse audience within its genre, blending elements of creature capturing with open-world survival and construction dynamics. Visually reminiscent of Nintendo’s iconic Pokémon franchise, ‘Parlu’ leverages its endearing aesthetics to entice players, while the core gameplay mechanics of social construction and interaction hold inherent appeal for enthusiasts of the genre.

Unlike the traditional Pokémon formula of ‘capture, train, battle’, ‘Parlu’ eschews direct emulation, instead weaving a narrative centered around social construction. By integrating creature capturing with construction mechanics, the game offers a novel approach to the solitary experience inherent in single-player social construction games. Players are afforded the opportunity to collect an array of charming ‘Palu’ creatures, each endowed with unique traits and abilities, facilitating their integration into the resource acquisition and survival processes. This innovative gameplay paradigm alleviates the monotony often associated with solitary gameplay, fostering a sense of camaraderie and achievement amongst players.

In addition to these deliberate factors, certain fortuitous elements have also contributed to the game’s success:

1. The game’s topicality strikes a chord with the player community, resonating within the contemporary socio-cultural milieu. Despite elements of controversy within its content, ‘Parlu’ manages to strike a chord with players, its thematic elements serving as a conduit for emotional release and catharsis within the virtual realm.

2. The stagnation of gaming innovation in recent years has created a fertile ground for ‘Parlu’s’ innovative gameplay mechanics. While the gaming landscape is replete with novel concepts, few possess the assured market appeal exemplified by ‘Parlu’.

The challenges inherent in fostering gameplay innovation have long plagued domestic developers, with industry giants increasingly reliant on volume-driven strategies to secure market share. However, smaller studios, such as Pocket Pair, continue to champion innovation, albeit at considerable risk. The arduous journey undertaken by Pocket Pair, encompassing a development team of 40 individuals over a span of three years, underscores the herculean efforts requisite for gameplay innovation in today’s hyper-competitive market.

In conclusion, the emergence of ‘Phantom Parlu’ represents a watershed moment in the gaming landscape, underscoring the enduring allure of innovation and creativity in an industry often besieged by stagnation and conformity.

What manner of enlightenment may the new year’s sensation “Phantom Parlu” bestow upon the Chinese gaming realm?

1. The notion of innovation as the paramount principle retains its sovereignty, yet hurdles persist in materializing Parlu’s gameplay essence within mobile gaming.

Beneath the fervor for battle royale games in 2017 lies the innovation of “battle royale” gameplay, fundamentally a subgenre within the realm of shooting games. Indeed, at that juncture, many found it arduous to fathom that the somewhat hardcore shooting mechanics could entice such a plethora of potential aficionados. Subsequently, numerous games hinging on the battle royale framework have emerged, such as Apex Legends and Call of Duty Warzone, both of which continue to hold ranks 7 and 9, respectively, in the active player charts. Another instance of gameplay innovation is exemplified by “Fall Bean Man”. The physics-grounded parkour mechanics of “Fall Bean Man” are easily graspable for the average player. Coupled with its singular gameplay, endearing aesthetic, and comedic attributes, it garnered significant traction, becoming the breakout sensation of that year. Following suit, “Eggman Party” debuted in 2022, assimilating the innovative gameplay of “Fall Bean Man”. Targeting the youth demographic, it capitalized on stellar localization efforts and immersive user-generated content, swiftly establishing itself as the flagship offering of NetEase Games. Notably, Tencent Tianmei’s 2023 launch, “Yuanmeng Star,” also enjoyed commendable success. Reflecting further, pioneering gameplay formats such as auto chess and MOBAs have transitioned into cornerstone titles within the contemporary gaming landscape.

Given the aforementioned perspectives, it is our contention that the performance benchmarks set by “Palu” affirm the viability of the “pet capturing + SOC” gameplay paradigm in the market. Drawing from past encounters, it is highly probable that peer enterprises will endeavor to emulate this innovative gameplay while implementing refinements in end-user engagement, localization, and monetization strategies. The pet-centric dynamics of “Palu” are poised to catalyze further innovation within the SOC domain.

Currently, domestic gaming entities such as Tencent’s “Dawn of Life” and “Paradise,” alongside NetEase’s “The Day After Tomorrow,” have encountered impediments in achieving breakthroughs, attributed to factors like the relatively hardcore gameplay mechanics and the absence of trending topics. Following the triumph of “Eidolon Parlu,” another survival and construction venture, “Enshrouded,” launched on Steam on January 24, amassing 160,000 concurrent online users. Of note concerning novel entries within the domestic market is Tencent’s open-world mobile endeavor, “Create Our Planet,” also revolving around pet-capturing mechanics. Having concluded its testing phase, this title obtained its version number in March last year and is slated for an official launch in the second quarter of this year, with 10 million reservations already secured.

The principal disparities between “Palu” and the mobile gaming stalwarts of domestic origin are encapsulated in the following three facets:

(1) Divergences between premium and free-to-play models necessitate nuanced long-term strategies. The conceptualization of monetization schemes for pet-centric titles necessitates meticulous deliberation and deconstruction. Conventional gacha mechanics are inclined to diminish the incentive for casual players to invest time in nurturing and amassing creatures.

(2) The sustained engagement of players mandates a holistic reevaluation of game longevity. Presently, the player base of “Palu” is witnessing a gradual decline, attributable to waning popularity and rapid consumption of gameplay content. This predicament is antithetical to the aspirations of a free-to-play title.

(3) Inherent limitations of mobile platforms pose challenges. With an extensive menagerie of creatures to manage on handheld devices, optimizing small-scale multiplayer and cooperative interactions entails a fundamental threshold.

2. For major gaming conglomerates, amalgamation represents a cost-effective and minimally intrusive recourse.

Major players in the gaming sphere command formidable resources. Whether scrutinized through the lens of labor expenditure or corporate branding strategy, the development costs borne by these industry titans are anticipated to be substantial, with scant tolerance for project failure.

Consider Nintendo as a paradigmatic illustration. An examination of Pokémon’s IP revenue structure within the company’s financial dossier reveals that by the denouement of 2023, the franchise had contributed $150 billion to Nintendo’s coffers, with single-game revenue constituting 19.2%. Derivative merchandise affiliated with gaming copyrights further bolstered Nintendo’s revenue by nearly $130 billion, underscoring the monumental scope of its IP empire. Notably, Nintendo’s inaugural foray into feature-length animation, “Super Mario Bros. The Movie,” though brief in duration, accrued a global box office intake of $1.362 billion in 2023, securing the second position in global box office rankings. Surveying the landscape of domestic gaming juggernauts, data furnished by Xintai Securities and Huaan Securities delineates that Tencent’s gaming division perpetually commands a revenue share of approximately 30%, while NetEase’s gaming arm consistently hovers around the 70% mark.

The rationale underlying major gaming conglomerates’ penchant for integrating gameplay segments to effectuate micro-innovations stems from the intricate architecture of their revenue streams. Endowed with diversified revenue channels and a steadfast player base, the imperative to overhaul gameplay mechanics in pursuit of innovation is comparatively diminished. Conversely, small-scale development teams grapple with existential challenges. Lacking the seasoned expertise requisite for sustainable development and management, they are compelled to rely on the intrinsic appeal of their games for survival, thus fostering a pronounced impetus for innovation within the gaming landscape.

Within such an industrial milieu, creative output burgeons from myriad small-scale enterprises, engendering periodic phenomena of blockbuster hits; conversely, major corporations, leveraging their industrial prowess, evince a predilection for assimilating and iteratively refining gameplay concepts validated by market reception. This symbiotic interplay between industrial heavyweights and burgeoning startups invariably culminates in the assimilation of numerous small-scale development teams through acquisitions, propelling the evolution of industrial-grade game development endeavors.

3. The discourse on game topic creation and publicity trajectory merits consideration and endorsement from the company.

The multi-faceted promotional strategy employed by “Palu,” transitioning from niche to mainstream to player segmentation, bears significant implications. It offers insightful perspectives for domestic enterprises emphasizing bulk purchase promotions.

Upon reviewing the promotional tactics of “Palu,” one discerns a trajectory where the game’s user outreach originates from the advocacy of niche social online community (SOC) game influencers, primarily virtual personas, then progresses towards prominent figures, namely mainstream game influencers. Ultimately, it fosters interactive engagement among users within non-gaming communities.

Given the rationality of the game’s publicity channels, the pivotal factor for achieving widespread recognition lies in the game’s inherent memetic potency and its capacity to evoke emotional resonance among target clientele. An indispensable catalyst in the propagation of “Palu” stems from the collaborative efforts of numerous secondary content creators producing videos and emotive expressions.

Regarding procurement announcements, domestic gaming enterprises encountered formidable challenges in 2023. Presently, the battle for market share in the domestic gaming sphere intensifies, concomitant with a surge in publishers’ investment expenditures. A prevalent theme in the gaming sector last year was the escalating procurement costs. A scrutiny of the financial disclosures of four A-share listed companies, including Perfect World and China Taiyue, reveals a sustained elevation in procurement investment levels. This trend is attributed to the close correlation between gaming product revenue and operational and promotional investments, particularly evident in Sanqi Interactive Entertainment, where game revenue substantially hinges on procurement volume.

The underlying principle in curtailing procurement volume distribution costs underscores that a larger and more targeted audience translates to diminished expenses, and conversely. Traditional game advertising overly relies on manual intervention, where the efficacy of adept sales pitches often dictates advertising outcomes. As the market evolves rapidly, manufacturers lacking adept advertising capabilities are poised to endure greater setbacks in the procurement arena. Gamma Data, as cited in the “RPG Global Market White Paper,” advocates bolstering the developmental prospects of game content and exploring avenues for customer acquisition beyond the gaming realm to effectively mitigate user acquisition costs. Currently, the majority of overseas RPG game developers prioritize investment in industry Key Opinion Leaders (KOLs), followed by gaming forum communities and social media platforms. This aligns with the promotional trajectory delineated earlier: from niche to the public sphere.

4. Prospects abound in the realm of PC buyout gaming, catering to evolving player preferences.

Per data from the Game Working Committee, since 2014, mobile gaming has burgeoned into an incremental market, sustaining a growth rate of 17.51% in 2023, while the domestic PC gaming market has maintained a relatively stable market share over the years, even achieving an 8% growth in 2023. This trajectory indicates that amidst intensifying competition for mobile gaming shares and consumer fatigue in habitual consumption patterns, redirecting attention to the overlooked client gaming domain presents viable opportunities.

Tencent’s Steven, Senior Vice President of Tencent Group, opines that the PC platform is conducive to fostering gameplay innovation, owing to its business model and player demographics. He suggests that occurrences of “mobile game practitioners being outshone by innovative PC games” may persist unabated. The paramount concern for game developers lies in the Return on Investment (ROI) and product turnover cycles, accentuating the significance of innovative gameplay.

Nevertheless, domestic gaming enterprises remain circumspect about the future prospects of client gaming ventures. On February 5th of the current year, 91Act, a domestic ACT game development studio, disclosed the disbandment of its entire Research and Development (R&D) team, citing lackluster revenues from its Steam client game, “Blank Wing: Chaos Effect.” Despite initial acclaim during multiple rounds of testing, the game failed to realize optimal commercial performance. Compounded by burgeoning partnership costs and future development expenses, the company was compelled to dissolve. Community sentiment reflects players’ appreciation for the game’s quality, advocating for the adaptation of client games into mobile platforms to explore avenues for revival.

Domestic PC gaming is poised for novel breakthroughs in 2024. In the latter half of 2023, NetEase released “Sixteen Voices of Yanyun,” developed by Everstone Studio, marking the culmination of its public beta phase. Positioned as an open-world RPG with a martial arts theme, the game targets PC, console, and mobile platforms, boasting superlative quality akin to premier international action games. The commercialization model for the game remains undisclosed. Additionally, the much-anticipated domestic PC release, “Black Myth Wukong,” slated for 2024, garners industry attention as it combines elements of domestic production, paid acquisition, and AAA-grade gaming, potentially paving a new trajectory for China’s gaming landscape.

While the free-to-play and in-game purchase model has proven successful over time, the concept of buyout gaming may yet find relevance in China. The saturation of microtransaction-laden mobile games has wearied players, prompting a reassessment of dormant pay-to-play gaming models. The success of “Palu” underscores the viability of buyout systems for client games, tapping into a vast reservoir of untapped users and fostering prospects for high-quality domestic client games to transcend the conundrum of being “popular yet niche.”

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