Source | YuanMeiHui

Following a productive lunch break on March 29th, Gamepixel officially unveiled its 2024 financial report, showcasing remarkable performance across key financial indicators such as revenue, gross profit, and net profit.

According to the report, Gamepixel's revenue surged to 5.01 billion yuan, marking a 47.9% year-on-year increase. Gross profit skyrocketed 68.2% to 3.48 billion yuan, while net profit was finalized at 890 million yuan, reversing the loss of over 65 million yuan in 2023.

Revenue from self-developed games experienced a significant 69.1% year-on-year jump to 3.317 billion yuan, contributing 66.2% of total revenue, with gross margin climbing to 62.6%. Notably, "Let's Go Muffin" topped the iOS bestseller chart in its inaugural month, establishing itself as Gamepixel's highest-ranking product to date.

Behind these impressive financial figures lies a profound transformation in Gamepixel's business structure and strategic focus. Historically reliant on TapTap for traffic distribution, Gamepixel achieved a qualitative leap in 2024 with three self-developed hits: "Let's Go Muffin," "Sword of Lily," and "Heartbeat Town," signaling a strategic shift in the company's landscape.

However, beneath these robust numbers lies an industry in flux, characterized by intense competition. Gamepixel must transition from channel dependence to R&D breakthroughs, from traffic anxiety to ecosystem reconstruction, evolving from a "channel-dependent" entity to a "full industry chain integrator."

01

The Resurgence of TapTap's Value

TapTap's contribution to Gamepixel's financial report is undeniable. As a leading gaming community in China, TapTap has amassed a vast base of loyal users and high-quality content over the years.

TapTap's China App witnessed a 23.0% year-on-year increase in average monthly active users (MAU) to 44 million. This steady expansion of the user base has laid a solid foundation for TapTap's commercialization efforts.

Previously, TapTap's commercialization path was met with controversy. The platform's insistence on not cooperating with developers and not sharing revenue resulted in missed monetization opportunities. This "acclaimed but not profitable" scenario once cast doubt on its commercial viability in the market.

"TapTap's commercialization remains restrained," which reflects the general perception of the platform and a signal from Gamepixel's management. However, "restraint" does not equate to "stagnation." TapTap is seeking to balance the exploration of diversified business models without disrupting the community ecosystem, thereby enhancing its profitability.

Today, TapTap has gradually realized its commercial potential. It has embarked on diversified monetization strategies, including advertising and game distribution. The growth of the user base, coupled with the exploration of new business models, has injected fresh vitality into TapTap's platform business.

Advertising revenue has grown significantly, benefiting from the expanded user base and improved ad targeting accuracy. Additionally, the game distribution revenue-sharing model has started contributing profits. TapTap's value as a premium game promotion channel is increasingly prominent, and its revenue-generating capabilities have been bolstered through revenue sharing with game developers.

TapTap's commercialization efforts have also spurred new growth for Gamepixel. The increase in TapTap's platform business revenue effectively mitigates the cyclical fluctuations of the gaming business, enhancing Gamepixel's resilience. The financial report reveals that although TapTap's platform revenue growth rate stands at 21.6%, lower than the 64.2% growth rate of gaming business revenue, its steady growth remains a crucial pillar supporting Gamepixel's performance.

Notably, TapTap has commenced experimenting with a revenue-sharing-free strategy for its PC version, interpreted by outsiders as a shift in its commercialization approach. Through the synergy between PC and mobile, TapTap aims to broaden its user reach, enrich platform content diversity, strengthen the loyalty of core players, and ultimately nurture the platform ecosystem.

02

The Dual-Driver Strategy of "Self-Development + Distribution"

The most compelling footnote to Gamepixel's 2024 financial report is undoubtedly its "turnaround to profitability" – a net profit of 890 million yuan, a stark contrast to the loss of 65.362 million yuan in the corresponding period last year.

This financial turnaround is not solely fueled by the TapTap platform but also by the robust rise of Gamepixel's self-developed games segment. Transitioning from previous over-reliance on TapTap for traffic to a dual-driver strategy of "self-development + distribution," Gamepixel is undergoing a profound strategic transformation.

In recent years, Gamepixel developed a certain path dependence on TapTap. While TapTap undeniably leads in the independent game field, the external environment has undergone significant changes. Tightened game license policies have introduced uncertainty in new game launches. Top-tier companies leveraging traffic further compress the survival space of small and medium-sized developers, and the growth ceiling of TapTap is becoming increasingly apparent.

External pressures, coupled with internal growth bottlenecks, necessitate Gamepixel to increase investments in self-development and seek new growth engines. As industry insiders assert, self-development is the "lifeblood" of game companies. Only by mastering core R&D capabilities can one build long-term competitiveness and remain steadfast in an unpredictable market.

Currently, Gamepixel's "self-development + distribution" strategy is bearing fruit. The most tangible manifestation is the leap in both quantity and quality of self-developed games. Multiple self-developed hits, such as "Let's Go Muffin," "Sword of Lily," and "Heartbeat Town," have emerged, driving significant revenue growth. According to the financial report, Gamepixel's gaming revenue surged 69.1% year-on-year to 3.316 billion yuan in 2024, with self-developed games accounting for the bulk of this increase.

The continuous increase in the proportion of revenue from self-developed games signifies that Gamepixel is gradually extricating itself from its dependence on TapTap's platform traffic and gaining more autonomy. Furthermore, Gamepixel is actively expanding overseas distribution channels to introduce self-developed products into the global market, further enhancing the profitability of its games and the influence of its IPs.

Self-development enables Gamepixel to more precisely control game content and operational strategies, thereby better meeting player needs and enhancing user loyalty. "Let's Go Muffin"s stable presence in the bestseller list's TOP 10 in its first month is the best testament to Gamepixel's self-development prowess.

Image: "Let's Go Muffin" Game Poster | Source: Company Website

The success of self-developed games has also bestowed valuable IP resources upon Gamepixel, which can be continuously developed and leveraged in the future, fostering a strong brand effect and laying a solid foundation for the company's long-term development. As per Gamepixel's management plan, the company will continue to boost investments in the self-development field, launch more market-competitive game products, and further consolidate the growth model driven by the dual-driver strategy of "self-development + distribution."

03

The Leverage of AI

If traditional game company segments such as distribution and self-development are the "explicit engines" of Gamepixel's growth, then leveraging AI to foster "creative equality" and activate the developer ecosystem constitutes its "implicit driving force."

Gamepixel acutely understands that the prosperity of the gaming industry hinges on the vitality of innovation and creation. Creators and developers are the fountainhead of innovation. How to better empower creators and ignite their creativity has become a pivotal proposition for the sustainable development of game companies.

The uniqueness of the gaming industry lies in the significant contingency of hit games. Their success cannot be fully replicated through increased investment and scale expansion. Many game companies invest heavily and assemble top-tier teams for R&D but ultimately fail to garner market recognition. Conversely, numerous independent games developed by small teams often become unexpected hits due to their unique creativity and gameplay.

Judging from Gamepixel's business layout, it maintains a leading position in creative and innovative endeavors within the industry.

TapTap has always been particularly supportive of independent games and small-to-medium-sized developers, significantly lowering the barriers to entry for developers by offering free game publishing, promotion, and operational services.

TapTap reinforces its ecological advantages in the realm of independent games and small-to-medium-sized development teams by continually strengthening the construction of the developer ecosystem. For instance, it hosts the TapTap Game Conference, developer salons, and the "Spotlight Game Jam" creation competition throughout the year, which have garnered positive feedback from gamers and game developers, further cementing its position in the independent game field.

With a mature developer ecosystem in place, Gamepixel can harness cutting-edge tools like AI to shorten the journey from creativity to product launch.

During the earnings call, Gamepixel's management reaffirmed the immense potential of AI technology in enhancing R&D efficiency and lowering creative thresholds. From Gamepixel's perspective, AI is not merely an efficiency tool but a means to cultivate a more open, inclusive, and efficient developer ecosystem, ultimately achieving genuine "creative equality."

The concept of "creative equality" aims to enable more talented and imaginative creators, regardless of their size or technical proficiency, to participate equitably in game creation and share the benefits of industry development.

Imagine AI assisting developers with game scene design, eliminating the tedium of manual modeling; aiding in character modeling, making artistic resources no longer a bottleneck; and even participating in scenario writing and code development, significantly boosting development efficiency and reducing costs.

Judging from the current business layout, Gamepixel has already integrated relevant AI technology into its operations.

In the art department, the company has developed AI drawing plugins to assist designers in refining art details more efficiently; trained project-specific character AI models, enabling designers to swiftly generate initial creative concepts using AI tools based on product development needs; in texture generation, motion capture optimization, and other aspects, AI has drastically reduced repetitive manual work, further shortening the R&D cycle; through the comprehensive application of AI, the overall efficiency of the art department has improved by over 50%.

In text translation, previously, Gamepixel relied on outsourcing translation companies, which was costly. With the introduction of AI, the company has significantly reduced translation expenses while maintaining overall translation quality. Additionally, Gamepixel has actively implemented AI-assisted code programming.

Apart from integrating AI technology into the company's existing business, Gamepixel has also strategically deployed research resources in the more foundational field of AI, serving as a "stepping stone" to keep abreast of cutting-edge technology and engage with the AI industry.

It is foreseeable that with the in-depth application of AI technology, Gamepixel's developer ecosystem will usher in a new wave of explosive growth. More creative and imaginative game works will emerge, infusing new life into the TapTap platform and providing a steady stream of momentum for Gamepixel's sustainable development.

Some images are quoted from the internet. Please inform us for deletion if there is any infringement.