April 20th, 2023: Market Updates

Reading Time: 9 minutes

#1: Honor of Kings Is Testing the Waters in the West

Honor of Kings, Tencent's premier MOBA, established itself as the top-grossing mobile game globally due to its widespread popularity in China. Outside of China, the game was launched under the rebranded title Arena of Valor, which arrived in North America and Europe in 2017. Tencent made significant changes to adapt Arena of Valor to the international market, including alterations to the game’s maps, UI, and character roster.

While Arena of Valor has experienced success in Southeast Asia, its performance in Western markets has been underwhelming, seemingly leading Tencent to abandon its efforts as indicated by the lack of user acquisition, declining metrics, and poor user ratings of Arena of Valor over the past few years. This decline was exacerbated by the launch of Tencent subsidiary Riot Games’s League of Legends: Wild Rift, which emerged as a mobile MOBA alternative for Western players.

Despite that, Tencent remains optimistic about the Honor of Kings brand and its potential to grow beyond the confines of China. Last month, the publisher expanded the original Honor of Kings to the West for the first time, starting with a beta test in Brazil. While we cannot say for sure why Brazil is the intended testing market, it was where Tencent and Riot first alpha tested Wild Rift (alongside the Philippines) ahead of its global launch. This indicates that Tencent may be testing whether Arena of Valor catches on not necessarily with tier-1 markets like the U.S., but in tier-2 ones instead.

The Western version of Honor of Kings retains most original maps, UI, and characters, featuring minor art style adaptations, localization, and geo-specific events. This update will delve into the game's performance so far and explore how the strategies and offerings of Honor of Kings differ from those of Arena of Valor, and determine whether Tencent can finally crack the code to Western market success.

Honor of Kings’ Performance

As 95% of Honor of Kings’ users play on Android, we will be analyzing data exclusively for Google’s platform. Honor of Kings has so far done a commendable job scaling users. Although it hasn't garnered the same level of attention as Wild Rift during its launch, Honor of Kings has managed to gather a high number of installs and has also maintained downloads at a strong level after the initial peak — as seen in the Downloads chart below for the Android Brazilian market:

Honor of Kings has also done a good job retaining users, at least in the short term, with active users remaining stable as you can see in the chart below:

Scaling users was Arena of Valor's biggest obstacle in succeeding in the Western market. For now, Honor of Kings has surpassed its adaptation, as it has easily surpassed Arena of Valor's peak all-time active users as seen in the chart below. This indicates that Tencent is making progress on figuring out how to adapt and scale these types of experiences for new markets.

However, Honor of Kings hasn’t been doing as well with monetization, and RPD for the Brazilian Android users stands at $0.08. Still, the RPD is at a similar level to Mobile Legends: Bang Bang and Arena of Valor for their respective early launch windows. Furthermore, considering that Honor Kings is a game that monetizes primarily from the customization of characters, a process that takes time as players grow more familiar with the full roster, we can expect the game’s RPD to grow over time.

How Honor of Kings Stacks Up Against Arena of Valor

Honor of Kings has been more successful in leveraging its brand by maintaining the same core game loop, map, and heroes as the original Chinese version. This offers a small market differentiator in a segment filled with well-defined games attached to strong brands and featuring very similar gameplay.

Tencent has also invested more money and time in designing a marketing strategy that is relevant to the target market. This includes creating daily YouTube content localized to the Brazilian market, forming partnerships with local influencers, and collaborating with Brazil celebrities including the DJ Alok to bring exclusive content and an exclusive song to the game.

Beta testing within a particular Western market, particularly one with less robust monetization, is an approach Tencent did not deploy for the launch of Arena of Valor. Given the significant differences between Brazil and major Western mobile markets like the U.S. and Canada, insights gained from this beta test may not be readily transferable to out markets.

Nonetheless, the decision to conduct this test in Brazil suggests a shift in Tencent's approach, emphasizing tier-2 countries in which competitors like Wild Rift and Mobile Legends enjoy popularity but Arena of Valor has experienced less success.

The Challenges Ahead for Honor of Kings

While Honor of Kings has demonstrated a stronger initial performance than Arena of Valor in its first test markets, Tencent must still contend with the challenges of competing against Western rivals in a mature mobile market saturated with similar titles. Both Mobile Legends: Bang Bang and League of Legends: Wild Rift have well-established, market-relevant brands, and both already outperform Honor of Kings in monetization.

Moreover, MOBAs have historically struggled in the West, and even if Honor of Kings attains market relevance, it is unlikely to surpass the performance of Wild Rift and Mobile Legends. Should Tencent ultimately decide to concentrate on tier-2 countries, any additional revenue generated by Honor of Kings in the region may be insignificant.

Game Launch Radar

#1: Marvel: World of Heroes

Publisher: Niantic
State: Closed Beta
Territories: New Zealand
Classification: AR/Location Based
Quick thoughts:
- Marvel: World of Heroes borrows Pokémon Go's AR experience and combines it with a Marvel IP. Like Pokémon Go, the game demands players engage with the real world by walking around to local landmarks and neighborhoods to unlock missions and collect characters. You can watch a video of the gameplay here.
- In missions, players engage in fights with NPCs, which are split into different waves. Players fight using their customizable avatars and have access to simple battle commands. They can also summon the special abilities of heroes they collect.
- Even for a game in its early stages, the quality of the graphics and animations in Marvel: World of Heroes is unimpressive, making this feel like another AR Niantic game doomed to fail.
- Despite several attempts to leverage its AR technology with other IPs, the company has been unable to match the success of Pokémon Go, and it's clear why. Pokémon Go's main success was driven by three different factors:
  - New, exciting technology that could leverage virality.
  - An IP with a limited presence in the mobile space.
  - A good match between IP and gameplay, simulating the original Pokémon experience by locating and catching roaming monsters in the real world.
- Similar to Harry Potter: Wizards Unite and NBA All World, Marvel: World of Heroes does not have any of these factors in its favor. The Marvel IP is already present in several mobile titles featuring better graphics and more sophisticated battle mechanics than World of Heroes, and the AR mechanic does more harm than good for the game.
- The question now is whether Niantic can find a new IP that rivals Pokémon to continue promoting mobile AR gaming, or is it time for the company to move on from the technology?

#2: Crushing Crew

Publisher: My.Games
State: Open Beta
Territories: Brazil, Canada, South Korea, New Zealand, and Japan
Classification: Strategy - Tactical Battler
Quick thoughts:
- Crushing Crew is a Tactical Battler featuring a cartoonish art style similar to Battle Cats, and Mighty Party with a UI inspired by Brawl Stars.
  - PvP gameplay is split into rounds, but due to a limited user base, bots are currently used for PvP battles.
  - Players select a deck of cards composed of previously collected heroes to begin the game.
  - Each round has a limited mana pool, letting players decide which heroes to play and in what order, as well as equipping characters with armor and potions for improved performance.
  - Additional features include quests, achievements, and a battle pass.
  - You can watch a video of the gameplay here.
- Overall, Crushing Crew offers enjoyable gameplay, polished art, and high-quality UI, but may find it difficult competing with Clash Royale or Castle & Dragons.

Other Game Announcements

Monster Hunter Now comes in September from Capcom and Pokémon Go maker Niantic (Link)
Monopoly Go! is Scopely’s latest Hasbro board game adaptation (Link)
PUBG Mobile launches Be@rbrick collaboration (Link)
Bandai Namco and DeNA to release Takt Op Symphony for Western audiences (Link)
Fortnite x Coachella 2023 is back with more melodic festivities and cosmetic items (Link)
Summoners War: Chronicles announces collaboration with One Punch Man (Link)
Blue Archive: Nexon launches official Merch shop named The Schale Store (Link)
Disgaea RPG will shut down the English servers on May 12, 2023 (Link)
Valkyrie Rush: Idle & Merge from Com2us will shut down on May 11, 2023 (Link)
Sword Master Story surpasses 6 million downloads globally across app stores (Link)
War Robots reaches $750M in revenue on 9th anniversary (Link)

Company Announcements

Sega to acquire Rovio at €9.25 per share (Link)
Ten Square Games axes 120 staff and two games (Link)
Sandsoft Games has a five year plan to become the Middle East’s mega publisher (Link)
BoomHits to merge offices with Skyloft Studios (Link)
CrazyLabs achieves six billion downloads in six million years of play! (Link)
Aonic acquires majority stake in Milky Tea (Link)
InnoGames lays off 75 staff (Link)
Hadi rebrands to Grand-Attic, raises $5.3 million (Link)

Ecosystem Announcements

Moonton Games partners with United States Esports Federation (USEF) to host IESF World Championships 2023 (Link)
Deloitte survey: 45% of gamers want more games based on film and TV (Link)
German games market up minimally in 2022 (Link)
Mobile game exclusivity triggers $32 million fine for Google (Link)
Chinese game licenses in 2023 could surpass the past two years combined (Link)
Gaming market to reach $201 billion in 2023 (Link)
Unity announces the winners of its 2023 Unity for Humanity Grant (Link)
92% of gamers are exclusively using phones (Link)
Pop star Jay Chou sues NetEase for copyright infringement (Link)
A new Sony patent indicates that the company is working to improve mobile game controls (Link)

Content Worth Consuming

The 8 Things Supercell is Doing to Level Up (Deconstructor of Fun): “Luckily, you — our dear reader — have the Deconstructor of Fun crew who combine public data and word-on-the-street insights to read between the lines and interpret what was left unsaid by one of the most influential game executives in the World, Mr. Ilkka Paananen.“ Link
Under the hood: deconstructing one of the top idle arcade games (Azur Games): “In this article, we’ll deconstruct a successful project from 2022 (that continues to be successful) and analyze its game design, mechanics, and monetization through screenshots. We’ll highlight specific approaches used in this game, which can be applied when developing other projects.” Link
Aim higher: How Neskin Games made EverMerge (Pocket Gamer): “Sergey Neskin, CEO of Neskin Games, tells us about small beginnings and the main challenges the team faced when building EverMerge from scratch. Not only do we explore the creation of the game but also how LiveOps is handled and how the game has evolved over the past two years.“ Link
Narrative in mobile games: why the story matters (LevelUp Podcast): “In this LevelUp episode, Melissa sits down with Lisa Brunette, Narrative Designer and Game Writer at Brunette Games. They talk about the importance of narrative, why gameplay should always come first, how to write for mobile games, and how (and why) Lisa gamified her gardening. “ Link
The Live Service Layered Cake — Part I (LevelUp Blog): “In what follows I will explore the interplay between retention and monetization that I have observed during the several years that I spent working on the successful live service. Do not treat this as a ready-made template. This is just a set of my personal observations. Rather, use it as a starting point in your thinking about the live service.“ Link
Mobile app trends: 2023 edition (Adjust): “App trends 2023 takes a deep dive into actionable Adjust data and draws on industry and c-level expertise to provide marketers, developers, and the industry at large with the knowledge and insights needed to measure, optimize, scale, and drive strategic growth in 2023.“ Link