Research Summary
The report discusses the success of miHoYo’s latest game, Honkai: Star Rail (HSR), which has generated significant revenue and reversed the revenue trajectory of the mobile turn-based RPG subgenre. However, the report also highlights some challenges, including cracks in miHoYo’s portfolio expansion strategy and the cannibalistic cost of HSR’s growth. The report also discusses miHoYo’s shift towards creating a collection of differentiated game experiences in a shared IP universe, known as the HoYoverse.
Key Takeaways
HSR’s Success and Challenges
- HSR’s Global Success: HSR has achieved global success, generating massive revenue for miHoYo. The game’s success is attributed to its visually stunning and narratively immersive gameplay, as well as its accessibility to a global audience.
- Portfolio Expansion Strategy: Despite HSR’s success, its launch has revealed cracks in miHoYo’s portfolio expansion strategy. The game’s growth has come at a cannibalistic cost, and its current state may not have the long-term staying power needed to fill the gaps created.
- Revenue Cannibalization: HSR’s launch has led to a decrease in total monthly portfolio revenue, as it has cannibalized Genshin Impact’s revenue. This is driven by miHoYo heavily promoting HSR to Genshin Impact’s audience and working with Genshin Impact influencers.
miHoYo’s HoYoverse Strategy
- Shift in Portfolio Strategy: miHoYo’s portfolio strategy is shifting towards creating a collection of differentiated game experiences in a shared IP universe to cater to a wider audience and drive incremental revenue growth.
- Initial Signs of Success: The HoYoverse strategy is challenging but has shown initial signs of success, as evidenced by HSR’s marketing targeting new audiences and driving incremental revenue.
- Challenges in the HoYoverse Strategy: HSR’s launch has showcased some cracks in miHoYo’s HoYoverse strategy. The company needs to learn from these implications for future game launches and consider testing for portfolio cannibalization and building games in genres with low audience overlap to maximize audience reach.
HSR’s Marketing and Monetization
- Successful Marketing Campaigns: HSR’s success factors include an outperforming pre-registration campaign and targeting Western players through influencer marketing tactics. The launch campaign successfully tapped into the existing fan base of Genshin Impact, driving interest and conversions for HSR.
- Revenue Inefficiency: Despite its success, HSR is not as revenue efficient as Genshin Impact, with lower revenue per download in the US and other regions. HSR’s gacha system is very generous, which may impact long-term revenue efficiency.
- Monetization Testing: miHoYo does not perform monetization testing during closed betas, which raises questions about their decision-making process and potential impact on revenue. The lack of monetization testing may be due to miHoYo’s heavy reliance on new character banner releases for revenue generation.
Actionable Insights
- Learning from HSR’s Launch: miHoYo should learn from the implications of HSR’s launch for future game launches. This includes testing for portfolio cannibalization and building games in genres with low audience overlap to maximize audience reach.
- Improving Monetization Strategies: miHoYo should consider performing monetization testing during closed betas to better understand the potential impact on revenue. This could help the company make more informed decisions about their monetization strategies.
- Exploring New Genres: The report suggests that there is room for innovation in every subgenre in the gaming industry. miHoYo and other gaming companies should consider exploring new genres and creating unique game experiences to attract a wider audience and drive incremental revenue growth.
