miHoYo's Genshin Impact and its 100 million dollar budget

Aka anime Zelda with voice acting

Let’s talk about the most anticipated Chinese game this year.

What’s the latest: The Shanghai-based miHoYo dropped a gameplay trailer at the latest State of Play as it announced its Breath of the Wild lookalike game Genshin Impact will be coming to the PS4 this fall. (Update: Genshin Impact will launch on September 28 on PC, Android and iOS.)

Why do I care: 

• For one, the game looks gorgeous (its cel-shading technique is impeccable) and it plays awesome. I tried it during its last beta. It could be the first Chinese hit on console. 

• And... the game is said to have a 100 million dollar budget. 100 MILLION.  🤯 🤯 🤯

More context: 

• A budget of 100 million dollar puts Genshin Impact in the same league as AAA games in terms of cost. NYT quoted Atul Goyal of Jefferies & Company in saying that Final Fantasy VII Remake costs about US$140 million. 💲 💲 💲

• Its budget will definitely go up as it is a live-service game. Bungie’s Destiny was said to have a budget of 500 million. But anyway, 100 million right out the gate is admittedly a generous number. 

(Picture: @So_Ethereal/Twitter)

How is miHoYo able to bankroll it:

As it is still a private company, we can only guess at miHoYo’s revenue level. But that’s not mission impossible because its revenue at this point mainly comes from Honkai Impact 3rd. Honkai’s performance in turn can be guessed through a comparable game put out by Bilibili -- Fate/Grand Order. As the graph here shows, Honkai Impact 3rd has slightly better performance than Fate/Grand Order. As such, since Fate/Grand Order has made 210 million yuan (US$30 million), it’s safe to assume that Honkai Impact 3rd can at least make about the same. 

(Picture: @芒果冰OL/Qimai Data/Bilibili)

According to the chart below as published by a Chinese game expert, Honkai Impact 3rd is estimated to have made about 235 million yuan last year. So somewhere between 200 million yuan and 230 million yuan is the whisper number for Honkai's 2019 revenue and the game has been on the market for about four years now.  

(Picture: 国产二次元手游观察/Bilibili)

miHoYo’s advantage: 

miHoYo’s advantage lies in that it has a larger profit margin than most gaming companies. According to a prospectus in 2018, miHoYo’s net margin reaches 76%. miHoYo is able to do that because it self-publishes games it developed. If you ask me, miHoYo’s R&D capability is arguably as good as that of Tencent and NetEase, which is astonishing to say the least given it is still just a relatively small developer. As such, so long as no big mistakes are made with Honkai, it is safe to say that miHoYo will have a steady stream of revenue in the next few years for sure. 

(Picture: miHoYo)

About Genshin Impact:

Let me say this. I’ll likely play and even stream Genshin Impact on Day 1. It’s exciting because: a. it is anime Zelda; b. it is Zelda with voice acting. Seriously I was amazed by how every dialogue of the game was voiced. On top of that, the map appears to be huge. Admittedly the wilderness in this game is nowhere near as interesting as Breath of the Wild but them cities look dope. Look at this one! It’s like a Witcher 3 city but in BotW. 

(Picture: @So_Ethereal/Twitter)

That said, I’ve written about how Genshin differs in many different ways from BotW. Read this if you want to know more about the combat, monetization and the gacha system of the game. But what I want to add here is that this game may be great for streaming especially given its status as a live-service game. It can potentially stay on Twitch for a while if it’s successful. 

Last but not least, let’s not forget how big BotW is in China and how BotW fans staged a protest when Genshin was announced. 

Attendees paid an average ticket price of US$20 to give Sony and miHoYo a piece of their mind. (Picture: Weibo)

But welp, Shuhei Yoshida publicly endorsed this game from really early on. And we know that Shuhei has a pretty effing high standard as evidenced by how he was reportedly unimpressed by God of War when he played its early demo… So that should count for something.