The tragedy of Renren Games: How a gaming company once worth 10 billion yuan was ruined

Tencent is undoubtedly the current leader in the mobile game rankings, but how many people know that long before the rise of the Tencent empire, there was another company that controlled most of the mobile game market - Renren Games led by Chen Yizhou. From web games to mobile games, Renren Games has experienced ups and downs with the development of the Chinese game market, from a quasi-listed company with a market value of 10 billion yuan to being almost forgotten by the market.

Dominating the list, one step away from listing

In 2006, Renren Games was founded, then known as Oak Pacific Games. The following year, it launched its first self-developed web game, “Cat Travels”. Based on the social network built by Mop, a popular WEB2.0 pioneer community under Renren Group, "Cat Travels" helped Renren Games get off to a good start in the field of web games.

Renren Games has experienced two glorious periods. The first glorious period began in 2008, when Renren Games launched the first domestic MMORPG web game "Tian Shu Qi Tan". As it was the first company in China to make games, there were basically no strong competitors in the market at that time. In addition, the company had a good grasp of the MMORPG direction, and "Tian Shu Qi Tan" quickly achieved fame and fortune, and Renren Games grew stronger as a result.

The second glorious period occurred from the end of 2011 to 2012. In the second half of 2011, Renren Games launched an SLG web game called "Chaos World", which did not perform well at first. As the domestic mobile phone market began to usher in a surging trend of smart phones, Zheng Ying, the producer of "Chaos World", led a few people to port it to the iOS platform and put it on the App Store. Unexpectedly, this mobile game directly ported using Adobe Air showed a strong ability to make money.

Having tasted the sweetness, Renren Games immediately ported all of its operating web games to mobile games for the iOS platform through Flash. Although Adobe Air only launched a beta test version at the time, Renren Games' technical department had strong capabilities in web game research and development and quickly completed a set of efficient porting tools based on this test version, which could easily and conveniently port existing web games to mobile platforms. In this way, Renren Games is far ahead in both products and channels.

At that time, the domestic mobile game market was still in its infancy, the Android channel had not yet begun to expand, and the jailbreak channel had not yet taken shape. The App Store, which occupied the majority of the market share, had not yet formed a strict regulatory system. The relaxed market environment provided huge opportunities for Renren Games' marketing . Renren Games is not only one of the first companies in China to operate heavy-duty paid mobile games, but also one of the first companies to try the shortcut of manipulating the charts . Since there were many loopholes in Apple's supervision of the App Store at the time, the effectiveness of manipulating the charts was astonishing. Even at the peak in the second half of 2012, nine of the top ten games on the list were from Renren Games.

In fact, in addition to the well-known ranking manipulation, Renren Games had two other secret weapons at the time. One is the introduction of the concept of "cross-screen gaming", which is to operate a product on both the web and mobile terminals at the same time, using a unified server, and then attracting users to bypass the App Store and recharge directly on the web terminal through different pricing methods, thus avoiding the 30% channel share. Another weapon is to change the game name and icon and put it on the shelves multiple times, providing more entrances for the game. This was possible at the time due to Apple's poor oversight. The final result is that Renren Games has occupied a large area of ​​the list, not only occupying nine places in the top ten, but also most of the next 20 and 50 places.

The combination of products, channels and marketing led to the explosion of Renren Games in 2012. The financial report shows that Renren Games' online game revenue in 2011 was US$42.3 million. Benefiting from its self-developed cross-platform games, Renren Games' online game revenue soared to US$90.2 million in 2012, a year-on-year increase of 113.2%. In the fourth quarter of 2012, the revenue share of Renren Games' top five games was approximately 58%. At that time, Renren Games had approximately 3 million paying users, and the payment rate of active users was approximately 6% to 7%.

In July 2012, Renren Games, which was at the peak of its popularity and was expected to be listed independently, was spun off from Renren Group and its office was moved from Jing'an Center in Beijing to the Guotou Creative Industry Park in Jiuxianqiao.

The account was blocked by Apple, and there are many problems in the subsequent development

Half a year after moving to Jiuxianqiao, December 15, 2012, was a Black Saturday for Renren Games. Apple suddenly launched a major crackdown on violations within the App Store. Renren Games, which had previously exploited many loopholes, was naturally not spared. Its developer account was directly blocked and all its games were immediately removed from the shelves. According to former employees of Renren Games, they were caught off guard and could only quickly resubmit the game for review using other accounts to get it back on the shelves as soon as possible.

The collective removal of a large number of games naturally caused some turbulence in the revenue of Renren Games. However, objectively speaking, the account blocking incident was just a fuse. At that time, many problems that had been hidden deep in Renren Games began to gradually expose themselves.

From the end of 2012 to the beginning of 2013, although the revenue of games under Renren Games was relatively stable, several core products had only been launched in August and September 2011 and had experienced a glorious year throughout 2012, but their life cycle had come to an end. At the same time, there was a serious gap in product development within Renren Games.

While other game manufacturers began to develop native mobile games, Renren Games did not have any native mobile products to keep up. The main problem was the gap in technology. Due to the strong foundation of web gaming, the technical talents previously recruited by Renren Games were only good at using Flash for development. Although some people have begun to learn new technologies such as Cocos, this will inevitably take time, and it will be difficult to recruit suitable newcomers for the time being. Therefore, the development of native mobile games has to be delayed indefinitely.

The second is the discontinuation of product lines. At that time, Renren Games' several flagship products, led by "Chaos World", were all SLG-type in terms of gameplay. The huge revenue gave the leadership blind confidence, and the subsequent product plans were also copycat, all of which were SLG, RPG, fighting, cards and other emerging game types. No advance layout was made, which led to serious homogeneity of the subsequent product lines.

However, product discontinuation was only a superficial problem of Renren Games. According to the recollections of former Renren Games employees, the real internal problem of Renren Games at its peak was not the products, but the decisions on development direction and corporate structure. "In terms of development direction, perhaps because they were overwhelmed by high income, the leadership only focused on the present when making decisions and ignored the layout for the future. The most prominent example is that Renren Games completely ignored the Android market . At that time, the size of the Android market was only about a quarter of that of iOS, and it was troublesome to connect 20 or 30 channels. In contrast, it was easy to get high income just by relying on the iOS platform. In this way, Renren Games ignored the huge potential of the Android market and missed a key layout opportunity."

At the corporate structure level, the management at the time hoped to transform the company into one with professional managers + data model analysis as the core, carrying out factory-style assembly line production . Like Zynga, Renren Games, which also made its fortune through social games, also made the mistake of relying too much on data analysis . "The most terrifying thing about the management is 'Don't ask me, analyze the model first.' It feels like the management lives in its own world and completely ignores the development direction of the outside market." In addition, although Renren Games also made some arrangements at the time, such as online platforms, mini-game centers, etc., they all tried them out with a trial mentality and stopped at a low level. Many projects were cut short when they did not see results in a short period of time.

In addition, Renren Games also has serious problems in talent management and incentive mechanisms . Renren Games has a very strict performance system. The scores are divided into S, A, B, and C. The salary system is calculated on a quarterly basis. An S score is rewarded with one month's salary, and an A and B score are rewarded with half to a quarter of a month's salary respectively. If you get two C scores in a row, you will automatically resign. "We calculated in a meeting at that time that the turnover rate in two quarters was as high as 50%, and the executive positions could basically be replaced every two quarters."

Due to the continuous decline in product performance, Renren Games announced in May 2013 that it would be undergoing large-scale layoffs. Then, starting from June, employees continued to choose to resign voluntarily, from operations, R&D to senior management, and the early core team left one after another. Faced with the serious dilemma of talent loss, the management chose to recruit professional managers to solve the urgent problem, and the salaries offered to professional managers were even several times that of the company's old employees. However, professional managers often do not understand the gaming market, which not only further disrupts the company's decision-making direction but also intensifies employee dissatisfaction, creating a vicious cycle. After He Chuan, the original helmsman of Renren Games, announced his sick leave, there was no further news. Soon in November 2013, Renren Games laid off employees and the gaming business was taken over by the group's COO Liu Jian.

Since then, Renren Games has never launched any truly valuable new self-developed products. Its only mobile game product, "Renren Show Dance", was abandoned halfway because it missed the best opportunity and was forced to abandon due to pressure from competitors. In the first quarter of 2014, Renren Group's net gaming revenue was US$12.7 million, down 52.5% year-on-year. On November 19, 2014, after a year of silence, Renren Games simply cut all its R&D projects and announced its transformation to mobile game distribution. However, more than half a year has passed, and we have only heard news but not seen any products. The first quarter financial report this year showed that Renren Group's net game revenue further fell to US$5.5 million, a year-on-year decline of 56.5%.

Chen Yizhou is the reason for his success and failure

"Chen Yizhou is a good businessman, but he is not a good CEO. He lacks the spirit of sharing and is too calculating when encountering many things, which leads to things that could have been big being abandoned halfway." This is how a former employee of Renren Games commented on Chen Yizhou.

As the founder and leader of Renren Group, Chen Yizhou has a profound influence on the culture of Renren Games. Both internally and externally, Renren Games has always been closed, just like Chen Yizhou's personality. Internally, Chen Yizhou cherishes the shares he holds very much. From 2011 to 2013, the operating income of the gaming business accounted for 37.6%, 56.1% and 54.5% of Renren Group's total revenue respectively. However, when Renren Games was spun off from Renren Group in July 2012, the shares it received were pitifully small, less than one-tenth. As a result, the split became a blow to Renren Games. From senior executives to executive positions, this team that had made great contributions was inevitably discouraged.

As for the external side, Renren Games, which has refused joint operations since the era of web games, has missed many opportunities for further development and early layout in the era of mobile games.

Nowadays, successful game development companies usually set aside a portion of their funds to invest in game development teams. However, at that time, although Renren Games had a large amount of funds - according to insiders, during its peak period between 2011 and 2012, Renren Games had a monthly income of more than 60 million. After deducting 16 million in personnel expenses and 5 to 6 million in costs for brushing the rankings, its net profit for a single month was nearly 40 million - but its investment plan was blank.

Obviously, Chen Yizhou, who is nicknamed the "God of Stocks" and is keen on and good at secondary market investment, has little interest in primary market investment. In his opinion, game companies can only make more money by developing and publishing their own games.

As a result, the lack of sharing and cooperation spirit has caused fatal damage to the Renren Group. A former employee of Renren Games lamented: "Although we received compensation, none of the people who left Renren had anything good to say about it, and none of the partners wanted to work with us again. When Renren was rich, there were a lot of companies surrounding it, but are there still any now? When the tree falls, the monkeys scatter. To put it bluntly, they have completely isolated themselves, the management has isolated the employees within the company, and all the partners in the market."

In this way, Renren Games eventually became a lone boat in the vast ocean. In the ever-changing gaming circle, few people mention it and its former glory.

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