Luckin Coffee collaborates, Hbmc hits limit up: "Black Myth: Wukong" enjoys a surge in traffic

Before the official launch, the high popularity of "Black Myth: Wukong" (hereinafter referred to as "Black Myth") is making various capital parties unable to hold back.

On August 19th, Luckin Coffee (LKNCY.PINK) officially launched the co-branded drink "Tengyun Americano" with "Black Myth", priced at 11.02 yuan per cup after coupon.

This is the first time that Luckin, who is keen on maintaining brand popularity through co-branding, has cooperated with a game IP.

Previously, Luckin's only collaboration with the gaming industry was in 2022 when they collaborated with the EDG esports club and opened a co-branded themed store at the TPY Center in Xuhui District, Shanghai.

According to incomplete statistics from Feng (ID: TradeWind01), among Luckin's more than 20 co-branding activities last year, they can be roughly divided into four categories.

The first category is collaborations with animated IPs such as Doraemon, "Biao Ren", TOM&Jerry, etc.;

The second category is collaborations with well-known KOLs such as Han Meilin, Feng Tang, Luo Xiang, etc.;

The third category is collaborations with consumer brands such as Victoria's Secret, Maotai, etc.;

The fourth category is collaborations with offline events or variety shows such as Gulangyu Music Festival, "This! Is Street Dance 6", etc.

In terms of co-branding effects, the most impactful collaboration for Luckin last year was the sauce-flavored latte product in collaboration with Maotai, which sold 5.46 million cups on the first day and still holds the record for new product sales at Luckin, becoming a permanent menu item since then.

However, there has not been any game IP in the above four categories.

In August last year, Luckin's old rival COFFii & JOY Coffee teamed up with Honor of Kings to launch four limited edition drinks.

Feng (ID: TradeWind01) inquired with relevant personnel at Luckin Coffee about the duration of the cooperation with "Black Myth" and other questions, but the other party stated that they are not clear for the time being.

Who is Benefiting

Not only Luckin, but the developer of "Black Myth" Shenzhen Game Science Interactive Technology Co., Ltd. (referred to as "Game Science") has already taken many IP monetization actions.

In April of this year, Hisense Visual Technology (600060.SH) reached an official global partnership with "Black Myth". The two will collaborate on Hisense U8, E8, U7, E7 series TVs, as well as Hisense monitor 27G7K Pro for technical cooperation.

In August, third-party game controller manufacturer 8BitDo officially became the global partner of "Black Myth" and launched a co-branded controller on JD.com on August 18th. Currently, the wired version of this product is out of stock.

The hot sales of co-branded products have driven the strong performance of 8BitDo's supplier ZhiShang Technology (301486.SZ) in the stock market recently.

From August 13th to 16th, ZhiShang Technology rose for four consecutive trading days, with an increase of 14.45%.

Feng (ID: TradeWind01) learned from an analyst at a brokerage firm in East China that in Game Science's long-term plan, "Black Myth" will be a series of IPs.

The person expects that in the future, Game Science will have more actions in developing IPs, as "Black Myth" has been selling limited edition physical figurines since its initial release.

Another company that is being hotly traded in the secondary market is Zhejiang Publishing Media (601921.SH), the publishing review company of "Black Myth". Its stock price has risen by more than 20% since the beginning of this yearZhejiang Publishing Media is only involved as a publisher and will not participate in the subsequent game sales.

From the shareholder structure perspective, Shenzhen Game Science Interactive Technology Co., Ltd. (referred to as "Game Science") is the developer and producer of "Black Myth".

Currently, the founder Feng Ji holds 44.1% of Game Science's shares, making him the actual controller of the company.

The only two external shareholders, Hero Entertainment and Tencent, are both game developers themselves.

In the angel round of financing, Hero Entertainment, through its wholly-owned subsidiary, holds 19% of the shares; Tencent holds 5% through its venture capital platform Guangxi Tencent Entrepreneurship Investment Co., Ltd.

However, there were reports earlier that Hero Entertainment had sold its equity in Game Science in 2022 for a transfer price of 480 million yuan.

Of this amount, 280 million yuan was received and completed delivery in the same year, while the remaining 200 million yuan will be paid no later than April 1, 2025. Hero Entertainment did not disclose the counterparty of the transaction.

This means that if the above transaction is completed, Huayi Brothers (300027.SZ), which currently holds 5.17% of Hero Entertainment, may have lost its status as a "Black Myth concept stock".

However, according to Tianyancha information, there has been no change in the equity structure of Game Science, and no records of equity delivery have been found. Currently, on Hero Entertainment's official website, Game Science is still presented as one of its classic investment cases.

This doubt does not seem to affect the enthusiasm of the secondary market.

On August 19, Huayi Brothers hit the daily limit up, closing up 19.9% at 2.47 yuan per share.

Prospects

As China's first truly AAA blockbuster, "Black Myth" is highly anticipated because it is seen as the lone AAA title in the domestic game industry.

Generally speaking, "AAA games" refer to high-cost and high-quality games.

Due to the relatively late start of China's game industry development, the early game market was mainly dominated by web games and mobile games, with lower development costs and technical requirements compared to AAA games.

Former Sony Interactive Entertainment CEO Shawn Layden publicly stated that the production cost of AAA games in 2020 reached as high as 80 to 150 million US dollars, with a production time of about 5 years.

"Black Myth" not only carries the expectations of domestic gamers for domestic AAA blockbusters but also influences the direction of investment in the domestic game industry.

Starting in 2017, "Black Myth" released a gameplay demo video in August 2020. Based on this, its development cycle is estimated to be 4-7 years.

Feng Ji publicly stated that the development cost per hour of player experience for "Black Myth" is about 15 to 20 million yuan.

The team estimates that the overall game duration will exceed 15 hours, and the actual development time is more than 1.5 times this duration.

Based on this calculation, the development investment of "Black Myth" is estimated to be between 338 million yuan and 450 million yuan.

In terms of distribution, the platforms where "Black Myth" is first launched include PC platforms such as Steam, Wgame, Epic Games, and console platforms such as PlayStation.

The revenue sharing ratios for the above four platforms are 20%, 30%, 12%, and 30% respectivelyAs of July 19th, the pre-sale sales of "Black Myth: Wukong" have reached 1.2 million copies, with pre-sale revenue of nearly 400 million.

Excluding channel costs and promotional expenses, it has basically covered the R&D expenses, but there is still a considerable distance from breaking even.

According to calculations obtained by Feng (ID: TradeWind01) from another media analyst at a securities firm in East China, "Black Myth: Wukong" needs to sell 4 million copies to break even.

The individual believes that if the total sales of "Black Myth: Wukong" in the first week (including pre-sales) can reach 4 million copies, it has the opportunity to challenge the highest global sales of AAA games, such as "Cyberpunk 2077" with a total sales of 19.9 million copies on the Steam platform, and "Red Dead Redemption 2" with 18.1 million copies.

Based on the reviews from domestic and foreign media, opinions on "Black Myth: Wukong" vary.

IGN China gave it a perfect score of 10, while 54 review agencies on the globally renowned rating website Metacritic gave it a score of 82 out of 100.

For comparison, "Cyberpunk 2077" and "The Elden Ring" received average scores of 91 and 97 respectively on Metacritic