Video Game Empire

Just when the Oriental Research Institute set off a frenzy in the Hong Kong capital market, the listing of the Oriental Game Company on the New York Stock Exchange also caused a huge sensation.

For the overall valuation of Dongfang Game Company, Li Xuan and Goldman Sachs finally negotiated a price of 27.5 billion US dollars, which is slightly lower than that of Dongfang Research Institute. Judging from the annual pre-tax profits of the two companies, the Oriental Research Institute is as high as US$3.27 billion, which is US$1.4 billion higher than the US$1.865 billion of Oriental Games.

However, in addition to the impact of data such as revenue levels and profitability, the company's valuation is also constrained by many other aspects. For example, the valuation level of the Oriental Research Institute is obviously low, which is limited by the overall size of the Hong Kong securities market, and is also due to the wishes of Li Xuan, the absolute controlling shareholder.

Even so, the market value of a company in the Oriental Research Institute already accounts for one-fifth of the total market value of all listed companies on the Stock Exchange. If the proportion of Oriental Research Institute continues to increase, the Hang Seng stock index, which reflects the ups and downs of the Hong Kong stock market, does not need to continue to count.

And Li Xuan himself does not want the valuation of the Oriental Research Institute to be too high. The reason why most newly listed companies hope that the initial valuation is as high as possible is because they hope to raise enough money for the company at one time through listing financing. developed so far. The Oriental Research Institute itself is not short of money, and the high valuation will only bring higher pressure on operating performance, but the gains outweigh the losses!

After all, after the Oriental Research Institute went public, it changed from a private company decided by Li Xuan to a public company. Although Li Xuan is still the major shareholder with an absolute controlling position in the company, he cannot completely ignore the voices of other minority shareholders.

The situation of Dongfang Game Company is different from that of Dongfang Research Institute. Although the company itself is not short of money, Li Xuan, the major shareholder, is very short of money. He had previously acquired Hilson-Lehman from Amex, but he was suddenly burdened with a huge debt of up to 8 billion US dollars. This time, he was trying to use the IPO of Dongfang Game Company to cash out part of the equity to repay the debt.

In fact, it can be seen from this point that the status of the Oriental Research Institute and the Oriental Game Company in Li Xuan's heart is still different. Even if Li Xuan is short of money, he is not willing to raise funds by reducing his shares in the Oriental Research Institute.

The Dongfang Game Company is different. Its biggest mission at the beginning was to act as a cash cow to provide sufficient funds for the rapid expansion of the Dongfang Group. After more than ten years of development, Dongfang Group has passed the initial period of thirst for funds, and it no longer needs Dongfang Game Company to continue to provide huge cash flow.

However, the role of Dongfang Game Company in Li Xuan's eyes has not changed, and it is still responsible for providing him with funds. It's just that this time it is no longer through the way of enterprise management, but through the way of equity flow.

Therefore, Li Xuan naturally wants to blow up the valuation of Dongfang Game Company as much as possible, so as to exchange enough funds with the least equity. In fact, if you only look at the profitability of Dongfang Game Company, it is not too difficult to support a valuation of 27.5 billion US dollars. But the weakness of Dongfang Games is that it is a typical asset-light enterprise, and its core asset is the copyright of the best-selling games.

But the game market is actually a very competitive industry, and no one can guarantee that the next game they develop will be sought after by players. If Dongfang Game Company's main products in a row are not popular, then its current status as the world's largest game manufacturer will be shaken immediately.

In contrast, the Oriental Research Institute, which is also an asset-light enterprise, has to face far fewer challenges. Its core business, the ERM processor, has actually completely monopolized the entire personal processor market, and it is impossible for any competitor to threaten it in the short term.

Other fields such as liquid crystal technology and mobile communication technology also have high capital and technical thresholds. In addition, the Oriental Research Institute, a pioneer, continues to use technology patents to set up more and more barriers to make other competitors want to The difficulty of following up is also increasing.

But the game industry is a creative industry. It is not impossible for a garage company with only a few employees to develop a game that sells millions of copies with a good idea.

Therefore, if Dongfang Game Company wants to improve its overall valuation, the most important job is to eliminate investors' concerns about the uncertainty of the company's future development!

Throughout the 1980s, the three main businesses of Dongfang Game Company were arcade machines, handheld game consoles and home video game consoles.

Among them, the arcade business was the most important source of profit for Dongfang Game Company in the early stage. However, with the reform of the retail mode of the largest export market in the United States, a large number of community laundries and grocery stores that can provide terminal operating places for arcade machines have disappeared one after another. Sales have shrunk sharply.

Although Dongfang Game Company is also actively exploring new terminal sales venues such as movie theaters and supermarkets in the United States, as well as entering emerging markets such as South America, Asia, Africa and Eastern Europe, the annual revenue of its arcade business is lower than 80%. At its peak in the mid-1990s, it was still down by a quarter, while pretax profits were down by a third.

The rapid growth of revenue and profit of Dongfang Game Company in recent years is actually mainly due to the rapid growth of sales of Game-Boy series handheld game consoles and FC series home video game consoles in the world.

However, whether it is in the field of home consoles or handheld consoles, after nearly ten years of expansion, Dongfang Games has not only occupied a dominant position in the global market, but has also established a complete set of game access and distribution systems, making it difficult to invest any more Bring a breakthrough sense of surprise! Therefore, Dongfang Game Company needs to enter a new blue ocean - the computer game market, in order to provide investors with sufficient imagination space for the future.

After nearly 15 years of rapid development in the global computer industry, both in terms of performance and overall ownership, it has provided sufficient support for the rise of computer games. And Dongfang Games has a very good layout in this field. As early as five years ago, it established itself as a high-end manufacturer in the computer game market with a sensational "The Lord of the Rings~www.readwn.com~" status.

What Dongfang Game Company is best at doing is to promote a game on all platforms in order to maximize profits. For example, the early "Pokemon" was originally a handheld game, but it also achieved good sales in the home and computer software markets.

The "Lord of the Rings" series is no exception. One year after the release of the PC version of "The Lord of the Rings 1", with the overall improvement of the configuration level of the new generation of FC home game consoles, the "Lord of the Rings" series also began to enter the home TV game market.

Therefore, Dongfang Games wants to make investors fully realize that the computer game market is a new market segment full of potential, and it also needs a new game that can fully demonstrate the uniqueness of the computer platform!

Just three months before the IPO of Dongfang Game Company, a brand new series of games quickly swept the American game market. It not only announced the arrival of a new era of computer games, but also opened a new wave of American network technology!

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