Recently, the concept of "millet economy" has taken center stage in discussions about the evolving landscape of the entertainment sector, particularly in the gaming industryAs the capital market experiences volatility, the phenomenon has sparked considerable interest, making it a hot topic among scholars, journalists, and industry analysts alikeThis has led to a closer examination of how “millet economy” pertains specifically to the booming sector of ACG (Anime, Comic, Game) within the broader context of China's cultural economy.

One notable aspect of these discussions is the acknowledgment that China's millet economy is still in its infancyExperts have pointed out that despite the hype surrounding this concept, there are very few leading enterprises firmly establishing their presence in the marketIn fact, some analysts have suggested that the fluctuations in the capital market often do not align well with the actual performance metrics of companies that are claiming to thrive in this new economic landscape.

In exploring the gaming industry, we traditionally focused our research on how intellectual property (IP) can translate into viable merchandise and experiences in the offline world

Presently, the evolving concept of millet economy holds potential value for gaming companies, but the market does not exhibit the same rapacious appetite that often characterizes speculative investmentsThe primary role of companies in the gaming sector should not be merely capitalizing on current trends; instead, a sustainable nurturing of intellectual properties remains paramount for the future.

The financial comparison of income generation underscores significant discrepancies in perception versus realityData from iiMedia suggests that in 2023, the market for ACG and related sub-markets in China is estimated to reach 221.9 billion yuanAmong these figures, ancillary and derivative markets alone account for 102.4 billion yuanThis shift indicates that the demand for ACG products has evolved from a solely content-driven paradigm into a dual demand outlet fueled by both original content and its derivative potential

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Forecasts project that by 2029, the ACG industry may expand to a staggering 590 billion yuan, boasting a compound annual growth rate of 18%. Currently, the user base for “pan-ACG” in China has surpassed 500 million, illustrating the scale and potential profitability of the market.

This burgeoning market, valued in the hundreds of billions, seems to be a treasure trove ripe for explorationAccording to Gamma Data's reports, by 2023, the market for gaming IP-related merchandise soared to over 4.06 billion yuan, realizing an impressive compound annual growth rate of 17% from 2019 to 2023. Even during the downturn of 2022 when the gaming industry faced overall negative growth, the sub-market for IP merchandise did not falter and maintained its upward trajectory.

Recent surveys indicate that more than half of the top mobile game releases from 2019 to 2023 launched some form of IP-driven merchandise, demonstrating an increasing commitment to this sector by key players

For instance, Tmall reported that during the Double Eleven shopping festival, miHoYo's flagship store doubled its transaction volume in just the first hour compared to last yearThe store not only became the first toy brand to break one hundred million yuan in sales during the event, but it also claimed top spots in two significant sales rankings regarding trendy toys.

However, it's crucial to note that even leading IP derivative products yield revenue far below the main revenue stream generated by the core games themselvesThese figures, often in the range of tens of millions to several billion yuan, highlight a significant gap between revenue generation from games versus from merchandise.

Consequently, the trend indicates that gaming IP merchandise remains a complementary option rather than the main strategyThis is primarily because game developers possess strong monetization capabilities inherently superior to those of other traditional IP creators in sectors like animation and film

While engaging with the millet economy, gaming companies generate income through interactive gaming while simultaneously cultivating rich intellectual properties.

This consumer-focused strategy influences how gaming companies perceive and harness the millet economy, which might differ significantly from outside interpretationsWhether companies opt to develop in-house merchandise or collaborate extensively, exposure through physical, offline environments greatly enhances the value of their brandsRather than focusing on how much revenue merchandise generates, companies are more invested in how these efforts feed back into their core revenue streams from gamesThis crucially shapes market dynamics, pointing to a more integrated approach to how businesses view brand visibility.

Moreover, successful gaming IP is often developed through enduring and high-revenue games; thus, there's a marked disparity between the revenue generation potential of established gaming IP and that from lesser-known properties

Those with lower name recognition typically see less positive results in merchandise development.

In light of significant competition and the pressing necessity for long-term sustainability, these are the strongest motivations driving gaming companies to delve deeper into the IP merchandise sectorThe need to adapt quickly to the realities of market pressures and changing user behaviors compels companies to innovate.

As we've discussed in past analyses, it is essential to keep in mind that gaming IP merchandise and related merchandise sales have been long-standing topics in industry discussionsWith intense competition racing forward, there’s a pressing need for increased agility among companies to keep up with market demands and consumer trends.

Given the robust monetization capabilities inherent to games, these derivatives serve the purpose of building brand value rather than purely focusing on financial returns

Top enterprises in the field have frequently accepted short-term losses as a trade-off for long-term branding gainsParticularly in niches such as trendy toys, merchandise serves as a pivotal wallet share touchpoint, enhancing the tangible connection between consumers and the respective IPs they love.

Engaging with younger audiences and obtaining real-time feedback on their preferences also plays a significant role, as shared insights lead to more effective and targeted product developmentsResearch has shown that 77% of participants felt an increased trust towards a brand post-participation in offline activities, indicating that these physical interactions create an emotional connection critical to evolving brand relationships with consumers.

Furthermore, strengthening brand visibility through offline events can dramatically shift consumer perceptionsRelevant studies highlight that participants exhibit a spending propensity that exceeds marketing expectations by 23%. This gap emphasizes the significant impact of personal experience on purchasing decisions.

The concept of millet economy embodies the evolving consumer preferences of younger demographics, ushering in a paradigm shift for how IP-related products are developed

The response is less about monetary input from gaming revenues, and more about achieving a sustainable operational methodology that creates effective offline monetization strategies.

As competitive pressures continue to mount, particularly as user payment tendencies change and the desire for less intensive gameplay experiences becomes prevalent, there are escalating demands for innovation from developersThe second-tier ACG market specifically is facing severe hardships as competition intensifies.

Overall, the downturn in original gaming revenues has pushed companies to elevate their IP merchandise efforts, seeking to use offline environmental branding exposure to solidify long-term revenue growth online while simultaneously enhancing the IP’s inherent value for future game developments.

From recent enterprise surveys, the objectives of “improving fan engagement” and “enhancing IP recognition” account for nearly 80% of corporate goals within the industry