In case you aren’t tuned into the gacha world, I believe HoYoverse, the makers of Genshin Impact and Honkai Star Rail, have tapped into two very lucrative markets. I’ll explain exactly what I mean by that later on, but I was sucked into thinking about their business model after hearing a true fact that blew my mind: HoYoverse outdid PlayStation in terms of profits. HoYoverse's profit of $2.27 billion in 2022 was significantly higher than PlayStation's profit of $1.84 billion in the same year. This is despite the fact that PlayStation's revenue was much higher than HoYoverse's, at $30.6 billion. When you think about their different business models you can see how this would be possible. PlayStation’s focus on hardware and game publishing takes a lot more investment money than HoYoverse crafting a couple games that contain in-app purchases. Still, I would have thought the vast popularity of PlayStation would have made it the more profitable contender. However that’s not the case, and I think the two markets that HoYoverse targets explain how they are able to make so much money.
I believe these groups to be people with very little money to spend on big games, and second, people with way too much money to spend on big games. Growing up I was in the first group. I played almost exclusively free MMOs without subscriptions because asking my parents for money wasn’t gonna fly. Toontown Online was the only game I ever got their money for and that’s because it was clearly family friendly. That left me with just asking for those “Ultimate Game Cards” for my birthday where essentially they were normal MMO game gift cards, but they could be used on a wide variety of online games. $10 here, $15 there. It was a lot easier to ask for those than a full blown $60 AAA title. Since HoYoverse games are free and run on almost fucking anything (I play Genshin and Star Rail on a 2014 graphics card), the barrier to entry is practically nonexistent. Anyone can hop in, have fun, find a character they want, and spend a few bucks on some wishes or bonus items. Secondly, they find whales. AKA, people who want to (for some god forsaken reason) collect everything in the damn game, and thus spend thousands of dollars for no real reason besides wanting to kill a boss in 30 seconds instead of 45. Between the huge amount of regular folks in the Chinese and worldwide markets spending a few bucks here and there and the psychotic whales of the world with too much money, HoYoverse has clearly found a way to maximize the profit potential of the gacha system.
Oh, and the constant stream of sexy fanart probably helps.
Some people might think this is going to start a gacha revolution, but I personally disagree. A ton of gacha games have already tried to crop up, but most fail in months. While HoYoverse develops gacha games, these are games with incredibly addicting gameplay, engaging stories, polished graphics, and interesting character designs. Oh, and who can forget the endless amount of content in each game thanks to events and updates? It takes a ton of work to craft a game in their style, and most gachas don’t have the startup power to be competitive. They show up, make a buzz, and then die out. Anyone remember the Tower of Fantasy hype?
This bad boy was everywhere... for a month.
Love them or hate them, HoYoverse has cemented their place in the gaming space and I don’t expect any developer to be able to steal their niche away in the near future. With profits like those I don’t expect us to see any slowdown either. In fact, they’re probably prepping for Zenless Zone Zero as fast as they can code. Were you shocked that this company made more than PlayStation in 2022? Has HoYoverse refined the gacha system? Have you tried any of their games, or just seen the lewd fanart? Travel the world, trailblaze the galaxy, and share your thoughts in the comments below, no gacha required!
