The free-to-play model has proven to be a goldmine for some developers. One such success story is the Chinese game studio Mihoyo, whose profitability has surpassed industry giants like Activision Blizzard and Sony’s Playstation.
According to a report by the Malaysian newspaper Guangming Daily, Mihoyo, which distributes its games internationally through its subsidiary Cognosphere or Hoyoverse, generated a revenue of 27.3 billion Yuan in 2022. This translates to nearly $3.84 billion USD. The profit stood at a staggering 16.1 billion Yuan, equivalent to over $2.27 billion.
To put this into perspective, Activision Blizzard reported a profit of around 1.5 billion USD on revenue of 7.52 billion for the fiscal year 2022. Sony’s entire gaming division, including Playstation, made a profit of 270 billion Yen, or 1.85 billion USD, in 2022.
A significant portion of Hoyoverse’s revenue comes from mobile versions of their games. Data from Statista shows that the company made $715 million US dollars from in-app purchases in the first half of 2023 alone.
For a long time, the primary source of Hoyoverse’s income was the free-to-play role-playing game Genshin Impact. According to Sensor Tower, the game reached a revenue milestone of $3 billion in 2022. Despite recording its lowest monthly revenue since its launch in 2020 in May 2023, the game still brought in $53 million.
However, Hoyoverse’s new game, Honkai Star Rail, is now generating more international revenue.
Genshin Impact is a gacha game, where rewards are distributed randomly. Upon its release, many warned about its gambling-like mechanisms. Some Genshin Impact streamers reportedly spent five-figure sums on in-game content.
The success of Mihoyo and its games like Genshin Impact and Honkai Star Rail underscores the potential of the free-to-play model in the gaming industry. It also raises questions about the sustainability of such models and the ethical implications of their monetization strategies.