CMGE executives involved in corruption detained, the gaming industry takes further steps to cleanse itself

The game anti-corruption continues unabated.

On July 30, an internal anti-corruption notice from CMGE shook the gaming circle, revealing that Jiang Haitao, the former general manager of the company's Manta Star Studio, has been criminally detained by public security authorities for suspected serious job-related crimes.

Jiang Haitao joined Giant Network in 2008 and served as the chief planner for the "Xianxia World" series of PC games and the producer of the mobile game "Dragon Ball: The Strongest Battle." After taking charge of Manta Star Studio, he led the team to develop the "Xianjian World" project, with a cumulative investment of over 300 million yuan in research and development.

In February this year, "Xianjian World" launched on PC and mobile platforms with a "384 square kilometer seamless large map," and initially topped the iOS free chart, seemingly poised to become CMGE's self-developed turnaround work.

However, just one weekend later, the game plummeted from the top of the free chart to 36th place.

On the TapTap platform, the rating of "Xianjian World" also dropped from 5.90 on the first day of launch to 5.20, lower than "Nishuihan" at 7.30 and "Yanyun Sixteen Sounds" at 7.20.

Many players commented: severe frame drops throughout, rough graphics performance, and perfunctory content design.

"From the gameplay perspective, 'Xianjian World' has shortcomings such as simple assembly and lack of depth in its open world and spirit summoning system, which leads to the actual product performance not meeting players' expectations for the Xianjian IP," pointed out DataEye Research Institute in its analysis report.

The major project with an investment of 300 million yuan in R&D generated only 1.25 million yuan in revenue in its first week. CMGE also admitted that "Xianjian World" has several significant flaws, with severe user loss in the early stages of the game, greatly affecting its market performance, and the first month's revenue did not meet expectations.

The once beloved "Xianjian" IP is being rapidly depleted of its emotional value and commercial potential.

As the game's reputation collapsed, the official "Xianjian World" team stated that, based on long-term project development considerations, they optimized and adjusted certain R&D functions and modules to improve resource allocation.

Subsequently, an anonymous report circulated online, accusing Jiang of abusing his project approval and management powers during his tenure, manipulating outsourcing, fabricating service contracts, and transferring funds to his affiliated companies, as well as accepting kickbacks and issuing false invoices, suspected of job embezzlement and commercial bribery.

Following the release of CMGE's anti-corruption notice, the capital market reacted swiftly.

As of the close on July 31, CMGE's stock price plummeted by 5.56%, closing at HKD 0.510 per share, with a total market value of only HKD 1.528 billion, a decline of over 30% since the beginning of the year.

This incident occurred at CMGE's most vulnerable moment. In 2024, the company is expected to report its largest loss since going public, with a net loss of up to 2.08 billion yuan.

Recently, CMGE announced that it will accelerate the RWA plan for the "Xianjian Qixia Chuan" IP to explore new infinite vitality and commercial potential for the IP. In addition, its wholly-owned subsidiary SuperNova has signed a memorandum of cooperation with one of the first issuers in Hong Kong's Financial Management Authority's stablecoin sandbox pilot, and the two parties will conduct integration testing for stablecoin payments, aiming to seize the market opportunity brought by the new stablecoin regulatory rules that will take effect on August 1 Recently, the gaming industry is undergoing a wave of "bone scraping and detoxification."

On July 1st, Perfect World publicly blacklisted several problematic outsourcing companies and dealt with executives, involving a total of 8 personnel from the three major studios: Million, Qingyun, and Hardcore.

Almost simultaneously, Bilibili reported that Zhang Moumin, the former general manager of the game cooperation department, was legally arrested for suspected serious job-related crimes.

It is worth noting that due to the strong cyclical characteristics of gaming industry projects, companies often rely heavily on outsourcing models to control labor costs and disperse R&D pressure. The outsourcing costs for art, special effects, and other aspects often account for 30%-50% of total R&D expenditures, providing space for managers to inflate contract amounts through related transactions by abusing their power