Text/Squidward Brother
Produced/Gyro Finance
Last week, a shutdown announcement caused some ripples in the recently quiet domestic digital and Tibetan circles.
On August 16, Tencent Magic Core issued an announcement stating that it will make business adjustments based on the company's consideration of focusing on its core strategy. From August 16, 2022, Magic Core will stop issuing digital collections. At the same time, all users who have purchased digital collections through its platform can choose to continue to hold or initiate a refund application.
Source: Phantom Core
The official customer service of Magic Core stated that before October 15 this year, you can apply for a refund, or you can choose to keep it for yourself, but it is not known whether the APP will be shut down in the future, and everything should be based on official information.
Magic Core is online, Tencent tests the water in the field of digital storage
On August 2, 2021, the "Phantom Core", known as the first NFT trading platform in China, was officially launched (later changed the word NFT to digital collection in October of the same year). This product belongs to the PCG business group under Tencent and is an innovative business of this department . In addition to independently issuing digital collections, the Magic Core platform also develops joint digital collections with museums, foundations, and artists.
The first digital collection launched at the beginning of the launch is based on the video talk show "Thirteen Invitations" owned by Tencent. It is called "Limited Edition Thirteen Invitations Vinyl Record NFT". It was sold out immediately.
Magic Core is based on its Zhixin Chain, which is a currency-free blockchain that meets regulatory requirements. It retains the characteristics of the blockchain that cannot be tampered with and traceable, and can ensure the authenticity and ownership of encrypted digital collections.
According to public information, Zhixinchain is a credible certificate storage blockchain platform jointly built by Tencent, China Net Security, and Feng Tiao Li Shun. The technical application scenarios cover copyright protection, judicial evidence on-chain, and data traceability.
Magic Core is Tencent's first attempt in the field of digital collections. For Tencent, which has long started research and development of blockchain technology and owns various blockchain intellectual property rights, the art collection market happens to be a highly feasible landing scenario. Magic Core emphasized at the beginning of its launch: when you buy digital collections, you don’t need to worry about storage, circulation, loss, theft, transportation, etc. You can easily and quickly purchase all kinds of digital collections, appreciate and manage these items that really belong to you , enjoy your digital rights.
From a logical point of view, Magic Core users only purchase collections and artworks from the platform one-way. Although the original content has been uploaded to the chain and the rights have been confirmed, there are no issues such as single circulation channels for these collections, opaque markets, and insufficient price discovery. The emergence of the blockchain has been essentially solved. Compared with the original chain circle, the advantage of Dachang Shuzang is that it can be purchased directly with legal currency, eliminating the complicated link of exchanging with encrypted assets.
Due to the blessing of Tencent's traffic and the leading quality of the collection, Magic Core was not hindered by the above-mentioned problems in the early days of its launch. Although the unit price of the collection is more than 100 yuan, almost all the collections released before May this year are sold in seconds. Since June this year, the pages of many collections on Magic Core are "closed" instead of "sold out". ", and the number of users participating in advance purchases has also dropped from 50,000 to 30,000. On July 8, the 10 works of the latest digital collection "Bed from Tosu" series released by Magic Core have not been sold out.
The cooling of the domestic data collection platform and the change in the direction of supervision have also laid the groundwork for the shutdown of Fannucleus.
The phantom core goes offline and becomes an abandoned child
There are already signs of the shutdown of the phantom core. On July 1 this year, Tencent News APP suspended the sales service of digital collections, and its "Digital Collections" section was also renamed "Digital Orders". At that time, some people suspected that the magic core was about to shut down, but the reply they got was "still in normal operation".
But one and a half months later, the magic core platform announced that it would stop the distribution of digital collections.
As an emerging business, Phantom Core’s revenue and importance are nothing to a company of Tencent’s size, but what is reflected behind the shutdown is Tencent’s judgment on the future direction of the core strategy.
For Tencent, supervision is like the sword of Damocles hanging above the phantom core. In March of this year, WeChat Envelope, its own platform, banned a large number of small programs and public accounts related to digital collections. spreading or engaging in related business activities”, and some platforms were banned due to suspected fraud.
Since digital collections naturally carry financial attributes, in order to prevent financial risks, many institutions have also issued relevant initiatives or regulatory measures since the beginning of this year, and digital collections have entered an era of strong supervision.
On April 13, the three major associations of the Securities Association of China, the China Internet Finance Association, and the China Banking Association jointly issued an initiative on "resolutely curbing the tendency of NFT financialization and securitization", advocating the adoption of self-regulatory organizations in the financial field rather than cultural organizations. Released as the main body, it can be seen that the financialization of NFT has a rising trend and has been paid attention by the regulatory authorities.
On June 30, under the leadership of the China Cultural Industry Association, nearly 30 institutions including Baidu, Tencent, Ant, and JD.com jointly launched the "Digital Collection Industry Self-Regulatory Development Initiative" in Beijing, opposing secondary transactions and hype, and raising access standards. The core consensus of high-quality development.
For Tencent, although the business scale of digital collections is not large, it has received a lot of social attention as a cutting-edge innovation field, and the development direction of digital collections is still vague. If there is a risk event in the industry due to supervision, it may have a greater impact on Tencent. The negative impact is not worth the candle.
If regulatory pressure is the main reason for the shutdown of Magic Core, then the financial report data for the new quarter may be the trigger for the decision to shut down.
Due to the absence of an open secondary market, it is difficult for the business model of digital collections to form a complete closed loop in a short period of time. After users purchase digital collections, the business chain is basically terminated, and the current limited application scenarios of digital collections are also one of the reasons for the lack of imagination in their business models. one. The unclear business model makes it difficult for Magic Core to contribute considerable revenue to Tencent.
According to the second quarter financial report disclosed by Tencent on the evening of August 17, Tencent’s revenue in the second quarter of 2022 fell by 3% year-on-year to RMB 134 billion. Profit fell 17% to 28.1 billion yuan, narrowing the decline for two consecutive quarters. In the first half of 2022, Tencent’s revenue was 269.5 billion yuan, a year-on-year decrease of 1%, and the profit attributable to non-IFRS company equity holders was RMB 53.7 billion, a year-on-year decrease of 20%.
Judging from the financial report data, Tencent needs to abolish product lines like Magic Core that cannot contribute revenue.
According to Jiemian News, the more direct reason for the abolition of the phantom core is Tencent's "cost reduction and efficiency increase". PCG has established a new GR (Gate Review) mechanism. After the project reaches a certain stage, if it fails to meet expectations, it will be shut down for adjustment.
Combined with the current general environment, "cost reduction and efficiency increase" will be the mainstream development trend of domestic Internet companies in the next few years. Tencent has laid off more than 5,000 employees so far. It was also reported that it canceled outsourcing free breakfast and dinner benefits, and the cafeteria no longer provides free lunch boxes and fruits.
Magic Core is not the only product that Tencent has shut down recently. In the past few months, Tencent has actually cut down 10 products. The 10 products are QQ Hall, Little Goose Pinpin, Sogou Maps, Penguin E-sports, VUE Vlog, Kandian Express, Sogou Search App, Tencent Kandian, and Pocket WeGame.
Some of these products have been in operation for more than ten years, while some have only been launched for a few months, but without exception, these products are currently not generating huge revenue.
The magic core is not as good as chicken ribs to Tencent. Shutting down the magic core will definitely do more good than harm for Tencent.
Where is the road to Tibet in China
As the magic core of the first echelon of domestic Shuizang platforms, its suspension will have an impact on domestic Shuzang platforms.
At present, there are three main types of popular digital collection platforms in China. One is the digital collection platforms launched by Internet giants, such as Tencent’s Magic Core and Ant’s Whale Explorer. , Weiyi Art, Huanzang, HOTDOG, etc.; the third is some small and medium digital collection platforms.
After the sale of Magic Core is discontinued, will other platforms follow suit? In fact, some small and medium-sized digital collection platforms have also successively shut down their businesses or closed the secondary market.
In June, Yuzang, a digital collection platform under the listed company Hang Seng Electronics, announced that it would shut down its business and return it in the form of "original price repurchase". The announcement mentioned that "at present, there are no clear laws, regulations and policy documents related to digital collections in China, and digital collections, as an emerging field, still have certain uncertainties and risks."
In July, Cyber Art Platform and Junwang Shuzang successively stated that they were notified by relevant government departments to close the secondary market and only enable the transfer function, and reopen the trading market after reviewing compliance. The Jiayi Yuanyi platform stated that due to the notice of the Shandong Provincial (Supervision) Bureau, due to the relevant policies issued by the relevant state departments on data collection and the requirements for application qualification review, the market will be temporarily closed.
Under the premise of uncertainty in the industry, after the suspension of Magic Core, it is not ruled out that other digital collection platforms will follow up and stop selling.
Focusing on the future, the number of digital collection platforms will inevitably decline, but this is not directly caused by the shutdown of Magic Core, but an inevitable trend of industry development. The market does not need hundreds or even thousands of digital collection platforms. In the absence of a substantial increase in the number of users, it is unnecessary for so many platforms to coexist at present.
For domestic digital platforms, IP resources are the core competitive factor. Platforms lacking high-quality IP will be abandoned by users first, and then eliminated by the market. In the end, only dozens or even a few platforms will remain in the entire market.
At present, the domestic digital collection industry is still in a chaotic stage, and the closure of Magic Core has sounded the alarm for other platforms: how to achieve standardized and differentiated development as soon as possible, and explore a sustainable path without relying on secondary trading hype. developmental compliance path.
It is foreseeable that the closure of Magic Core has brought an inflection point to the development of domestic data storage platforms. Whether to embrace change or remain lonely since then, this is probably an issue that needs to be clarified urgently for the existing domestic storage platforms.
References
Magic Core shut down, the turning point of the digital collection industry is approaching
The phantom core has been withdrawn, and the big factories have left. Is there a future for the unaccustomed digital collection?
What happened to Tencent? Net profit fell by 56%, layoffs of 5,500 people, and cut 10 products
Tencent tested the "NFT" trading platform, and "Thirteen Invitations" became the first IP
Gyro Finance Contact Information
Business Cooperation|Contribution:
Xiao Huang (WeChat ID 18925291949)
Mango (WeChat ID 19925139144)
Ning (WeChat ID 13631579042)
recommended reading
