Following Black Myth: Wukong, another domestically developed AAA game is now facing market scrutiny.
On October 29, the wuxia action game Phantom Blade Zero, developed by S-GAME, was officially released, topping Steam's global bestseller list on its first day. As of 11 PM that evening, peak concurrent players reached approximately 720,000.
According to estimates from third-party market analysis firm Alinea Analytics, as of October 28, cumulative pre-orders across Steam and PS5 platforms totaled approximately 850,000 units, generating pre-order revenue of about $43 million, equivalent to roughly 287 million yuan.
Two years ago, Black Myth: Wukong set a sales record for domestic premium games. Now, the market performance of Phantom Blade Zero has brought renewed attention to Tencent (00700), the common investor behind both titles.
As early as 2021, Tencent (00700) invested in both Game Science and S-GAME. At the time, domestic AAA games had yet to produce a fully commercially validated success story.
S-GAME's commercialization track record dates back more than a decade.
In 2011, founder and CEO Liang Qiwei established the company, starting with the Rain Blood indie game series. In 2014, the company launched the mobile game Phantom Blade, published by NetEase, beginning to generate scale revenue in the mobile gaming market.
Subsequently, the company released Phantom Blade 2 and Phantom Blade 3. Liang Qiwei previously disclosed that the original Phantom Blade peaked at over 40 million yuan in monthly revenue, while Phantom Blade 3, launched in 2021, peaked at over 100 million yuan in monthly revenue, with a combined R&D and operations team of fewer than 30 people.
Mobile game revenue accumulated the funds for S-GAME to develop large-scale games, while external capital further supported its expanded R&D investment.
S-GAME received early investment from institutions including ZhenFund and NetEase Capital. In 2021, Liang Qiwei disclosed that the founding team bought back shares held by some early investors, then brought in Tencent (00700).
On September 30 of that year, S-GAME announced the completion of a strategic financing round worth several hundred million yuan from Tencent (00700), while also unveiling two large-scale projects for PC and console platforms: Phantom Blade Zero and the sci-fi title Starguard.
A year earlier, Black Myth: Wukong released its first gameplay demo video, drawing widespread attention. In March 2021, Tencent (00700) invested in Game Science, acquiring a 5% stake; in August of the same year, Black Myth released another Unreal Engine 5 gameplay demo.
By the time Tencent's (00700) investment was finalized, domestic premium games such as Tale of Immortal and Dyson Sphere Program had already achieved million-unit sales, and Naraka: Bladepoint had found commercial success in the PC market. However, large single-player AAA titles requiring hundreds of millions of yuan in investment still lacked a mature commercial reference point.
In a pre-launch retrospective, Liang Qiwei revealed that the company subsequently cut other projects in development and concentrated R&D resources on Phantom Blade Zero, with total project R&D costs reaching approximately 300 to 400 million yuan.
Large single-player titles typically require several years of development before recouping investment after official release.
High development costs also make AAA game financing more dependent on investors with financial strength and industry resources.
S-GAME received several million yuan in angel investment from ZhenFund in 2011, millions of dollars in Series A funding from NetEase Capital in 2013, and brought in equity investment from Yan'an Haoyu in 2018. The latter has capital ties to Hero Entertainment.
NetEase and Hero Entertainment also successively published Phantom Blade series mobile games. Around 2021, NetEase and some early investors exited, the founding team bought back relevant shares, and Tencent (00700) subsequently took a stake.
Currently, Liang Qiwei directly holds approximately 36.09% of S-GAME, Tianjin Aisi Software Development Partnership holds about 35.19%, and Tencent's (00700) subsidiary Guangxi Tencent Venture Capital holds approximately 26.34%.
Liang Qiwei previously stated that Tencent's (00700) investment was premised on non-interference in operations, no binding product cooperation, and no impact on creative work.
A similar capital relationship appears with Game Science. At the end of April this year, Game Science completed business registration changes, with Hero Games' affiliate exiting, and Tencent's (00700) stake increased from 5% to 24%, becoming the sole external shareholder.
However, Black Myth's commercial success has not yet driven capital to flood into domestic AAA games comprehensively. New industry funding still mainly comes from industrial capital such as Tencent (00700), overseas platform-type investors, and some local funds, while most traditional VC/PE institutions remain cautious.
According to data from the Game Publishing Committee of the China Audio-video and Digital Publishing Association, in the first half of this year, domestic console game market revenue reached 961 million yuan, down 7% year-on-year. After Black Myth's popularity faded, new supply has yet to fully follow.
Nevertheless, major gaming companies continue to position themselves in this market through internal R&D and external investment.
In June 2025, NetEase's 24 Entertainment Lin'an studio announced the premium single-player game Guitang. Set against the backdrop of late Tang Dynasty Dunhuang history, the game is planned for PC and console platforms with a global release. In June of this year, Guitang unveiled a new story trailer at Summer Game Fest.
Meanwhile, Game Science has announced Black Myth: Zhong Kui, extending from Journey to the West themes to Chinese folk mythology, continuing to develop large-scale action RPG titles.
From external equity investment to internal R&D, domestic AAA games have formed multiple capital investment pathways.
But with costs in the hundreds of millions of yuan and development cycles spanning years, whether a single title's success can translate into a studio's sustained development capability still requires more titles to verify.
Comments