CMGE has reported its poorest financial performance to date, with revenue declining 28% year-on-year to 1.39 billion yuan, marking a seven-year low since its listing. The adjusted net loss reached 1.471 billion yuan, with the loss amount still exceeding total revenue. Concurrently, CMGE's share price hit a record low, falling 6.41% during trading to 0.219 Hong Kong dollars per share, bringing its market capitalization down to just 656 million Hong Kong dollars, the lowest since its initial public offering.
The dual decline in both earnings and share price is primarily attributed to revenue drops and mounting losses caused by underperforming game products. The complete failure of the flagship title "Sword and Fairy World" was the most critical factor. Issues including loss of control in research and development management, subpar product quality, and flawed commercialization design, combined with the ineffective conversion of intellectual property benefits, led to a severe imbalance between investment and returns for this core self-developed product. It became a significant drag on the full-year performance. Additionally, the scattered layout of other new titles lacking competitive strength, coupled with continuously declining revenue from long-term operational games, further exacerbated the weakness in the product portfolio. Industry competition and delayed strategic adjustments amplified the impact of these product failures.
Although the company managed to narrow its losses through cost-cutting measures and expansion of overseas operations, the fundamental issues within its product lineup remained unresolved. This unresolved core problem is the main reason for the continued revenue decline. The product failures essentially represent a continuation of CMGE's previous strategic miscalculation, which over-emphasized in-house development and heavy bets on the open-world genre. This prompted a complete strategic shift towards a model focusing on low-cost experimentation, large-scale promotion, and rapid iteration. The company is now concentrating on mini-games, overseas publishing, and IP operation in an attempt to overcome its operational difficulties through business structure optimization.
Whether CMGE will continue to face significant challenges remains uncertain based on the current situation.
The inability to stem losses led to drastic measures, starting with staff reductions followed by cuts in research and development spending. As a leading global IP game operator, CMGE focuses on intellectual property, delivering premium IP games worldwide through self-development and co-development. It aims to create world-class IP, continuously producing quality content and interactive experiences for fans around its owned IP, "Sword and Fairy Legend."
CMGE listed on NASDAQ in September 2012, becoming the first Chinese mobile game company to list on a U.S. stock exchange. It completed a privatization process in August 2015 and subsequently listed on the Main Board of the Hong Kong Stock Exchange in October 2019.
Since its listing, CMGE's performance has shown significant volatility, similar to a roller-coaster ride: initial substantial growth was followed by a peak and subsequent decline. From 2022 to 2025, the company's revenue declined for four consecutive years, repeatedly hitting new lows, while it sustained continuous net losses accumulating to over 3.8 billion yuan.
In 2025, CMGE entered a phase of contraction and loss reduction, which saw a narrowing of losses, but revenue continued to fall. Annual revenue was only 1.39 billion yuan, with an adjusted net loss still as high as 1.471 billion yuan. Combined with the previous year's loss of 2.078 billion yuan, the company lost a total of 3.5 billion yuan within just two years.
The core trigger for the performance collapse was the complete failure of the flagship product "Sword and Fairy World." After more than three years of development and cumulative investment exceeding 300 million yuan, the game, originally scheduled for a 2024 release, was delayed twice. It finally launched in early 2025 but faced a collapse in both reputation and revenue due to issues including loss of control in R&D management, failure to meet quality standards, and poor commercialization design. The IP benefits were not effectively converted. Its TapTap rating plummeted to 5.1, and cumulative revenue on iOS over several months was only approximately $250,000, far below expectations.
Company management was aware of the product quality issues. In its 2024 annual report, CMGE candidly analyzed the defects of "Sword and Fairy World": the game's excessive size and high dependency on mobile hardware performance led to a poor user experience on mobile devices; mobile graphics quality was subpar with low precision and a dark palette; early game levels lacked effective guidance for new users, and commercialization effectiveness was poor.
Misfortunes seldom come singly. In July 2025, an internal CMGE announcement revealed that the former head of the Mantianxing studio, which led the development of "Sword and Fairy World," was detained on suspicion of duty-related crimes, exposing serious loopholes in the company's project management. The product's failure, combined with the incident involving key personnel, made this project the company's most significant misstep in recent years.
Losses from problematic investments and collaborations were also considerable. According to industry reports, the company signed a 100 million yuan development agreement with Chengdu Longyuan in 2021, but the counterparty failed to deliver as agreed, leading to mutual lawsuits filed in 2024. However, with Longyuan itself entangled in legal disputes, the prospects for recovering the funds are not optimistic. Financial reports show that in 2025 alone, CMGE reversed advance payments corresponding to approximately 30 contracts, totaling about 610 million yuan. Additionally, several invested enterprises incurred a combined fair value loss of 336 million yuan due to operational issues. Including these internal and external losses, the scale of non-operating losses is quite staggering.
Facing severe operational challenges, CMGE had to adopt aggressive cost-cutting and efficiency measures. The most直观的数据 in the financial report is the sharp decline in employee numbers. By the end of 2025, the number of full-time employees had drastically reduced to 260 from 710 the previous year, a裁员比例 exceeding 60%. At its peak, the company's total workforce had exceeded 1,100. Simultaneously, R&D costs plummeted by 44.2% from 244 million yuan to 136 million yuan. This indicates that CMGE is not only cutting staff but fundamentally scaling back its R&D efforts, abandoning its previous high-investment, "heavy R&D" model.
Beyond the core failure of "Sword and Fairy World," the performance of CMGE's other game products in 2025 generally fell short of expectations, further intensifying earnings pressure.
On one hand, the layout of new titles was dispersed, lacking blockbuster support, and some new games failed to generate significant revenue. In 2025, CMGE launched 10 new games globally. While the product matrix appeared diverse, the strategy was overly scattered without a major hit capable of sustaining long-term revenue. New IP-based games launched domestically, such as "New Three Kingdoms: Cao Cao Biography" and "Naruto: Konoha Masters," gained some recognition within their core target audiences but failed to break out of their niches and achieve broad influence, resulting in limited revenue contribution. Products launched in overseas markets, like "Dynasty Warriors: Overlord" (Japan), "Douluo Continent: Reverse Time" (Hong Kong, Macau, Taiwan), and "Fights Break Sphere: Unrivaled" (Hong Kong, Macau, Taiwan, and Southeast Asia), provided some support for overseas revenue growth but none became breakout hits sufficient to offset the gap left by the failure of core domestic products.
The only standout was "Spring and Autumn Mystery" (WeChat mini-game), which surpassed 100 million yuan in cumulative revenue within three months of launch, with paying user retention rates far exceeding similar products. It entered a profit-recovery phase in the second half of the year. However, the revenue scale of mini-games is inherently limited, and competition in this segment is fierce. Consequently, it could not become a core pillar supporting the company's overall performance and was unable to reverse the weak trend of the broader product portfolio. According to data intelligence, the game's iOS revenue plummeted three months after launch, with average daily revenue falling below $2,000.
On the other hand, revenue from long-term operational games continued to decline, weakening core income support. Several of CMGE's already-launched games, such as "One Piece: Pirate Warriors," "New Chinese Paladin: Love," and "One Piece: Bounty Rush," have entered long-term operation phases, with some titles operational for over ten years. While stable user bases are maintained through refined operations and content updates, providing a degree of steady income, factors like product life cycle and intensified competition in a saturated market have led to continuously declining revenue from these long-term products. They can no longer provide strong support for earnings, further magnifying the performance pressure caused by the failure of new core titles.
For example, "One Piece: Pirate Warriors," which launched in June 2016 and has been operational for ten years, saw its estimated iOS revenue in 2025 total $1.886 million, a year-on-year decrease of 29.3%. Similarly, "One Piece: Bounty Rush" saw estimated revenue of $9.389 million, down 29% year-on-year, and "New Chinese Paladin: Love" had estimated revenue of $532,000, a sharp decline of 77% year-on-year.
Furthermore, the IP publishing model previously relied upon by the company faced declining efficiency due to rising user acquisition costs industry-wide and user concentration towards major players. The return on investment for new game launches kept decreasing, worsening the predicament caused by product failures. The industry environment and the lag in the company's strategic adjustments also served as significant contributing factors to the game product failures in 2025.
The domestic game industry remained in a state of competition for existing users in 2025, with intense rivalry in segments like open-world and anime-style games. Major players, leveraging advantages in capital, R&D, and channels, continued to squeeze the market space for small and medium-sized companies. As a publisher centered on IP, CMGE, lacking strong in-house development capabilities and a pipeline of potential hits, struggled to cope with industry competition pressure. Although the company undertook organizational restructuring, workforce optimization, R&D cost reduction, and shifted towards a dual-strategy of "APP + mini-games" and overseas publishing following the failure of "Sword and Fairy World," the effects of these strategic adjustments were not fully realized within 2025. The lag in product layout resulted in a full year without core hit products to rely on, preventing a reversal of the product failure situation.
Amid these overlapping factors, CMGE suffered a dual blow to both its earnings and share price. According to financial data, at the time of reporting, CMGE's share price fell 6.41% during trading to 0.219 Hong Kong dollars per share, with its total market capitalization hitting a record low of 656 million Hong Kong dollars.
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