The post-85s entrepreneur backed by Tencent has climbed to the top spot globally.

At 10 a.m. on October 29, the domestic Chinese martial arts action game Phantom Blade Zero was unlocked globally. Less than 20 minutes after its launch, the concurrent player count on Steam exceeded 100,000, and doubled half an hour later. Developed by Beijing S-GAME, the game immediately claimed the top spot on Steam's global bestseller list. In fact, as early as the pre-order stage, it had already outperformed Call of Duty: Modern Warfare 4, which was released in the same month.

The next day, the peak concurrent player count settled at 730,000, ranking 15th in Steam's all-time history. It stayed on Weibo's hot search list for a whole day, with screenshots popping up one after another in gaming groups. Many people said this is another time a Chinese game has topped the global rankings following Black Myth: Wukong.

Checking the industrial and commercial information of this company, Guangxi Tencent Venture Capital Co., Ltd., under Tencent, holds approximately 26% of S-GAME's shares.

This capital was injected in the autumn of 2021. At that time, S-GAME had just parted ways with its old shareholders, and the performance of its last mobile game was declining steadily. Phantom Blade Zero had not even been officially greenlit for development. Five years later, that check of "hundreds of millions of yuan" in exchange for a No.1 spot on the global bestseller list.

Overnight, Everyone Was Asking About Liang Qiwei

On the night of the game's launch, a partner at an early-stage fund focused on game investments shared a screenshot of the Steam leaderboard in a small investor group of a dozen people, asking only one question: Are there still available shares in S-GAME? The group stayed quiet for several minutes before someone replied, "Forget it, Tencent got in five years ago." Another person then asked if he had met Liang Qiwei in earlier years. He thought for a long time and said he seemed to have seen him from a distance at some industry conference, a man wearing glasses who speaks slowly, whom he remembered as a mobile game developer, and had not heard much news about him since then.

Such inquiries were not rare in those few days. According to estimates from data agency Alinea Analytics, Phantom Blade Zero sold about 850,000 pre-order copies on Steam and PS5 before launch, plus another 250,000 copies on Tencent's WeGame, generating approximately 43 million U.S. dollars in pre-order revenue.

Overseas media also gave highly positive reviews, with an average Metacritic score of 88, making it the highest-rated Chinese game on the platform, far higher than the 81 points of the PC version of Black Myth: Wukong.

The name Liang Qiwei is not unfamiliar in gaming circles, but it has long been relatively unknown in the capital market. He was born in Hainan in 1985, completed his undergraduate studies at the School of Architecture of Tsinghua University, and later went to Yale University to pursue a master's degree in architectural design. If he had followed the conventional path, he would probably have joined a top architecture firm in New York, a job offer he did receive. But in the end, he returned to China to make games.

This idea actually emerged when he was at Tsinghua. Around 2006, Liang Qiwei, still a student at the time, used amateur tools like RPG Maker to single-handedly develop the turn-based standalone game Rainblood: Town of Death, which gained a small reputation in the indie game community. The huge "Phantom Realm" world in today's Phantom Blade Zero traces its origin back to this student project. He later said that making games was originally just a spiritual sustenance during his school years, but unexpectedly became the most important part of his life.

His online alias is Soulframe, and his studio during his student years was also named the same. When he returned to China to start his business in 2011, the company's English name S-GAME was derived from this alias, and his first funding came from angel investor Xu Xiaoping.

In the first few years of its founding, S-GAME was so small that it seemed rather humble. When developing Rainblood Prequel: Mirage and the first generation of Phantom Blade, the entire company only had two planners: Liang Qiwei and his partner Ma Lasi. The two of them took charge of all the copywriting, combat design, level design, and numerical balancing, and they often had to handle execution-level work themselves, such as combat special effects, sound effects, scene building, and enemy AI tuning.

It was around those years that Liang Qiwei got to know Feng Ji. Feng Ji mentioned this past story in a long Weibo post on the day Phantom Blade Zero launched: the two were both new entrepreneurs who had just started their own businesses, both making mobile games. They had their first meeting over a barbecue meal, where they earnestly discussed how to integrate narrative, combat, payment systems, and stamina mechanics together.

Later, the two went their separate ways, but at a certain point they both put aside other options and turned to develop standalone games. That long post was published at 9:48 a.m. on October 29, ending with the sentence "Peaches and plums do not speak, yet they form a path beneath them; no effort goes to waste." More than 40 minutes later, Liang Qiwei reposted it, replying only: "Thank you! Wish you a great time playing the game!"

One created Black Myth, and the other created Phantom Blade Zero. Few people noticed that the shareholder lists of these two companies bear the same name.

The Check Tencent Signed in the Autumn of 2021

Going back to 2021, S-GAME was not having an easy time. The company had been navigating the mobile game market for seven or eight years, and while the Phantom Blade series had built up a group of loyal players, its commercial performance had always been lukewarm. Phantom Blade 3, launched in January of that year and distributed by Hero Entertainment, peaked at 13th on the iOS bestseller chart, but soon dropped out of the top 300.

The shareholder list was also quietly changing. In 2013, NetEase led a multi-million-dollar Series A round for S-GAME when the team only had 12 people. By 2018, NetEase Leihuo still held 25% of the shares, second only to Liang Qiwei himself. In May 2021, NetEase Leihuo exited, and some early investors also left the company, with the founding team buying back all these shares.

Four months later, the new shareholder emerged.

On September 29, 2021, S-GAME completed its industrial and commercial change, with Guangxi Tencent Venture Capital Co., Ltd. becoming the new shareholder, holding 25% of the shares.

The next day, Liang Qiwei sent an internal letter, publicly announcing for the first time two large-scale action games for PC and consoles developed with Unreal Engine 5: one is Phantom Blade Zero, and the other is the space-themed Stellar Guardian. Tencent's capital was prepared for the R&D of these two projects over the next five years. The letter also stated: Tencent will not interfere in the company's operations, will not bind product cooperation, and will not affect the creative direction of the works.

These commitments were almost identical to the terms of Tencent's investment in Game Science half a year earlier. In March 2021, Tencent acquired 5% of Game Science's shares, and the publicly known "three noes" principles at that time were: no intervention in operational decision-making, no seizure of project leadership, and no pursuit of distribution and operation rights. Feng Ji even publicly joked back then that after leaving Tencent for so many years, he received their investment again without having to worry about KPIs.

After getting the funding, S-GAME made a more radical decision. When Phantom Blade Zero was officially greenlit for development in 2022, Liang Qiwei later admitted in a review that the company cut all other ongoing R&D projects, and allocated all personnel and funds to this single product. The total R&D cost finally reached between 300 million and 400 million yuan, roughly the same scale as Black Myth: Wukong.

In May 2023, the game was first unveiled at Sony's PlayStation global showcase, which was the first time overseas players heard of this Chinese studio. In the following three years, S-GAME brought the demo version to events including ChinaJoy, Gamescom, and Tokyo Game Show. In June this year, the game announced a delay, which sparked widespread criticism in the community. It was not until the end of July that it obtained the game license and opened pre-orders, and public praise was restored.

Apart from the book value, Tencent also had a visible source of revenue. Phantom Blade Zero was launched on Tencent's own PC game platform WeGame in China. According to Alinea's estimates, it sold about 250,000 copies on this platform during the pre-order period alone. Not binding product cooperation does not prevent Tencent from getting a share of the profits through its distribution channels.

Tencent's Chessboard, and the Next Move for Domestic Chinese AAA Games

Looking at Tencent's entire game investment map, S-GAME is just one deal in that round of aggressive investments in 2021. That year, Tencent invested in roughly one game company every three days, with more than 100 companies invested in throughout the year according to statistics from Niko Partners.

Domestically, there are Game Science and S-GAME, as well as Lancet Studio which developed Border, in which Tencent took a 44% stake. Overseas, Tencent acquired Polish studio Bloober Team and became its largest shareholder. Even earlier, Tencent made a strategic investment in Epic Games back in 2012, which was one of the reasons why Game Science was willing to accept Tencent's investment in the first place: Black Myth uses Unreal Engine, and the team wanted more technical support.

In those years, the outside world's evaluation of this strategy was not kind. Some called it a scattergun approach, while others said it was driven by anxiety. Looking back five years later, the net was indeed cast very wide, but the two big hits that people truly remember are these two titles.

Tencent is now increasing its investment in both of these two hits. On April 30 this year, Game Science completed its industrial and commercial change: Tianjin Hero Financial Control under Hero Entertainment exited, and Tencent's shareholding ratio rose directly from 5% to 24%, making it the only external shareholder of Game Science. Adding S-GAME's approximately 26% stake together, Tencent holds more than 20% of the shares in both of the two most high-profile AAA standalone games produced in China in recent years.

Tencent's own AAA game layout is also advancing simultaneously. Overseas, it has taken stakes in Ubisoft, and invested in top-tier standalone studios such as Larian Studios and Remedy Entertainment. Domestically, the acquired studio Shanghai Aurogon is working on a new GuJian title, there is the funded project Where Winds Meet, and the self-developed Crossfire: Ghost. However, most of these projects follow the path of strategic support, and only Where Winds Meet has Tencent's deep involvement in development.

The overall industry environment is relatively favorable at the moment. In the first half of this year, the actual sales revenue of China's game market reached 188.45 billion yuan, a year-on-year increase of 12.17%. The recovery of PC games and overseas expansion are the two bright spots. In July, 197 game licenses were issued in one batch, the largest single batch in nearly five years. However, the user scale has barely grown, with only a 0.82% increase in half a year, and the market's incremental revenue mainly comes from existing players spending more.

The economics of standalone games are far less relaxed than they appear. The 43 million U.S. dollars is only the gross pre-order revenue. After deducting platform cuts, the actual amount S-GAME receives is much smaller. Compared with the 300 million to 400 million yuan of R&D investment, whether the game can turn a profit still depends on its first-month sales and long-tail performance afterwards.

A recent cautionary tale is not far away. Wuchang: Fallen Feathers, the most anticipated title at last year's Summer Game Fest, was once regarded as "the most anticipated domestic AAA game after Black Myth". But its reputation collapsed after launch, and it became a negative example in the industry. For a very long time, domestic Chinese standalone games have been trapped in a cycle of "one breakout hit followed by years of no notable releases", and the outside world even suspected that Black Myth was just a one-off fluke.

Capital has long kept a distance from this track. After the huge success of Black Myth, there was no massive influx of funds. Most of the new capital that entered the sector still came from industrial capital like Tencent, overseas platform investors, and some local government-backed funds.

Therefore, the significance of Phantom Blade Zero is different. It has to answer the question: can there be a second breakout hit after Black Myth?

In that autumn five years ago, a small Beijing-based company received a sum of money with no distribution strings attached. Liang Qiwei used this money to cut off all fallback options, betting on a game that was very unlikely to turn a profit at the time. When Tencent signed that check, it probably never imagined that this deal would become the No.1 spot on the Steam leaderboard one morning five years later.

This article is from the WeChat official account "Rongzhong Finance" (ID: thecapital), written by Wang Tao, and published with authorization from 36Kr.