Deal focus: Well-Link aims to make gaming even more real

The CNY 400m (USD 56m) account balance Well-Link Technologies held as of March was sufficient to fund operations for the next five years under the current business plan. But the China-based start-up, a provider of real-time cloud rendering solutions for game developers, still resolved to return to market.

“We want to be able to make decisions based on what we should do, not what we must do,” explained Matt Guo (pictured), the company’s founder and CEO. “It’s true that current conditions aren’t good and we may not get the best valuation, but no one knows how long the winter will last. Raising more capital reduces our development risk, creates a positive atmosphere, and gives confidence to the entire industry.”

Well-Link has completed five funding rounds in the last three years, including a CNY 400m Series B in September 2021. Last month, Temasek Holdings led a USD 40m extension, supported by existing investors Future Capital and CDH Investments. Guo adds that several term sheets were rejected – one from a prospective lead investor offering a higher valuation – to limit the overall size of the round.

Well-Link’s popularity with investors is underpinned by a fourfold year-on-year increase in revenue for the first nine months of 2022. The company is still loss-making, but Guo is not overly concerned.

He divides Well-Link into two parts: business and imagination. The business side is driven to generate revenue and turn a profit as soon as possible, reassuring investors and other stakeholders. Imagination is not burdened by such near-term considerations; it is programmed to be the future growth engine.

“If our we concentrated on being company profitable, then we might not be investing enough in the future. If our existing products remain unprofitable, it means there is a flaw in our productization and commercialisation ability, or our direction is wrong. We need to balance the two sides,” said Guo.

Well-Link is an early mover in graphics-as-a-service, where rendering is carried out by a third party over an internet connection, making games accessible to users who don’t have high-performance computers. The company made its name by producing a cloud version of Genshin Impact, a game developed by miHoYo, one of its Series B investors.

Genshin Impact quickly became a benchmark for cloud-based games. Well-Link leveraged this momentum to establish a dedicated server – called Siland – that it claims can help game developers reduce rendering costs by up to 25%.

Guo believes the transformational impact of cloud-based games is not so much about convenience for end-users as easing the burden on developers. Traditionally, developers base their planning on expected advances in computing power and rendering capabilities in the two years prior to a game being released. Ambitions are effectively curbed by conservatism. With cloud games, the only limit is one’s creativity.

According to IDC Consulting, China's cloud game market was worth CNY 4bn in 2021, a 93% year-on-year increase. iiMedia Research predicts continued rapid expansion, with market value reaching CNY 98bn by 2023. Well-Link plans to capture a meaningful share of this growth by serving as an infrastructure builder for virtual reality (VR), artificial reality (AR), and metaverse applications.

“The visual interaction of all walks of life brought by real-time rendering is the biggest opportunity of web3,” said Guo, highlighting the metaverse opportunity. Instant rendering of virtual worlds means business meetings can take place in grasslands in the foothills of the Alps and car buyers can get up close and personal with new vehicles while absorbing all the specifications.

In August, Well-Link released a movie-like cloud-native game demo The Grass of Genesis, which showcases Ark, a next-generation computing and rendering architecture. The objective is to integrate all technical capabilities into a single cloud developer operating system equipped with open-source tools and methodologies. It amounts to a significant step towards standardisation.

The Grass of Genesis is also notable for introducing movie industry capabilities to cloud game production, which should smooth the way to creating more realistic environments for VR and AR-enabled interaction. Consumer demand is already strong – shipments of VR and AR headsets reached 11m units in 2021, up 92.1% year-on-year, according to IDC – but Guo envisages it stepping up a level.

“More immersive and more realistic film and television-style interaction has become the experience pursued by players and users,” he said. “Cloud architecture for content development will become the only way to realize that.”

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• Topics
• Greater China
• Technology
• Early-stage
• China
• TMT
• metaverse
• gaming
• Future Capital
• Temasek Holdings
• CDH Investments Management