Today, the card game is the biggest winner in the Chinese toy market, occupying more than 90% of China’s trading card market share.
In this wave of boom, Zhejiang Kayou Animation Co., Ltd. (hereinafter referred to as “Kayou”) is the biggest winner. According to its official website, its products are available in more than 100,000 terminal stores in 31 provinces, districts, and municipalities in China.
Although Kayou does not disclose its results, according to sources, Kayou’s annual revenue is about 3 billion RMB and net profit is over 1.5 billion RMB, with the Ultraman series contributing the majority of this revenue and the second-largest IP, “Soul Land” only generating a tenth of Ultraman’s revenue.
The Trading Card Market In China
The ability of Ultraman cards to attract money in China is evident, and Kayou is firmly targeting a large audience – children – by distributing Ultraman cards through wholesalers in any location within reach of students and setting up flagship stores at the most crowded gates in children’s areas.
These Ultraman cards are sold in a blind box or pack. You cannot confirm exactly which card you are buying until you unwrap it, and the price of it is proportional to the probability of drawing a rare card. Exactly how many classifications and levels there are, parents may never figure out, and kids can never buy them all.
Ultraman cards are also a “social tool” among Chinese children and even a social necessity. When all the surrounding kids are playing, having Ultraman cards is the only way to meet with friends and not be isolated. The higher the level and the rarer the cards, the more satisfaction and pride you can get from displaying them.
What’s more, there is a special card tournament called “Hero Battle”. It is known that Kayou has held this tournament for 3 years, including novice tournaments, monthly tournaments, SP tournaments, city tournaments, etc.
More than 50,000 people have participated in the tournament, covering nearly 30 provinces and more than 100 cities in China.
The rise of Kayou has also brought the trading card game market back into the public eye in China. According to the data, the global market size of trading card games reached USD 11.13 billion in 2020 and is expected to expand to USD 31.26 billion in 2027, maintaining a high growth rate.
China’s TCG market is expected to reach RMB 30 billion in the future, and the penetration rate has more room for improvement. Currently, the majority of the domestic card market is still in the younger age group, while the two major gold mines of the youth and adult markets have yet to be fully explored.
In September 2021, SCC Growth VI Holdco AD, Ltd. (an investment fund of Sequoia Capital China Fund) announced a 3% stake in Kayou and a $1 billion valuation for Kayou. In addition, Chinese card makers such as JasonAnime, Hitcard, and FansMall have also received investments.
With the accelerated entry of various players, a tough battle will be fought on China’s TCG circuit. It is predictable that the Chinese market is just starting to wake up, and opportunities for growth are expected to emerge.
How To Make Money With Trading Cards?
In fact, Kayou’s business model is simple and effective: first, it gets authorization from the copyright holder and prints the IP on paper before selling it. Now Kayou gets the licensed IPs, including Ultraman, Marvel, Naruto, Harry Potter, etc. As long as the potential IPs are taken, new card products may be incubated.
From this perspective, card products seem to be a business that can be expanded indefinitely. Excluding IP licensing fees, the gross profit margin can be very high as the printing cost can be extremely low.
WJPC is one of the largest Chinese trading card printers in China and has cooperated with many renowned brands such as Kayou, Disney, and BANDAI. It once gave a comprehensive introduction on how to sell a card game.
According to its description, if the demand is high, the lowest production cost of an ordinary card is only 0.07 RMB; if it is five or six thousand, the single price is 0.1 RMB; but the selling price of a single card reaches 1-2 RMB; and there are even card books that sell for hundreds or even thousands of RMB.
WJPC extends a warm invitation to popular international IPs looking to collaborate and leverage local advantages to enter the Chinese market successfully!