Tencent to partner with more developers to fuel its mobile games expansion

Technology firm wants to team up with start-ups to bolster its position as mainland's leading mobile games provider in rapidly growing market

PUBLISHED : Tuesday, 29 July, 2014, 1:26am
UPDATED : Tuesday, 21 April, 2015, 11:20am

Mainland internet giant Tencent Holdings is drawing new battle lines in the red-hot market for mobile games, with efforts to entice more start-up developers to join its platform rather than chip away at its domestic market share.

Shenzhen-based Tencent, the world's biggest games company by revenue, has sharpened its focus on partnerships amid the rapid growth of the mainland's mobile games market, which mobile internet analytics firm TalkingData has forecast to post US$3 billion in revenue this year and surpass that of the United States by next year.

"From a creativity perspective, we need to extend our partnerships with potentially promising studios to help build up our games pipeline," Wang Bo, vice-president at Tencent Games, told the South China Morning Post. "We are actively looking for the right candidates to work together with us."

Wang is primarily responsible at Tencent's games operation for international business development, licensing, investments, and mergers and acquisitions.

In the first quarter, Tencent bolstered its position as the mainland's leading mobile games provider with 180 million daily active users on its social platforms Mobile QQ and Weixin, known as WeChat outside the mainland. The company's mobile games revenue totalled 1.8 billion yuan (HK$2.26 billion) in the period, a threefold increase from the quarter to December.

"The Tencent Games business is more of a publishing model in which we work with different partners," Wang said. He pointed out that the company has 20 to 30 partners, including US firm Electronic Arts and Japan's Capcom, in its traditional online desktop computer games.

"We have about triple the number of partners in mobile games," he said, adding that demand for these games would only get bigger as more people on the mainland access the internet on their smartphone.

"What we're offering is a very competitive market rate to sign up developers to work with Tencent. They don't need to worry about operations because Tencent can help them address all technical issues. For example, we deploy more than 10,000 servers in China just for online gaming. Our partners can just focus on developing and providing the best experience to mobile gamers."

Government data show that there were 368.1 million total online gamers on the mainland at the end of June, which was driven by the number of people who played smartphone games.

A report from TalkingData said a player on the mainland installs a new mobile game every 3.48 days on average, with games initially provided as free. Sales are generated from virtual goods bought by players to take on a game's advanced levels.

Ricky Lai, an analyst at Guotai Junan International, said: "Tencent is an attractive partner to start-up mobile games developers because of the size and the reach of its operations."

In the latest monthly ranking by research firm NewZoo and TalkingData, Tencent accounted for 12 of the top 20 mobile games for Android-based smartphones on the mainland in May. These included the top-three titles - GunZ Dash, Speed Up and Fight the Landlord. Android devices make up the majority of smartphones in use on the mainland.

Tencent made its biggest ever game-related investment in March when it bought a 28 per cent stake in South Korean developer CJ Games for US$500 million.

Wang said Tencent was keen to expand its mobile games business not only on the mainland, but across key Asian markets as well.