Alibaba will give developers the lion's share of the cut from games offered on a mobile platform that will open up a new front in its rivalry with fellow mainland e-commerce giant Tencent.
The revenue-sharing model would see developers keep 70 per cent of sales from their games, with Alibaba getting only 20 per cent, the firm said yesterday. The remainder would be spent on improving education in rural areas.
"If the industry still keeps the 1:9 revenue-sharing model, the abnormal status quo of this industry won't be changed. We have to help to fight for a healthy environment for game development," spokesman Wang Shuai said on Alibaba's Sina Weibo account yesterday, referring to a 10 per cent take for developers now.
Tencent leads the market in online games on the mainland, where it has used its popular instant messaging service WeChat to offer mobile games to its 270 million monthly active users.
"We are unhappy with Tencent's monopoly in this industry, which has ruined its ecosystem," Wang said in comments suggesting Alibaba is keen to lure developers to its platform with the attractive revenue-sharing arrangements.
Liu Chunning, the president of Alibaba Digital Entertainment, said the mobile gaming platform would be linked to AliCloud, Alibaba's cloud computing arm, and Alipay, the group's e-payment affiliate.
Liu announced Alibaba's move into mobile games at the China Mobile Game Industry event in Hangzhou yesterday.
"Alibaba's game platform is very aggressive. It only requires 20 per cent of the commission fee from developers, while others often require over 60 per cent," said Ricky Lai, an analyst at Guotai Junan International. "It will intensify competition in this industry.
"The game industry will be influenced by Alibaba's new mobile platform. With the low commission fees, other companies would want to trim theirs to stay competitive."
The mainland's mobile games market was worth 11.2 billion yuan (HK$14.3 billion) last year, up 247 per cent from 2012, based on Alibaba's data.
Florence Shih, of Alibaba's international corporate affairs department, said the mobile platform would be launched "in the near future".