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The logo for ByteDance's Jinri Toutiao mobile app is displayed inside the company's headquarters in Beijing. Photo: Bloomberg

TikTok operator ByteDance buys video gaming start-up in move likely to sharpen rivalry with Tencent

  • ByteDance operates the popular short video app Douyin, known as TikTok outside China, which competes with Tencent-backed Kuaishou and others

Beijing-based ByteDance has acquired 100 per cent of Shanghai-based mobile game developer Mokun Technology, as the world’s most valuable unicorn makes a further foray into video gaming.

Mokun, founded in 2013, became wholly owned by Beijing Zhaoxi Guangnian Technology recently, a subsidiary of ByteDance, according to public business registration information. Mokun’s executive chairman is currently Zhang Lidong, senior vice-president and legal representative at ByteDance. The Shanghai-based video gaming company was previously owned by 37 Interactive Entertainment, a Shenzhen-listed game developer.

A ByteDance spokeswoman declined to comment on the matter. Last month, ByteDance posted a job opening for a games content operator, based in Beijing, on its official career page.

Mokun has developed a 3-dimensional mobile game with a classical theme of the Three Kingdoms, a period in China’s history when it was divided between the states of Wei, Shu, and Wu. The game was distributed by Tencent Holdings, the world’s largest games publisher by revenue and a keen rival of ByteDance in the short video market.

ByteDance operates the popular short video app Douyin, known as TikTok outside China, which competes with Tencent Holdings-backed Kuaishou and its broader social networking platform. Bytedance and Tencent even filed competing lawsuits against each other last year alleging anti-competitive behaviour and defamation respectively.

China’s internet giants are competing aggressively as they seek to offer all-in-one apps to keep users within their ecosystems as much as possible. WeChat, launched by Tencent in 2011 as a mobile messaging app, has now morphed into a super app through which more than one billion Chinese people play games, read news, order food, pay bills and more. ByteDance’s move into gaming will likely sharpen the rivalry between the two internet companies.

Despite last year’s gaming approval freeze by regulators – which created uncertainty and knocked billions of dollars off the market value of Tencent, the Shenzhen-based company still accounted for more than half of the country’s gaming market as of the second quarter ended June last year, according to market research firm iResearch.

According to research firm Sensor Tower, Tencent’s domestic mobile game hit Honour of Kings has taken in US$4.5 billion from overseas markets since 2015. Games generated US$3.8 billion in sales for Tencent in the third quarter ended September 2018, making up nearly one-third of its total revenue.

Last month, Douyin unveiled a leisure game called Music Jumping Ball to be played within the short video app. The app also allows third-party gaming developers to issue games in the app.

Meanwhile, Tencent pioneered so-called mini programs – apps within apps – within WeChat and in 2017 launched a mini game called Jump Jump which went viral. Last year, Kuaishou also started to test its own mini game function.

This article appeared in the South China Morning Post print edition as: ByteDance acquires gaming start-up