Tencent feels heat from gaming rivals Alibaba, ByteDance and Genshin Impact maker miHoYo
- Tencent saw record growth in gaming in 2020, investing in nearly 30 companies as PUBG Mobile and Honour of Kings pulled in more than US$5 billion
- While Alibaba and ByteDance continue to push into gaming, miHoYo’s Genshin Impact became one of the hottest new titles without Tencent’s ecosystem
Tencent Holdings, the world’s largest video games company by revenue, saw remarkable growth in 2020, but it now finds itself on the defensive, trying to tap into new gaming genres as large tech rivals and gaming upstarts chip away at its empire.
The Shenzhen-based company, which gets a third of its revenue from gaming, invested in 29 video game companies last year, three times more than in 2019. Tencent also pulled in more than US$2.6 billion from each of its two biggest mobile games, PUBG Mobile and Honour of Kings, a first for any gaming company, according to app tracking firm Sensor Tower.
Alibaba is the parent company of the South China Morning Post.
The success of Genshin Impact also represents a unique challenge for Tencent because miHoYo published and distributed the game itself through its website and various third-party platforms, largely bypassing Tencent’s ecosystem. The open-world action adventure game pulled in US$245 million in October and another US$148 million in November, averaging US$6 million every day, according to Sensor Tower.
“About 90 per cent of ad spend went to Bilibili and ByteDance’s platforms, and players can’t even download the game on Tencent’s MyApp store,” said Owen Soh, founder of EastLab Consulting. “The meteoric rise of smaller, non-Tencent backed studios focusing on niche genres such as miHoYo, HyperGryph and Papergames reveals that Tencent underestimated part of how the industry would evolve.”
