Tencent eyes overseas for video game growth as domestic market cools under tech crackdown

Tencent Holdings, the Chinese tech giant that operates the world’s largest video game company by revenue, is pivoting overseas as the domestic market cools under tight regulations.

During the four-day Tencent Game Developers Conference that kicked off on Sunday, the Shenzhen-based company highlighted overseas expansion opportunities for its in-house titles, as well as those of other Chinese developers.

Chinese games have high growth potential in several emerging markets, including the Middle East, Latin America and Southeast Asia, Xia Lin, vice president of Tencent Games, said in a speech. preliminary.

The number of game users and downloads in these geographies has “far exceeded the scale of the Chinese market,” Xia said. “These regions are seeing growth opportunities similar to what we saw from 2012 to 2015 (in the domestic market).”

Tencent has increased the number of conference sessions devoted to the topic of overseas expansion from just one last year to four this year, showcasing the developers behind some of the company’s biggest mobile hits, notably PUBG-Mobile and Call of Duty: Mobile.

At least 22 English-speaking developers have been invited to share sessions, including those behind well-known mobile titles such as clash of clans, created by Finnish studio Supercell, owned by Tencent. In comparison, two foreign game developers were invited to speak last year.

Tencent’s mobile games have performed well even as competition has intensified in the overseas market, according to Yang Qi, chief operating officer of Tencent. Call of Duty: Mobile.

Garena Free Fire quickly grabbed the market… and performed well in Latin America, Southeast Asia, India and North America,” Yang said, adding that the battle royale title Knives out achieved an “outstanding” performance in Japan thanks to brand cooperations and good localization of social features.

China’s video game market has been battered by some of the world’s toughest regulations in the industry, as the country’s leaders seek to eradicate video game addiction among young Chinese people.

Some of the toughest rules include a strict licensing system and a game time limit that has banned players under the age of 18 from playing online for more than three hours a week since last September.

The combined revenue of the Chinese video game market fell 1.8% in the first half of this year, while the number of players fell slightly to 665.69 million at the end of June against 666.57 million in December, according to the China Audio-Video games publishing committee. and Digital Publishing Association said in a report released last month.

Tencent, along with China’s second-largest video game company NetEase, has yet to secure a one-time license to release new games on smartphones or personal computers this year, even after regulators resumed the approval process in April. . The last time Tencent received a new license was 14 months ago.

In the March quarter, Tencent saw almost no revenue growth, while net profit fell more than half from a year ago. In May, founder and chief executive Pony Ma Huateng said the company had implemented cost control initiatives and “streamlined” non-core activities.

Despite the headwinds, Tencent’s flagship blockbusters remain as popular as ever.

honor of kings and PUBG-Mobile were the world’s highest-grossing mobile games in the first seven months of 2022, racking up $2.889 billion (RM12.90 billion) in combined sales, according to data compiled by US analytics firm Sensor Tower.

As Tencent doubled its overseas business, its international video game revenue rose 4% to 10.6 billion yuan (RM6.98 billion) in the first quarter, while domestic game revenue grew. dropped by 1%. The company is due to release its second-quarter results on Wednesday.

Amid intense scrutiny from the Chinese government, Tencent has once again highlighted the role of video game technologies in promoting social value.

The company is building a virtual Great Wall of China using US game-making software Unreal Engine 5, which allows digital cultural heritage to be viewed on smartphones, Xia said on Sunday. – South China Morning Post