Alibaba, Who Said They’d Never Tap into Gaming, Now Gets into It in a Big Way

Alibaba has announced US$120 million investment in U.S. game developer Kabam. While many would count it as part of its foray into the U.S., what’s surprising to many Chinese is the company is entering into gaming in such a big way. Many years back, Jack Ma, then-CEO of Alibaba, reportedly said in public that his company would rather starve than tap into gaming, for he didn’t want his son to play games, and it would hurt China’s future if kids were encouraged to do so. Some Alibaba employees would confirm that Mr. Ma had said something similar in private.

China media immediately began to mock Mr. Ma when Alibaba launched a mobile gaming platform, take revenue shares from third-party games, at the start of this year. Many mobile games, including US-made Dots, would be added onto it. Kabam promises to contribute 10 games on Alibaba’s platform in the next three years, according to the announcement.

Earlier this month (July) the company rolled out a plug-and-play game platform for connected TVs that games from overseas developers, including EA, Gameloft, and Glue Mogile, are available.

Alibaba now also owns UC Web’s gaming business, since it has fully acquired the Chinese mobile browser and mobile service developer.

To Combat Tencent in Gaming

In October 2013, Jack Ma told a small group of journalists that Alibaba would compete head-to-head in gaming with Tencent, the Chinese social giant who has been making a majority of its revenues from online games, according to a Weibo (a Chinese micro-blogging service) post by Liu Jiang, chief editor of CSDN. That’s a couple of months after Tencent’s WeChat, the most popular messaging app in China, became able to accept mobile payments and added mobile games.

Tech industry, including China’s, changed too fast. After kicking eBay out of China and Taobao became the largest online marketplace in China, Jack Ma said their competitors were too far behind that he couldn’t see them even with a telescope. Alibaba couldn’t foresee back then that Tencent, an instant messaging software provider who had begun making revenues from virtual items and online games not long ago, would become its direct competitor in online payment and e-commerce/online-to-offline commerce several years later with a mobile messaging app.

Alibaba poached Liu Chunning, former senior exec at Tencent, to take charge of its mobile gaming business. When launching the mobile gaming platform in January, Mr. Liu said that Alibaba would take smaller a revenue share than Tencent.

To fight against Tencent, Alibaba made moves in mobile messaging that revamped the one the company developed in 2011 and invested US$280 million in US messaging app Tango earlier this year.