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Tencent in need of new blockbusters as Honour of Kings mania fades
Tencent’s mega-hit mobile game Honour of Kings is no doubt one of most successful games of the Chinese gaming giant. It still is one of the cash cows of Tecent. But as the craze surrounding the three-year-old game fades off, Tencent is in need of more new popular games to maintain its domination in China’s gaming industry.
App Store marketing service provider AppBi revealed in a recent report that Honour of Kings reached its peak with a profit growth rate of 29 percent in 2016. But its popularity started to drop with policy restrictions and growing competition. The heat surrounds Honour of Kings and the purchase of users declined gradually.
China’s mobile gaming industry is dominated by Tencent and NetEase. Among all games listed on “Top 20 Paid Games” from 2014 to 2018 Q1, Tencent constitutes 50% of the total, while Netease was the second with an 18 percent share.
In Q1 this year, Net Ease is catching up with its new game“决战！平安京” topping the fastest growing category. The best performing game by Tencent is QQ Speed, which recorded a $170 million or 19 percent YOY profit growth in Q1 this year. Compared to previous years where Tencent and Netease carved up most of the profits, several gaming startups become the budding publishers in China’s game arena.
Mobile revenue still relies heavily on the game industry. According to the recent report released by China Culture and Entertainment Industry Association (CCEA), more than 70% of APP income was generated by game players.
Since 2014, China experienced an explosive growth in the gaming market. AppBi research shows the total revenue had jumped almost four times from 2014 to 2017. In 2018 Q1, China mobile game revenue reached $2.3 billion, equivalent to the total in 2014.
AppBi studied every year’s Top 20 Games in Revenue in IOS store and found that most of the top publishers are either invested by Baidu, Tencent, and Alibaba, or BAT itself. Small startups are suffering increasing difficulty to survive or go independent.
From 2016-2018Q1, most of the Top 20 profitable games are well-established IP or Chinese fantasy category, which proven to be very popular among Chinese consumers. There was a significant lacking in originality and innovation.
With more players generated by games like the Honour of Kings, China mobile users are expected to exceed 550 million, according to CCEA. However, the game market still requires more originality, talents, and better data-driven marketing strategy, the company pointed.