On Monday, Tencent held its annual gaming conference Spark 2022, introducing 44 new gaming-related titles and projects. The event provides a useful outlook on gaming industry trends and the world-leading gaming company’s future plans.
Tencent is expanding its existing advantage in popular titles and mobile games while developing more expensive blockbuster projects and exploring new technologies.
As the largest gaming company in China and the second-largest in the world after Microsoft by market cap, Tencent’s domestic gaming business is plateauing while its overseas gaming business continues to grow.
Tencent’s financial results for the first quarter this year showed the firm’s game revenue in China decreased by 1% to RMB 33 billion ($4.9 billion) compared to the same period last year. In comparison, its international game revenue saw a 4% year-on-year growth to RMB 10.6 billion. Tencent attributed the results to an increase in revenues from games including Valorant and Clash of Clans, partly offsetting a decrease in revenues from PUBG Mobile as user spending normalized in the post-Covid period.
These factors are also influencing Tencent’s current thinking, as Spark demonstrated. Here are four major strategies in gaming that Tencent appears to be pursuing:
Bringing proven gaming titles to mobile
- Tencent has partnered with firms like Microsoft (in Chinese) that own popular gaming titles or series IP, repurposing existing titles for phones and tablets.
- The company brought the Microsoft Xbox title Age of Empires, a real-time strategy game, to mobile platforms for public testing in June (in Chinese). The firm has also revealed a plan to work with 20th Century Studios to develop a mobile game based on the sci-fi movie Avatar. At Spark 2022, Tencent also announced further expansions to its existing League of Legends universe, including a new esports-themed title, having previously launched three titles related to this game on mobile platforms.
- Tencent is experienced in operating mobile game titles, with stand-out successes such as Honor of Kings and PUBG Mobile in their gaming portfolio, so this move makes a lot of sense for the company. Additionally, the global mobile gaming market made up over half of the overall total gaming market in 2021, according to gaming insight firm Newzoo.
Ambitions in AAA games
- One of the most notable titles revealed at Spark was the still-in-development open-world game Code: To Jin Yong, produced by Tencent’s LightSpeed Studios. This appears to be a move to marry a hugely popular yet largely untapped (in gaming terms) trove of material from one of China’s most famous authors with Tencent’s gaming capabilities.
- Since last year, Tencent has sped up attempts to establish an AAA game development studio (in Chinese), TiMi F1. At Spark 2022, Tencent also announced that it would operate Ubisoft’s AAA-level title Tom Clancy’s The Division 2.
- However, China’s gaming approval body the National Press and Publication Administration (NPPA) rarely approves overseas AAA-level titles, with the organization having failed to issue any new gaming licenses for overseas titles for over a year (in Chinese). Developing its own AAA title may allow Tencent to bypass such uncertainty.
Taking gaming tech into other fields
- Spark saw Tencent announce several projects where it will use its gaming prowess in new fields, ranging from scientific research to cultural heritage to tourism.
- One notable example was the company’s confirmation that it will join a program initiated by the Institute of High Energy Physics at the Chinese Academy of Sciences, to power satellites to explore outer space using the firm’s gaming algorithms.
Building universes around its most popular titles
- At Spark 2022, Tencent revealed a series of programs and new add-in gameplay options to some of its biggest operating titles, including Honor of Kings, League of Legends, and The Magic Sword.
- For League of Legends, Tencent has a routine to add new characters and renew the gameplays. Generally, there will be a new “champion” every one or two months, and the gameplay strategies will have a significant change twice a year. Similar moves are also adopted in titles like the Honor of Kings and the mobile version of League of Legends.
- Additionally, Tencent will release cross-game events based on games’ background stories for promotion, drawing players’ attention and building a stronger connection between its titles. For example, Tencent introduced the Arcane program in late 2021 after bringing League of Legends: Wild Rift to the domestic market. Players from the desktop must download the firm’s other related titles and have a try to earn awards. Tencent even partnered with Netflix to release a TV series with the same name to promote.