In a strategic pivot, Tencent, the world’s largest video games company, has shifted its focus from developing big-budget sophisticated foreign franchises to creating easy-to-play party games. This move is exemplified by the redeployment of resources from the multi-year project “Assassin’s Creed Jade” to the recently launched “DreamStar”, Tencent’s answer to rival NetEase’s hit “Eggy Party”.
The decision to pivot comes as Tencent aims to generate higher profits from its gaming division, which accounted for around 30% of its overall revenue last year. The company’s founder, Pony Ma, has emphasized the need for improvement in the gaming sector, as competitors continue to innovate and create new products.
To adapt to the changing landscape of the gaming industry, Tencent is focusing on fewer bigger budget games that iterate on successful IPs or proven gameplay success within niche markets. The company is also pushing for lower royalty fees in negotiations, seeking to reduce costs associated with developing IP games.
In an effort to encourage innovation and take more risks, Tencent recently launched its “Spring Bamboo Shoots Project” to incubate in-house games with novel gameplay, offering budgets of up to 300 million yuan per game. This initiative signals a willingness to explore non-conventional game design in order to stay competitive in the market.
Despite setbacks, such as the discontinuation of “Apex Legends Mobile” and the failure of “Undawn”, a zombie apocalypse shooting game endorsed by Will Smith, Tencent is committed to finding innovative solutions to drive growth in its gaming division.
As Western companies like Microsoft’s Activision Blizzard shift away from outsourcing mobile game development to Chinese companies like Tencent, the competition in the market continues to intensify. Despite challenges, Tencent remains focused on adapting its strategies to succeed in a rapidly evolving industry.
Overall, Tencent’s strategic shift reflects the company’s commitment to embracing change, taking calculated risks, and prioritizing innovation in order to drive growth and profitability in the competitive gaming market.
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