Mobile games revenue from Tencent and Netease has risen 382 per cent in 2018 as both companies compensate for China’s gaming regulations by expanding their international markets.
Despite reports that Tencent is reportedly cutting its marketing budget following a market slowdown driven by the regulatory disruption in China, business information provider IHS Markit (thanks, GamesIndustry.biz) reports international mobile game revenue has grown year-over-year by 382 per cent since January 2018, jumping from $78 million to $376 million.
Netease’s growth was the greatest of the two companies, taking 72 per cent of the combined revenue. According to IHS Markit, PUBG Mobile has only contributed 2 per cent to Tencent’s total mobile business this year.
"Tencent and NetEase have begun to build a stronger international franchise for their games in response to the regulatory environment in their domestic market," said Piers Harding-Rolls, IHS Markit games research and analysis director. "However, even with this stronger focus, in the opening nine months of 2018, direct international revenues from mobile games represented only three percent of the companies’ total mobile games revenue. Both companies still have a mountain to climb to derive meaningful revenues from international markets to offset slowing growth in mainland China."
Last month Tencent announced it will be restructuring for the first time in six years following increasing challenges dealing with Chinese governmental regulations for the gaming industry. The megacorp was hit with a fall in profits for the first time in 13 years owing to the very same Chinese regulatory issues that have pushed the decision to restructure.
Tencent also recently announced that it will expand its player identity verification processes across all its games by the end of 2019 after governmental pressure to reduce game addiction, minimise underage players, and curtail short-sightedness. The new legislation, introduced in August, has made it increasingly difficult for Tencent – which, by sales, is the world’s biggest game company – to release new titles or include microtransactions or in-app purchases. Its last release was back in March, pushing its share price down by 28 per cent and reducing the company’s market value by $138 billion.