Bloomberg has reported that ByteDance, the USD 75 billion valued Chinese startup is set to release two mobile games this spring, wading into a market that has long been dominated by well-established players like Tencent and NetEase.
ByteDance, the world's most highly valued startup, was reported to be on a hiring spree for talent over the past few months, and has quickly established a mature gaming department to lead it into the competitive sector. Meanwhile, it has quietly acquired several game studios and exclusive game distribution rights.
One of the gaming division’s creative teams is led by Wang Kuiwu, who joined from China’s Perfect World, a major game developer and esports tournament organizer.
The company which started off with news aggregator Toutiao, then later released its world-famous short video app TikTok, is now seeking to develop new revenue streams in a fast-evolving market. In fact, in the past few years, ByteDance has developed quite a few games, some of which became popular with the help of its video platforms, making money mainly through advertisements.
Bloomberg also reported that representatives for ByteDance, Tencent and Netease declined to comment on the news. Shares in Tencent went down as much as 0.6% during morning trading on Monday.
We believe that ByteDance might be the only company capable of entering such a competitive market and grabbing a share instantaneously – but the process won’t be a piece of cake, as Tencent and Netease have the advantage of having long-established relationships with Chinese regulators, who in 2018 began a campaign to root out gaming addiction, which drastically constricted the number and variety of games allowed to be published in the country.
ByteDance might have an edge over the two giants as it has a vast and engaged user base among the teenage demographic: it can leverage Douyin/TikTok to channel users toward its games.
“Having fully established itself as a leader in a short video with over one billion users across its apps, ByteDance is now building multiple game studios by acquiring experienced game developers and talent,” said Daniel Ahmad, an analyst with Asia-focused gaming research firm Niko Partners. “Its massive global user base and investment in gaming could make it a big disruptor in the gaming space this year.”
On the topic, ByteDance acquired an AI game technology developer last month.
The official website information shows that LevelupAI (深极智能) focuses on using machine learning technology to change the game industry. This company mainly studies how to apply AI technology to solve the pain points of the industry, and also conducts forward-looking technology research to completely change game production method.
According to research firm Statista, the revenue of China’s online gaming industry will reach CNY 419.6 billion by 2022.