Game On, as TikTok’s Parent Bytedance Purchases AI Firm to Conquer Gaming
Tik Tok’s parent company, ByteDance, is seemingly always on course to expand its business boundaries. After acquiring game developers, ByteDance has stayed on the course to dominate the world of online games.
From building gaming departments to acquiring and investing in game developers, ByteDance has stepped into the game service support business – it has acquired levelup.ai (深极智能科技), a company that provides big data analysis and supports game developers to improve products and optimize the gaming experience.
Levelup.ai crafts AI players, letting game developers provide a realistic two-player gaming experience, as it identifies ad bots in games via semantic analysis and delineates user images to improve gaming experience and user retention rate. As a leader of an AI company, the CEO of levelup.ai, Chris Guo (郭祥昊), is something of an expert in natural language processing. Founded in 2016, the company focuses on the gaming industry – an industry continuously grows with Post-Y Gen.
At the beginning of 2019, ByteDance, the parent company of the world’s most popular mobile app, TikTok, started to make moves into China’s gaming industry, which had been dominated by local Internet companies like Tencent and NetEase. Due to regulatory reasons, the gaming industry in China encountered a dark time between 2018 and 2019.
The state froze new game approvals and game developers suffered from the freeze: over 42% of 52 A-share listed game companies saw net profits slump in the first 3 quarters of 2018. From Tencent’s annual report, the revenue coming from gaming grew less than 6.2% in 2018 while total revenue boosted over 30%. The headwind blew away small game developers but yielded chances to those giant gaming companies to swallow market share through pre-existing published games.
In this particular case, while game approvals are limited or suspended, improving current, viable games are the priority for game developers to survive the crisis. ByteDance launched in-app mini-games in Douyin (Chinese version of TikTok) in February, acquired a Shanghai-based game company, Mokun Digital Tech (墨鹍科技), and purchased over 45% of Sunho Games (上禾游戏) in March, then set up game product teams in tier-1 cities, including Beijing, Shanghai and Guangzhou.
To compete with Tencent and NetEase, ByteDance uses the most competitive offers to build powerful product teams. From strategy to talent reserve, ByteDance tried very hard in the competitive gaming industry. It attempted to monetize traffic accumulated from news aggregator Toutiao, short video social media Douyin and other platforms created by itself. According to an employee at ByteDance (who wished to remain anonymous), the MAU of all ByteDance’s apps reached over 1.5 billion people as of November.
Other social media behemoths are more forthcoming about their active user figures. Facebook reported a DAU of 1.5 billion and an MAU of 2.32 billion in its annual report for 2018, released in January this year. It also disclosed an annual ads revenue of USD 55 billion - over 98% of total revenue. Having a role model in Facebook, ByteDance leans towards following it to such success, ASAP. The rule of this era seems simple: user data is the way to wealth.