Pressure mounts for China’s gaming industry as firms early look for the next viral game while facing challenges from regulatory concerns.
Tencent (Chinese: 腾讯, 0700:HK) has recently established the XR business line that incorporates both software and hardware. It hopes to seize the opportunity in the next 4-5 years by actively experimenting in software, content, system, tool SDK, hardware and other aspects to create industry benchmark VR products and experiences.
On June 27, Tencent Games announced for the first time that it will introduce seven gaming technology cooperation projects, including the ‘Digital Great Wall’, a game-driven accelerated intelligent learning project, an interconnected digital factory and the joint project of a full-motion flight simulator.
“Under the trend of accelerated integration of virtual and reality, gaming-related technologies are being used in digital cultural preservation, industrial simulation, smart cities, film and television creation and other fields,” said Ma Xiaoyi, senior vice president of Tencent.
How Tencent Games seeks new business growth has also become the focus of attention. Tencent's 2022 first-quarter results showed that gaming revenue in the local domestic fell 1% to CNY 33 billion.
Therefore, the external landing of Tencent Games through the XR business line and others can be seen as a move to explore new possibilities of commercializing its technology and prove the extensive value of the game to society amid regulatory concerns.
Nonetheless, there exist multiple challenges throughout the process. Especially in traditional industries, large enterprises are not willing to accompany technology companies to make trial and error attempts as costs are extremely high.
These issues remain common among players in the same industry. CMGE (0302:HK), NetEase (9999:HK) and 37 Interactive Entertainment are also looking for solutions.