ByteDance readying assault on Tencent


  • Corporate News
  • Tuesday, 21 Jan 2020

Maiden foray: The world’s most valuable startup has rapidly built a full-fledged gaming division to spearhead its debut into hardcore or non-casual games. — Reuters

Hong Kong: ByteDance Inc is preparing a major push into the mobile arena’s most lucrative market, a realm Tencent Holdings Ltd has dominated for over a decade: games.

The world’s most valuable startup has rapidly built a full-fledged gaming division to spearhead its maiden foray into hardcore or non-casual games, according to sources.

Over the past few months, ByteDance has quietly bought up gaming studios and exclusive title distribution rights.

It’s embarked on a hiring spree and poached top talent from rivals, building a team of more than 1,000. Its first two games from the venture will be released this spring, targeting both local and overseas players.

Commonly compared with Facebook Inc because of its billion-plus users and sway over American teens via social media phenom TikTok, ByteDance is looking to expand its horizons. It started as a popular news aggregator with the Toutiao app in China before setting the world ablaze with short-form video sharing on TikTok and its Chinese twin app Douyin.

Now it’s looking to go beyond cheap ads and develop recurring revenue streams by taking on the Tencent gaming goliath in the chase for coveted distribution rights.

“Having fully established itself as a leader in 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, 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.”

Gaming in China has long been a Tencent fortress, with Netease Inc a distant second. But ByteDance might be the one company capable of upsetting that status quo, having already defied convention by surviving and flourishing outside the orbit of Alibaba Group Holding Ltd and Tencent, who between them have locked up much of the country’s internet sphere.

Toutiao is a key channel for Chinese game publishers to acquire new users, with 63 of the top 100 ad spenders among mobile games in 2019 devoting most of their ads to the news app, according to data tracked by Guangzhou-based researcher App Growing. — Bloomberg

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