Internet giant Tencent Holdings aims to stamp its mark in the fast-growing market segment of hyper-casual games, according to analysts, following its recent investment in French developer Voodoo.
Tencent, which has recently been in the crosshairs of the Trump administration, earlier this week bought a minority stake for an undisclosed amount in Voodoo, a leading proponent of hyper-casual games. These are mostly free, simple-to-play mobile games made cheaply and quickly, which rely on advertising for revenue, and appeal to the broadest category of players on both Android and Apple iOS devices.
Analysts expect that deal to directly benefit Tencent’s multipurpose messaging and social media platform, WeChat, which already offers easy-to-play mini games launched straight from the app.
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“Voodoo’s games are a great fit for WeChat mini games,” said Serkan Toto, chief executive of game industry consultancy Kantan Games. He said these games would also enable Tencent, which runs the world’s largest video games business by revenue, to stave off the challenge from TikTok owner ByteDance, which has developed its own portfolio of hyper-casual games.
The stakes are high for Tencent because of the increased interest in video games worldwide amid stay-at-home measures to help contain the spread of Covid-19.
Tencent has been ramping up efforts to develop a large war chest of valuable entertainment content, especially for mobile games in China – the world’s largest smartphone and video games market.
“We look forward to developing new products together for the Asian market, and publishing games created by the many talented game studios in the region,” Voodoo chief executive Alexandre Yazdi wrote on Twitter in response to a TechCrunch report on Monday about Tencent’s investment.
Shenzhen-based Tencent did not immediately reply to an emailed request for comment. Its Voodoo investment, according to various reports, valued the French company at about US$1.4 billion.
“Voodoo is interesting because it focuses on hyper-casual games, which aren’t necessarily Tencent’s forte,” said Matthew Kanterman, an analyst at Bloomberg Intelligence.
Hong Kong-listed Tencent mainly owns stakes in companies that make blockbuster desktop and mobile games at a measured pace and with large budgets. These include US-based developers Riot Games, Epic Games, Glu Mobile and Activision Blizzard, as well as South Korean firm CJ Games and Japanese company Aiming. It spent US$8.6 billion to take over Finnish mobile game developer Supercell in 2016.
Paris-based Voodoo provides Tencent with additional international scale. The French outfit has launched more than 100 games since it was founded in 2013, and now counts more than 300 million monthly active users. Some of its popular games include Helix Jump, Ball Blast, Car Merger, Baseball Boy! and Crowd City.
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“Voodoo had the most downloads of any hyper-casual games maker in 2019,” said Kanterman of Bloomberg Intelligence. “About 1.1 billion downloads.”
Still, the regulatory landscape has always been the highest barrier to success in China’s video games market, according to research firm Niko Partners. Tencent’s latest investment is not expected to face a regulatory issue.
Hyper-casual games that rely on ad revenue, according to a Niko Partners report this month, do not need to be reviewed and granted a publishing licence before launch by regulator the National Press and Publication Administration. That is the same rule for educational games listed in a non-game category on app stores.
More from South China Morning Post:
- Analysts say Tencent’s US$22 billion in US assets, mainly gaming, could be at risk after Mike Pompeo’s latest remarks
- If Trump bans Apple from offering WeChat, people in China could ditch iPhones in droves
This article Tencent steps up move into hyper-casual games with some Voodoo in its business first appeared on South China Morning Post