ByteDance, the owner of TikTok, has pushed its flagship gaming studio Nuverse to centre stage by launching a stand-alone website for the development and publishing team, a sign of its commitment to gaming as the Beijing-based unicorn seeks to profit from its vast user base and challenge arch rival Tencent.
Although Nuverse, led by a former Tencent executive, was established in 2019, the roll-out of the new website – which lists all the gaming titles from the studio – represents one of ByteDance’s biggest public commitments to video game development. Last month, the company did a soft launch of a new cloud gaming platform called Aoligame.
The ambitions of ByteDance in video games, a highly competitive but profitable business, have become clearer with its aggressive hiring of talent. Analysts said the company’s gaming strategy is taking a page out of Tencent’s playbook of funnelling social media traffic into games to create monetisation opportunities. An earlier report by the tech-focused Chinese online media 36Kr said ByteDance had about 2,000 gaming developers at the end of 2020, double the number from 2019.
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While Nuverse titles such as Eden No Tobira, Strike Royale and Arena of Evolution: Red Tides are not in the same league as Tencent cash cows like Honour of Kings, which was the world’s No 1 online game in terms of revenue in January, ByteDance said it wants to expand worldwide by offering “top-tier games” and build a “global community, providing fun and inspiring experiences for every gamer”.
The video games market has become hugely lucrative in recent years, with Big Tech in China and high-powered start-ups aggressively building up their gaming units. What was once a two-horse race between Tencent and NetEase is now shaping up to be a heavily contested market with new heavyweights like ByteDance, Alibaba Group Holding (owner of the South China Morning Post), and miHoYo, makers of surprise-hit Genshin Impact.
China’s domestic gaming revenues soared 20.7 per cent in 2020 to 278.7 billion yuan (US$43 billion), according to statistics from the government-backed China Audio-Video and Digital Publishing Association. Nearly half of China’s population is now playing video games. The number of gamers in the country rose 3.7 per cent last year to 665 million, according to the association.
Nuverse creates “hardcore” games that require relatively big investments, but can generate steady revenues if proven successful. However, up to now ByteDance’s biggest successes in the sector have been with smaller casual games that mainly generate revenues from advertising.
Nuverse’s previous titles, Arena of Evolution: Red Tides and JJ Street Basket, both struggled to live up to expectations, but observers say it is only a matter of time before it comes up with a hit game given the studio’s experienced developers and ByteDance’s vast user base.
Led by former Tencent executive Yan Shou, ByteDance’s gaming arm has established studios in Beijing, Shanghai, Hangzhou and Shenzhen, according to Chinese media LatePost.
ByteDance’s desire to get into the gaming business itself is also fuelled by the fact that its short video apps have become effective marketing and user acquisition platforms for other gaming companies, big and small. Even Tencent, the world’s biggest gaming company by revenue, has used Douyin, the Chinese version of TikTok, as a promotion vehicle for its games.
Gamelook, a Chinese gaming news outlet, estimates that a quarter of ByteDance’s revenue, which The Information estimated at US$37 billion last year, comes from ad spending by gaming companies.