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Tencent And Netease Mobile Game Revenue Rose 382% This Year (Analyst)

Video game publishers Tencent and Netease saw their mobile games revenue grow by 382% in 2018, from January through mid-November, compared to the same time last year, according to analysis company IHS Markit.

Their combined international revenues reportedly rose from $78 million in 2017 to $376 million during the same time frame this year.

Tencent is the publisher behind hit mobile titles like “Arena of Valor” and “PUBG Mobile.” It has majority stakes in “League of Legends” developer Riot Games and “Clash of Clans” developer Supercell. It also owns part of Epic Games, the studio behind the mega popular battle royale title “Fortnite.” NetEase, meanwhile, is responsible for mobile titles like “Fantasy Westward Journey” and “Rules of Survival.” It’s also partnered with Blizzard Entertainment to operate versions of “World of Warcraft,” “Hearthstone,” “Overwatch,” and more in China.

Tencent is currently undergoing its first restructuring in six years. It suffered a drop in market value after the Chinese government decided to largely freeze new game releases in March. For large publishers like Tencent and Netease, these tougher regulations have underlined the importance of international markets for future growth, IHS Markit said.

“Tencent and NetEase have begun to build a stronger international franchise for their games in response to the regulatory environment in their domestic market,” said IHS Markit games research and analysis director Piers Harding-Rolls. “However, even with this stronger focus, in the opening nine months of 2018, direct international revenues from mobile games represented only 3% of the companies’ total mobile games revenue. Both companies still have a mountain to climb to derive meaningful revenues from international markets to offset slowing growth in mainland China.”

NetEase reportedly accounts for 72% of the combined company revenue growth, which underlines Tencent’s limited success in exporting games to international markets, IHS Markit said. “Arena of Valor” is popular in Asian markets but has failed to catch on with Western audiences. “PUBG Mobile” has fared better, yet it represented just 2% of Tencent’s overall mobile games business in the third quarter of 2018.

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