US crackdown won‘t slow Tencent‘s exploration of overseas markets: analysts

Tencent‘s logo File photo: IC

Tencent‘s pace of exploring overseas gaming markets won‘t slow down regardless of the Trump administration‘s ban on the Chinese tech giant‘s WeChat app, industry insiders said, although their opinions differ as to whether Tencent games will get caught up in China-US friction. 

Chinese online articles have raised doubts as to whether the US government will kick popular Tencent games out of the US market. US President Donald Trump recently signed an executive order that would place a ban on business transactions with Tencent‘s WeChat. 

Sun Hui, CEO of Beijing Lucky99 Software Technology Co and a veteran game developer, said that the chances of the US government targeting Tencent games are very low, given that it would bring huge losses to US commercial giants but wouldn‘t shake the foundation of Tencent. 

“The in-app purchase of games is much larger than that of social apps like TikTok or WeChat, which means that companies like Apple and Google would suffer tremendous losses if the US banned Tencent  games,” he told the Global Times Monday. 

On the other hand, it‘s unlikely that people would use game apps as platforms to voice opposition against Trump, as they did with other apps, so games are less likely to provoke the Trump administration into imposing bans.

However, some experts are pessimistic. For example, Zhang Yi, CEO of Shenzhen-based iiMedia Research, said that the Trump administration is cracking down on Chinese companies “at any cost” regardless of the interests of its own companies. 

“Seeing that its support rate does not increase much after the existing crackdowns on China, the Trump administration might step up the pressure to stimulate the public,” Zhang told the Global Times. 

An article published in Forbes magazine said that Trump‘s move to target WeChat puts Tencent‘s other US investments at risk, including investments in US-based games developers such as the Los Angeles-based Riot Games and the North Carolina-based Epic Games.

However, experts stressed that there‘s no way that the US government would frighten Tencent away from pursuing its global strategy. 

“On the one hand there‘s a bottleneck and fierce competition in China. On the other hand, the global market is still growing, with the pandemic boosting game playing. How can Tencent stop its pace of global exploration?” Sun said. 

He said that Tencent games‘ largest market is Europe, which is a hub of gaming technology and talent. “The US gaming market isn‘t particularly important to Tencent, but I figure Tencent will continue to invest in the US as planned, as long as it is not banned by the US government,” he said. 

Tencent‘s revenues from overseas games doubled to about 6.9 billion yuan ($990million) in the fourth quarter of 2019, accounting for about 23 percent of its overall games revenues, according to China‘s game media GameLook.

Tencent has also mounted efforts to develop its overseas business, such as acquiring Norway-based game company Funcom and organizing global gaming contests. For example, in the 2020 Honor of Kings World champion Cup, a team from Malaysia competed in the quarterfinal. 


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