Tencent-Netease Take 70% Of Chinese Mobile Games Market

Aug. 29, 2016 11:39 AM ETNetEase, Inc. (NTES), TCEHY1 Comment
Ivan Tang profile picture
Ivan Tang
445 Followers

Summary

  • Tencent and Netease's combined China online game market share rose to 59.3% in H1 2016, while that of mobile games jumped to 67%.
  • Netease’s online game revenues jumped to 36.4% that of Tencent in H1 2016 from 26.5% a year ago.
  • China's online game user number grew less than 5% in 2015, the lowest growth in 7 years. Most online game publishers suffered from a revenue drop.
  • Major online game publishers look for diversification and M&A as ways out of market doldrums.

Tencent (OTCPK:TCEHY) and Netease (NASDAQ: NASDAQ:NTES) have enlarged their duopoly of China's mobile games market, with a total market share approaching 70%. Though still far behind, Netease has narrowed its gap with Tencent. Yet, facing a deteriorating market, the duo have taken similar strategies of diversification and M&As with their fellow games publishers.

According to data gathered by Sina Technology, mobile games accounted for nearly half of Chinese online game market in the first half this year. In the mobile games market, Tencent and Netease continue their lead, together taking approaching 70% of the industry's revenues. Squeezed by the duopoly, three out of the next big seven online games service providers suffered from shrinking revenue while the small ones were in deep troubles.

Tencent-Netease H1 Online Game market share Rise to 59.3%

According to the second quarter earnings reported by the two market leaders, Netease's online game net revenues was 6.438 billion yuan, still far behind Tencent's 17.124 billion yuan . The first half 2016 figures for Netease and Tencent are 12.453 billion and 34.209 billion yuan respectively.

Company

H1 2016 Online Games

Revenue (Billion Yuan)

H1 2015 Online Games Revenue(Billion Yuan)

Tencent

34.209

26.283

Netease

12.453

6.954

Source: Sina Technology

According to a report published by Games Publishing Committee, China's online games industrial body, the industry's revenue during the first six months this year was 78.75 billion yuan, of which 37.48 billion yuan came from mobile games. In other words, Netease and Tencent together grabbed 59.3% of China's online games market, a great improvement from the 52.3% in the whole 2015, according to Sina report. The two firms grabbed a combined mobile games market share of 60.5% in the whole 2015.

In the first half 2016, the leading duo both relied on mobile games for revenue

This article was written by

Ivan Tang profile picture
445 Followers
I am an experienced journalist focusing on multi-disciplinary analysis of China's economy and business. I graduated from the Chinese University of Hong Kong and got my MBA from l'Ecole Superieure de Commerce de Paris.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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