Chinese mobile games market hots up as Alibaba takes on Tencent

$100 billion company makes move on $120 billion rival

Chinese mobile games market hots up as Alibaba takes on Tencent

If you were looking for broad equivalence, the news that Chinese e-commerce outfit Alibaba has announced its launching a rival mobile gaming platform to Tencent's WeChat would be something like Amazon or eBay deciding to take on Google over mobile games.

In terms of publicly-owned internet companies, only Google, Amazon and eBay are worth more than the Hong Kong-floated Tencent.

It dominates the China's games business, through its QQ Game Center business on PC, but more recently with its QQ and WeChat mobile messaging platforms.

WeChat's integrated gaming service launched in the summer of 2013 in China, and has already been very successful, despite less than a dozen games being released on it.

The battlelines

It's this success, combined with the potential $10+ billion-scale of the Chinese mobile games market over the next decade, that's encouraged Alibaba to make its move.

Yet, it's not decision without consequence.

Best known as an e-commerce company with annual revenue of over $4 billion through the more than $170 billion-worth of sales facilitated by its Taobao and Tmall platforms, Alibaba also has strong experience in terms of cloud computing (Aliyun), online payment (Alipay) and search.

It doesn't have any experience in mobile gaming, however.

Another significant aspect is that the company, which is 24 percent owned by Yahoo, is preparing to IPO (perhaps in the US), with a valuation ranging anywhere from $75 to $125 billion.

That could change the company's medium term strategy as shareholders like to see focus on core business areas, not expensive assaults on well-entrenched competitors with deep pockets.

Giving away 10 percent

In terms of the details of Alibaba's announcement, it says it's planning on launching a distribution platform for third-party mobile games that will link into its Laiwang mobile messaging service.

The business will be run through a newly-formed subsidiary run by president Liu Chunyu, who used to work for Tencent.

Alibaba also has existing deals with Sina Weibo (a Twitter-like service) and UC Browser that could be helpful in terms of app distribution.

Perhaps one of the strangest parts of the announcement, however, is that Alibaba says it will give away 10 percent of the gross revenue generated by the platform to charity.

Developers will get 70 percent of revenue - just as they receive with Apple's App Store and Google Play, but a much higher cut than is passed on by most Chinese app distributors, including through WeChat. Alibaba will take the remaining 20 percent.

[source: TechInAsia]

Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.