Tencent and NetEase are China's biggest gaming companies, and some of the biggest in the world, including in the realm of mobile gaming with a rivalry stretching back years. However, NetEase has found a new hit in the form of competitive party game Eggy Party, which has quickly become one of China’s most downloaded titles and racked up 30 million daily active users.
The Financial Times reports that the move has deepened the rivalry between the two companies, in part due to Tencent shareholder Epic Games pushing back the release of a mobile version of Fall Guys, which is developed by its subsidiary Mediatonic. While Stumble Guys, which released for mobile shortly after and takes clear inspiration from the Epic Games title, managed to capitalise on this move overseas, the report notes that Eggy Party has filled the void in China. Tencent is now reportedly working on its own game, which it hopes can compete with the success of both titles.
Tencent has traditionally pulled ahead of its rival in the casual market, and the surprising success of Eggy Party has drawn the attention of NetEase CEO William Ding, who company insiders report has become actively involved in its development, aiming to maintain its success.
Ding has called Eggy Party a testing ground for the use of generative AI in user-generated content, and in a recent call with investors he stated that he expects the game to have a shelf life of over a decade.
Cracking new markets
The success of Eggy Party has become a topic of concern for Tencent, according to company insiders, as the company spent billions of dollars between 2019 and 2021 on strategic acquisitions in an effort to find its next big hit. Despite this investment, a company insider has noted that it’s yet to see a significant return on investment, and that “Tencent feels a lot of pressure from Eggy Party”. Despite this, Tencent does expect to see a significant boost in revenue due to the recent domestic release of Valorant.
The comparative stock prices of the two companies offers an interesting insight into their respective performances. While Tencent currently trades at $42.30 - more than twice NetEase’s current price of $20.22 - it has only grown 4% in the year so far. In contrast, NetEase has seen a 35% growth over the same period.
So what’s the reason for Eggy Party’s success? Bernstein gaming analyst states that NetEase’s more creative culture, where new game ideas are continuously pitched, has helped them succeed.
Speaking to the Financial Times, a Tencent manager stated that “NetEase has a higher tolerance for failure and gives its copywriters, planners and artists more creative freedom.” They went on to say that Tencent has been over reliant on monetising its legacy titles, such as PUBG Mobile and Honor of Kings.
We listed NetEase and Tencent as two of the top 50 mobile game makers of 2022. We’ll be unveiling our list for 2023 in the coming months.