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Tencent and NetEase regain momentum as licences return

But licences volumes are still below their equivalent levels from 2017
Tencent and NetEase regain momentum as licences return

Tencent and NetEase, two of China’s biggest gaming companies, are slowly regaining momentum as the licensing freeze and legislative restrictions in the country ease.

As noted by Nikkei Asia, titles such as NetEase’s Eggy Party - which launched in May 2022 - are now some of the company’s biggest titles. Eggy Party, a Fall Guys-like battle royale, boasts 30 million daily active users. This title lifted NetEase’s sales by 8% in the January-March period, to $2.8 billion.

Tencent meanwhile saw a rise of sales by 11% to $6.7 billion, mainly fuelled by their mega-hit Honor of Kings. In particular it’s noted that sales in China - which account for 70% of all sales for the company - increased for the first time this year in five quarters.

However, it’s not all sunshine and roses. It’s noted that while in 2019 licence approvals stood at around 1500, 2023 has yet to catch up. But some analysts such as Niko Partners are projecting that this may change very soon.

Caution warranted?

With the Chinese game market forecast to reach $57 billion by 2027, it may seem as if the slump is well and truly over for this market. However, dire circumstances during the Covid pandemic seem to have spooked companies, who are now looking to diversify their portfolios abroad with a less restricted audience.

Tencent senior cice president Steven Ma is quoted as saying, "In the future, we would like to make more than half of our income from games overseas." The current figure for oversea sales for Tencent is 10% and for NetEase is 30%, but Tencent hope to raise theirs to a sizable 40%.

Not only that, but China’s stumble has let other markets, particularly main rival India, catch up. However, it’s undeniable that it’s in a far better position than it has been in months. But it remains to be seen just how quick this recovery is, and whether China will return to being the runaway gaming juggernaut it once was.