Tencent conquers overseas market with a blockbuster

So the company’s strategy is to grow bigger overseas and come back later.” Li Hualiang, founder of Shinezone

Chinese game companies are pitting their wits against overseas online rivals as they bid to break into export markets.

Leading the pack is internet giant Tencent Holdings Ltd, which launched Strike of Kings, the English version of its money-making Honor of Kings, on Apple’s App Store and Google Play Store in May.

“The move was crucial for Tencent as it bids to expand,” said Peter Warman, chief executive officer of game industry research firm Newzoo.

In a well rehearsed roll out, Tencent replaced cult Chinese characters, such as Li Bai and Zhuge Liang, with celebrated Western super heroes like Batman and Van Helsing.

It certainly worked as more than 1 million overseas users have downloaded Strike of Kings on Google’s Play Store.

But then, Tencent had already tested the overseas waters when it launched the Korean version in April.

Within four weeks, Strike of Kings was number one on Apple’s App Store and Google Play Store with a monthly turnover of 30 million yuan ($4.4 million).

It was a similar story in Thailand and Vietnam last year. As always, Tencent had done the ground work, followed by a whirlwind round of acquisitions.

Last year, it bought Finnish mobile game company Supercell, which is famous for Clash of Clans, for $8.6 billion.

In 2015, Tencent snapped up Riot Games in the United States after it had developed League of Legends, which grossed $1.9 billion and is the most profitable PC game in the world.

“Tencent already has the lion’s share in the domestic market,” Warman, of Newzoo BV, said. “But now it must increase its overseas market share to maintain steady growth.”

Smaller players are also trying to muscle in on the export market.

Shinezone Network, which was set up in Shanghai six years ago, has been exploring ways to move into Europe, the US and Southeast Asia.

The company hopes to complete two acquisitions in the North American market in the second half of this year.

“The Chinese sector is now highly competitive and led by giants such as Tencent, while smaller companies find it difficult to develop,” said Li Hualiang, founder of Shinezone.

“So the company’s strategy is to grow bigger overseas and come back later,” he added. “The Chinese market is so big that we cannot afford to lose.”

A Newzoo report, released during last year’s China Digital Entertainment Expo and Conference, showed that games developed by domestic companies made $4.65 billion in overseas income in 2016.

The survey also revealed that companies here took a 17.4 percent slice of the global market, which was worth $26.7 billion.