On Friday, Tencent Holdings revealed “DreamStar,” a highly anticipated party game, marking a significant move to compete with domestic rival NetEase. This innovative game transforms players into cartoon characters navigating challenging obstacle courses, directly challenging NetEase’s popular “Egg Party,” which has propelled NetEase shares by over 40% this year.
JPMorgan Analysts’ Concerns: “DreamStar” Impact on NetEase Revenue
Expressing reservations in a note on Thursday, JPMorgan analysts raised concerns about the potential impact of “DreamStar” on NetEase’s revenue, estimating a potential dent of 2% to 3%. In response, the bank adjusted its revenue forecasts for NetEase, lowering estimates by 4% and 5% for the next two quarters, respectively.
Goldman Sachs forecasts that “Egg Party” is poised to generate annual revenue ranging between 7 billion yuan and 8 billion yuan ($980 million and $1.1 billion) this year. In parallel, the financial giant anticipates “DreamStar,” positioned as Tencent’s response to “Egg Party,” to achieve revenue between 5 billion and 6 billion yuan in its inaugural year.
As of Friday, NetEase’s market capitalization reached $67 billion, surpassing Meituan (3690.HK) and securing its position as China’s fourth-largest internet company. Meanwhile, Tencent, maintaining its status as China’s premier internet company, continues to lead as the world’s largest video game provider and operator of WeChat, China’s foremost social network app.
Tencent’s Strategic Moves: Unveiling “Last Sentinel” Amid Industry Competition
In the fiercely competitive gaming sector, Tencent is proactively searching for breakthrough titles amidst rising competition from companies like NetEase and miHoYo, the creators of “Genshin Impact.” As part of this strategic pursuit, Tencent recently unveiled its most ambitious console title, “Last Sentinel,” earlier this month, signaling a commitment to staying at the forefront of the dynamic gaming industry.
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