Tencent’s Strategic Move with ByteDance: Leveraging Rivalry for Success
Tencent’s is strategically leveraging its once-rival, ByteDance, to propel the launch of its significant video game, signaling a shift in relations amid heightened competition in China’s resurgent gaming industry.
The newly unveiled mobile party game, “DreamStar,” aims to challenge NetEase’s (9999.HK) surprise hit, “Eggy Party,” boasting 100 million monthly active users this year. Analysts project DreamStar to generate up to 6 billion yuan ($842 million) in its inaugural year, while forecasting Eggy Party to earn NetEase 8 billion yuan, boosted by advertising on ByteDance platforms.
In a bid to maintain its status as China’s gaming giant, Tencent has opted to promote DreamStar on ByteDance’s popular advertising platforms, despite a contentious history that saw both companies restricting each other from their platforms.
Approximately 38% of Tencent’s DreamStar ads have appeared on ByteDance’s Pangolin, making it the top ad service for the game in the last 30 days, as per data from DataEye. This decision is notable as Tencent possesses its own ad network and various promotion channels within its ecosystem. Surprisingly, only 12% of DreamStar ads were placed on Tencent’s ad network, Youlianghui.
Investment for Success: Tencent’s 1.4 Billion Yuan Ecosystem Plan
This advertising strategy is part of Tencent’s 1.4 billion yuan investment to develop DreamStar’s ecosystem and ensure its success. As part of this approach, Tencent has allowed video game live-streamers, including Zhang Daxian, a renowned live-streamer associated with Tencent’s “Honor of Kings,” to stream on ByteDance platforms. This marks a significant shift in dynamics considering the history of lawsuits between Tencent and ByteDance.
For years, both companies were embroiled in legal disputes, with ByteDance suing Tencent in 2021 for restricting users from sharing content from Douyin on Tencent’s apps. Simultaneously, Tencent sued ByteDance for featuring footage of Honor of Kings on a ByteDance platform, citing copyright infringement.
The apparent thaw in their relationship coincides with ByteDance’s decision to wind down its gaming business, signaling a retreat from direct competition with Tencent and NetEase in the gaming sector. China’s video game market has rebounded this year, with domestic revenue surging 13% to 303 billion yuan, putting the industry crackdown of two years ago in the rear-view mirror.
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