than a year after the nine-month freeze has ended, the State Administration of Press and Publications (SAPP)published a listof 30 newly licensed foreign online games, including titles
submitted by Tencent, NetEase and
China has been approving games on a fairly
regular basis, there were some concerns that licenses were only being granted to certain genres of games, or based
solely on domestic IP. This new release clearly dispels that risk.
SAPP is currently faced with a backlog
of multiple thousand games waiting for approval, and two of the world’s
most popular Battle Royale titles (Fortnite and PUBG) are still waiting to be
cleared for in-game purchases.
Analysis & Comments
As a reminder, I see considerable upside for the Western developers from releasing their IP in China via Tencent and/or NetEase. At the moment I treat this as a free option.
Note that Ubisoft is waiting for approval for Rainbow Six Siege in China. The game is already a hit amongst Chinese gamers playing via Steam, but it is only possible to see considerable monetisation when publishing and marketing with a domestic player (Tencent).
Previous analysis suggests hat if Ubisoft can sell just 1.5-2m units in China for each of its 3-4 games released each year, and Tencent takes a 50% revenue share, I estimate this could add €9 (over 10% of current value) to the base-case valuation.
Activision Blizzard is also hoping to release a Call of Duty mobile game in partnership withTencent.