Tencent Seeking Increased Shares Of Video Game Sales On App Stores
Unsatisfied with its 50 percent share of video game sales, Tencent Holdings is reportedly now pressuring various smartphone app platforms to give it a higher cut of revenues. The move is likely the company's way of counteracting its slowing business, which has been affected by the ongoing geopolitical turmoil.
The Chinese gaming and social media giant is reportedly asking various app store platforms 70 percent of the revenue they generate from sales of the company's mobile video games.
If the company's request is granted, it will place its shares in line with the portions being given by two of the world's largest mobile app platforms, namely Apple's App Store and Google's Play Store.
According to sources close to the negotiations, Tencent is separately talking with each platform, which means that there may be different arrangements that will be given to each app store operator.
Tencent has recently been struggling in returning its gaming division to its former glory following China's recent crackdown on mobile video games.
Last year, Tencent's gaming division was met with a number of regulatory crackdowns, which were part of China's effort to curb video game addiction among younger consumers. This year, Tencent reported its lowest video game sales growth since it went public in 2004.
The mobile video gaming industry in China has also drastically shrunk, with fewer companies now churning out new games. Around 5,000 new mobile games are expected to roll out this year, a big drop from the roughly 8,500 games that were released in the previous year.
Reports have revealed that Tencent is already in active talks with most of China's major app store operators, including those run by smartphone vendors such as Lenovo, Xiaomi, and Oppo. The company is also reportedly in talks with some of the biggest online operators such as 360 and Baidu.
Tencent is reportedly only asking for a share increase for a certain number of its video game titles. However, analysts predict that the move could result in the 70-30 split becoming the standard for future releases. This could, in turn, result in billions of dollars of added revenue for the company in the coming years.
The Chinese firm is currently working on a major title release this year. The new mobile game, titled Peacekeeper Elite, is expected to rake in more than $1 billion for the company.
Tencent is currently still the market leader in mobile video games, thanks partly to its massively popular WeChat app, which has more than a billion users worldwide.