Tencent Holdings is depending on one-time fierce rival ByteDance to market its most major video game release in years, indicating both improved ties and more rivalry as China’s gaming industry recovers.
Tencent debuted the mobile party game “DreamStar” on Friday, hoping to compete with NetEase’s “Eggy Party,” a similar product that has been an unexpected smash this year with 100 million monthly active players.
Analysts estimate DreamStar to generate up to 6 billion yuan ($842 million) in its first year, while Eggy Party, which relies heavily on advertising on ByteDance platforms, will make 8 billion yuan ($842 million) for NetEase this year.
Tencent has opted to promote Dreamstar on ByteDance’s prominent advertising platforms to maintain its position as China’s largest gaming business, despite the two companies’ tumultuous history of blocking one other from their platforms.
According to data monitoring company DataEye, 38% of Tencent advertising for DreamStar was placed on ByteDance’s online ad provider Pangolin in the previous 30 days, making it the top ad service Tencent has spent on for the game.
Tencent has its ad network and multiple marketing channels inside its product ecosystem, so its choice to depend significantly on Pangolin is noteworthy.
According to DataEye, Tencent has only placed 12% of DreamStar advertising on its ad network Youlianghui.
The advertising arrangement is part of Tencent’s intentions to spend 1.4 billion yuan in DreamStar’s ecosystem to ensure its success.
Tencent has also begun to allow video game live-streamers to stream on ByteDance platforms as part of this approach.
Zhang Daxian, China’s top live-streamer who rose to prominence via his participation in Tencent’s “Honor of Kings” game, launched his channel on a ByteDance platform earlier this month and previewed DreamStar, a situation that many fans could not have imagined a year ago.
Tencent and ByteDance were embroiled in a series of legal battles for years. ByteDance sued Tencent in 2021, alleging anti-monopoly legislation, for preventing users from sharing material from Douyin, TikTok’s sibling app in China, on Tencent’s applications.
Tencent sued ByteDance in the same year for displaying Honor of Kings material on a ByteDance site, asserting copyright violation.
The apparent thaw in their relationship coincides with ByteDance’s recent decision to wind down its gaming division to concentrate on its core platform activities, signaling a pullback from its gaming battle with Tencent and NetEase.
Domestic sales in China’s video gaming sector increased 13% to 303 billion yuan this year, leaving Beijing’s eight-month industry crackdown two years ago in the rearview mirror.
