Tencent’s ‘DreamStar’ Game to Challenge NetEase’s ‘Eggy Party’ Success

Summary

  • Tencent has launched a mobile party game called “DreamStar” to compete with the incredibly popular “Eggy Party” from NetEase. The company is leveraging ByteDance advertising platforms, including Pangolin, despite past rivalries. This follows ByteDance’s decision to scale back its gaming operations, reducing competition in the sector.
  • DreamStar could generate up to 6 billion yuan in its first year, according to analysts. Eggy Party’s success, driven by ByteDance platform advertising, is expected to bring in 8 billion yuan for NetEase.
  • Both Tencent and ByteDance have been involved in numerous lawsuits, some involving copyright infringement and anti-monopoly allegations.
  • China’s gaming market, responsible for 303 billion yuan in domestic revenue, has experienced a major comeback.

Launching of “DreamStar”

Tencent has introduced its mobile party game “DreamStar” on Friday. This move is aimed at rivaling NetEase’s hit game “Eggy Party”. Eggy Party has gathered around 100 million monthly active users, becoming this year’s unexpected success.

Expected Earnings and Advertising Strategy

“DreamStar” is predicted to yield up to 6 billion yuan ($842 million) within its initial year. Meanwhile, Eggy Party, with its widespread promotion on ByteDance’s platforms, is projected to earn a staggering 8 billion yuan for NetEase this year.

Interestingly, despite their past disputes, Tencent has opted to endorse DreamStar on ByteDance’s widely-used ad platforms, with the intent to retain its lead as the top gaming company in China.

Utilizing ByteDance’s Pangolin

About 38% of DreamStar promotions have been posted on ByteDance’s online ad service Pangolin in the past month, becoming the top ad service Tencent has spent on for the game, reports DataEye. This heavy reliance is quite notable given that Tencent has its advertising network and promotion channels within its ecosystem.

Tencent allocated only 12% of DreamStar promotions on Youlianghui, its own ad network. The company is planning to invest 1.4 billion yuan to create a supportive DreamStar ecosystem to ensure its triumph.

Tencent and ByteDance’s History

For many, the current cooperation between Tencent and ByteDance is a surprising turn of events considering their long history of legal conflicts. In the past, both companies sued each other on several occasions. One noteworthy case was in 2021 when ByteDance took lawsuit action against Tencent over access restrictions to Douyin content on Tencent’s apps, referring to anti-monopoly law. In return, Tencent accused ByteDance of copyright infringement for showing footage of Honor of Kings on a ByteDance platform.

Tencent’s Revival Strategy

However, in light of ByteDance’s recent decision to pull back its gaming business to focus on its primary platform operations, tensions appear to have lessened. As a result, Tencent is now allowing the live streaming of its video games on ByteDance’s platforms.

China’s video gaming industry, generating a 13% increase in domestic revenue to 303 billion yuan this year, seems to have recovered from Beijing’s industry crackdown two years ago. ($1 = 7.1255 renminbi).

For foreign exchange traders, these developments could potentially impact shares of Tencent and NetEase, along with the value of the renminbi amidst fluctuations in China’s gaming industry.

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