Back in March, King Digital Entertainment went public in New York with hopes high that it would find a follow-up hit to Candy Crush Saga, the smartphone game that went viral last year. So far, the Stockholm-based firm has yet to find a new game that comes close. In the meantime Candy Crush is waning in popularity. Investors are downcast, sending King’s shares down 38% from their IPO price.
Will China come to the rescue? Last week Tencent launched a localised version of Candy Crush. The web-based game, which involves lining up colourful candies, is now available to download through Tencent’s Mobile QQ and its hugely popular social media app WeChat.
To drum up interest, the company also hired the biggest South Korean star in China at the moment – Kim Soo-hyun, an actor in the hugely popular soap opera You Who Came From the Stars – to endorse the game.
“WeChat and QQ have a huge amount of users in the mobile space, and they’ve been able to convert non-gamers into casual gamers and eventually into hard-core gamers,” Jian Huang, chief executive of Beijing-based Hoolai Games, told The Wall Street Journal.
The initial response to the tie-up with Tencent has been strong. Within six hours of the game’s launch, it was China’s most downloaded game for iPad and iPhone devices, according to the company’s portal, Tencent Games.
The original Candy Crush was meant to be played alone, with minimal interaction with other people. But the China version is adding a few new features, including an ability for players to compare scores and – more importantly – to spend genuine cash on additional ‘lives’ and other virtual goodies. Industry observers say the move could be a huge revenue generator, as the majority of Chinese gamers already spend on enhancements to mobile games.
Candy Crush’s entry to the market comes at a time when the mobile games industry is booming. Market research firm iResearch forecasts that games revenues will increase nearly fivefold to Rmb70.6 billion ($11.5 billion) in 2017 from Rmb14.9 billion last year. But the market is getting crowded. Lenovo, China’s largest PC maker and one of the largest shareholders of iDreamSky, a Chinese game publisher which went public on Nasdaq in early August, wants to leverage mobile games to boost its smartphone sales. Alibaba Group, the e-commerce giant (and Tencent’s arch-rival) announced that it is also boosting its presence in mobile gaming by paying $120 million for a majority stake in Kabam, a fast-growing San Francisco-based start-up. Under the deal, Alibaba will become the China distributor for many of Kabam’s games.
Non-internet firms don’t want to miss out either. Last week, construction conglomerate Shanghai Zhongji Investment announced that it is paying $960 million to buy gaming firm DianDian Interactive from FunPlus. DianDian owns a collection of popular games like Family Farm and Happy Acres. The deal, if completed, will be the largest of its kind yet in China. Shanghai Zhongji explained the move as a diversification into the entertainment business.
King Digital can’t be certain that Candy Crush is going to be a smash hit in the China market. Local gamers tend to gravitate towards domestically-designed games, with Western companies making up a small percentage of the market. The top 10 highest-grossing mobile games in China are all homegrown and Chinese gamers often seem more interested in running, racing and card games. “Match three” (‘match-three-and-they-vanish’) games like Candy Crush don’t usually strike quite the same chord with local players…
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.