Some Chinese tech companies see surge in customers amid coronavirus outbreak

This article is co-authored by Josh Ye.

The millions of Chinese in Wuhan and surrounding areas confined to their homes during the new virus’ outbreak have turned to the internet to alleviate boredom and do their work from home, boosting the fortunes of tech companies that offer services like mobile games, work conferencing, and online health services.

While nobody knows how and when the health crisis will end, the business and tech landscape is likely to change by the time the crisis is over, creating a new set of winners and losers in China’s increasingly digitalized economy.

Photo credit: Arena of Valor

“Online gaming will likely be the biggest beneficiary of the coronavirus-triggered disruption,” Nomura analyst Jialong Shi said in a report, noting that most of China’s existing blockbuster gaming titles have seen a surge in playtime and in-game purchases since January, which was further fueled by the release of new titles.

Tencent’s Honor of Kings led the charts with daily active users surpassing 100 million over the Lunar New Year holiday, compared with the usual level of around 60 million to 70 million, according to Nomura.

“The momentum will likely continue, as most Chinese colleges have postponed the start of the new school year to mid- or late-February,” Shi said. “College students are one of the top user groups for online and mobile games.”

Security firm Sinolink Securities echoed the view, saying, “The gaming companies are the biggest beneficiaries of the coronavirus outbreak.” Its more bullish forecast predicted that Honor of Kings would reach between 120 million and 150 million daily active users during the holiday season – the highest ever for the game.

Tencent’s other blockbuster title, Game for Peace, generated somewhere between 200 million and 500 million yuan (US$28.7 million to US$71.5 million) in revenue on the eve of the Lunar New Year alone, according to Sinolink.

Separately, a mobile game called Plague, Inc. – where the object is to develop a perfect virus able to infect and kill everyone on the planet – became the top paid app in China’s Apple App Store last month.

The game’s popularity among the Chinese soared after the outbreak of a real virus in the country. Released in 2012 by British studio Ndemic Creations, the game also saw a spike in downloads and player numbers during the 2014 Ebola outbreak.

Short-form video, which has become a major source of entertainment for mainland Chinese people, is also seeing a big boost from the millions who are confined to their homes with time to spare.

The Kuaishou short-video platform generated a cumulative 780 million viewers and 63.9 billion interactions for its digital red packet campaign during the CCTV New Year Gala, according to a Jefferies report.

The Tencent-backed video app was the official provider of the digital red packets for this year’s festival. Many companies in China routinely hold red packet promotions, giving out cash or rebates that consumers can then “snatch” through mobile apps.