Bytedance reportedly builds gaming division to tackle Tencent head-on

TikTok owner Bytedance has built a gaming division to lead its entry into mobile gaming, a market led by rival Tencent, Bloomberg reported, citing people familiar with the matter.

Photo credit: Bytedance

Bytedance has built a team of more than 1,000 people, poaching top talent from its rivals, according to the sources. It has onboarded the core developer team of NetEase-linked Pangu Game. And one of the creative teams is led by Wang Kuiwu, who joined Bytedance from Chinese game developer and esports tournament organizer Perfect World.

The team would operate independently from the company’s current efforts at creating casual mobile games, the people said. According to the report, the move would involve a more significant investment this time, targeting players who are more likely to spend on in-game items.

After grabbing exclusive title distribution rights over the past few months, Bytedance’s first two games are set to be released this spring, designed for both local and overseas players, one person said.

“Bytedance has massive reach with 400 million daily active users via Douyin and can leverage this to acquire gaming users,” Daniel Ahmad, an analyst at Asia-focused gaming research firm Niko Partners, told Bloomberg.

However, going up against Tencent in the gaming arena may not be that easy. “Whilst they [tech companies in China] may be able to develop a number of hit titles in the China market, we believe it will still be difficult for them to truly challenge Tencent in the gaming space,” Ahmad said.

According to a recent Mordor Intelligence report, the Chinese gaming market is expected to register a compound annual growth rate of 14% through 2024, driven by the rise of mobile gaming and esports. The report also noted that the market is currently dominated by five major players, with Tencent leading the pack, followed by NetEase.