Tencent’s hit game “PUBG Mobile” achieved sequential revenue growth of 189 percent, outperforming rivals “Fortnite”* and “Knives Out” in the first quarter of 2019, according to IHS Markit’s recent analysis of Priori Data title data.
Net revenue for “PUBG Mobile” surged by 241 percent just between February and March, despite a continuing – although marginal – downward trend in downloads. This suggests that existing players are being better monetized in-game by Tencent. Tencent’s regular, high-quality content updates of “PUBG Mobile” are sustaining player engagement and will have helped with user retention rates. What’s more, emerging territories are proving to be unusually crucial growth drivers.
NetEase sees marginal non-China decline
As a result of the success of “PUBG Mobile”, Tencent’s mobile games net revenue outside of China increased by 209 percent compared to the fourth quarter of 2018, rising to $82.2 million. Comparatively, NetEase saw a 22 percent decrease for the same period, failing to match Tencent’s considerable gains. However, the combined non-China net revenue performance of both major publishers did grow modestly in the first quarter, and further growth in 2019 is likely.
The Chinese equivalent of Tencent’s game, “PUBG Mobile: Exhilarating Battlefield,” proved very popular despite never acquiring the rights to monetization. Tencent has now resorted to pulling the title altogether and migrating its millions of players to a government-friendly equivalent – “Game for Peace” – which sailed through the approvals process.
Although initially driven by its success in Japan, “Knives Out” has begun to lose traction and recovery seems unlikely. Epic Games’ blockbuster “Fortnite”, however, maintained its high performance. Indeed, its net revenue generation on the Apple App Store alone was comparable to that of “PUBG Mobile”, despite the latter having a considerably greater number of downloads and monthly active users.
This burst of international success for Tencent comes in the wake of domestic market disruption. The nine-month freeze on the game approval process in China in 2018 impacted the well-prepared plans of all the domestic games publishers, pushing the biggest players to capitalize on the somewhat untapped international opportunity. As the effects of the freeze linger, IHS Markit expects Tencent and NetEase to continue to build their exposure to international markets, thus competing more directly with major games publishers from other regions.
*Fortnite is not released via Google Play Store