Jul 12, 2019 (China Knowledge) - China's gaming and social media giant Tencent is seeking as much as 70% of its video game sales. It has recently initiated negotiations with the leading vendors of many big app stores in China, including Oppo, Lenovo, and Xiaomi.
Tencent has dominated China’s video games market, as its WeChat app serves more than a billion people. Taking advantage of its social influence, Tencent Holdings is now pressing China’s top smartphone vendors and app stores to increase the percentage of revenue it gets from video games sold through their platforms. This would make Tencent’s pay cut similar to publishers on other platforms, including Apple’s iOS store and the Google Play Store.
As Tencent’s gaming division has shrunk since the regulatory crackdowns by the government, citing “gaming addiction among youths”, it is striving to claw back profits from video games sales. If the 70-30 split becomes the standard, it would bring about billions of dollars of additional revenue to Tencent annually. “Tencent is likely to gain stronger bargaining power against its distribution channels”, said Alicia Yap, a Citigroup analyst.
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