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Alibaba Takes Aim at Tencent with Mobile Gaming Platform

Sina Tech, 1/08/14

Chinese e-commerce conglomerate Alibaba Group today announced the launch of a mobile gaming platform, stating that the company intends to break up rival internet company Tencent's (0700.HK) dominant position in the Chinese mobile gaming sector.

According to Liu Chunning, CEO of Alibaba's Digital Entertainment Business Group and head of Alibaba's mobile gaming project, in 2014, developers of single-player mobile games will be able to register games on Alibaba's gaming platform free of charge. Developers who jointly operate games along with Alibaba can keep 70% of revenue after "channel costs" have been deducted. Of the remainder, 20% will go to Alibaba, and 10% will be donated toward the education of underprivileged children. Developers who exclusively license games to Alibaba for operation will be able to keep 40% of game revenue.

Alibaba's mobile gaming platform will include a user account system, payment system, and virtual currency to facilitate user-developer interaction, as well as data analysis tools, optional cloud hosting via Alibaba's AliCloud service, and other services for developers. Alibaba will make use of the extensive traffic across the company's various platforms, including third-party platforms in which Alibaba has invested, to promote the sales of top games.

According to Alibaba representative Tiger Wang, the company has strong objections to the mobile game market monopoly held by Tencent. More specifically, Alibaba considers Tencent's current system of revenue sharing, whereby, according to Alibaba, Tencent keeps 90% of mobile game revenue and developers keep 10% (likely also extending to games on Tencent's WeChat mobile messaging platform), to be unfair. In light of Tencent's dominance, Alibaba's stated goal is to create a healthier competitive environment for the gaming industry. The first game to run on Alibaba's mobile gaming platform will reportedly launch soon via Alibaba's Taobao mobile client app.

Editor's Note: For more background on this topic, please see "Rumor: Alibaba to Enter Mobile Gaming Industry" MD 12/03/13 issue.

Keywords: mobile gaming Liu Chunning e-commerce wireless Tencent 0700.HK Alibaba Group revenue share Tiger Wang

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