Tencent Swaps Out PUBG for Chinese Game That Can Generate Profit

(Bloomberg) -- Tencent Holdings Ltd. unveiled its latest entry in the Battle Royale death-match genre Wednesday, allowing China’s largest social media company to begin cashing in on a red-hot gaming arena.

Its shares leapt as much as 3.7 percent, marking their biggest intraday climb in about two months. Tencent concurrently pulled the plug on the mobile version of PlayerUnknown’s Battlegrounds, a title it was never allowed to make money on after Beijing imposed a months-long freeze on approvals. The game’s testing phase formally ended Wednesday, Tencent said in a notice to users.

Game for Peace -- which pays homage to the Chinese military -- closely mimics and complements PUBG’s gameplay, down to a similar interface and functions to help users migrate their in-game profiles. Its launch catapults Tencent finally into the thick of a Hunger Games-style genre that’s taken the industry by storm since the original PUBG kicked off years ago, helping jumpstart the Chinese company’s waning growth.

What Bloomberg Intelligence Says

Tencent’s suspension of its mobile hit game PlayerUnknown’s Battlegrounds in China is likely a bid to migrate players to its new near-identical battle royale Game for Peace, which received monetization approval in April. This may allow Tencent to start generating sales from the lucrative genre.

-- Vey-Sern Ling and Tiffany Tam, analysts
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Having recently won a license to make money off users, the game also lets players deposit money into their accounts, meaning Tencent can finally start charging for hugely popular duel-to-the-death style titles. It’s currently available only to Android mobile users aged 16 and above.

Game for Peace appeared designed for maximum liftoff. It pays tribute to China’s airforce and in fact asked the military unit’s recruitment arm for advice during its development, according to a report posted by Tencent’s qq.com. Some users downloading the game found it automatically replaced the mobile version of PUBG. Krafton Inc., the Seoul-based game studio formerly known as Bluehole Inc. that created PUBG, did not immediately respond to calls and an email requesting comment.

Tencent’s prized games business is showing signs of recovery after a brutal 2018, when Beijing cracked down on approvals to combat addiction among the country’s youths and an economic slowdown cooled advertising. The industry watchdog has since resumed greenlighting titles, but they’re working on a backlog of thousands of games.

Chinese regulators this year sketched out new requirements for videogame approvals following a year of scrutiny, providing more clarity to Tencent, Netease Inc. and other players still recovering from 2018. Among other things, publishers will now have to submit more information from measures to curb play addiction to detailed scripts.

“An earlier-than-expected launch of “Game for Peace” should drive strong re-acceleration in” second-half mobile revenue, Jefferies analysts Karen Chan and Ken Chong wrote.

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