Commentary

Tencent Could Give Pocket Gems Foothold In China

Globe-spanning computer bugs aside, mobile-gaming developments dominated headlined on Monday.

In two separate scoops, The Wall Streetreported that Nintendo has a "Legend of Zelda" mobile game in the works, and that Tencent just put another $90 million in mobile gaming startup Pocket Gems.

The latter story is interesting because Tencent is a Chinese tech giant, and is thus expected to give the U.S.-based Pocket Gems a foothold in a market overflowing with opportunity.

With the investment, Pocket Gems “clearly hopes to take Tencent’s understanding of the market in China to make its two biggest games -- Episode and War Dragons -- more popular there,” Rahul Chadha, Asia-Pacific analyst at eMarketer writes in a new research note.

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This year, the Chinese market will consist of about 492 million mobile gamers, by eMaketer’s estimate.

What’s more, that’s just over half of the country’s current population of mobile users, so that number has plenty of room to grow.

“That’s an untapped market that Pocket Gems is keen on reaching, since neither Episode nor War Dragons are currently available in Chinese-language versions,” according to Chadha.

Of course, $90 million is chump change for Tencent. Indeed, in a deal estimated to be worth $8.6 billion, the Chinese Goliath bought a majority stake in SoftBank Group, last year. Supercell is the creator of the immensely popular “Clash of Clans” mobile game series.

More broadly, while the market for mobile games appears to be maturing, it’s still growing at a healthy clip.

From 2015 to 2016, related revenue grew by about 7% -- from $5.75 billion to $6.15 billion -- according to recent estimates from SEGA Networks and Sensor Tower.

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