Tencent, NetEase global hits signal new era for Chinese gaming

Investing.com– Bernstein analysts hailed December 2024 as a transformative moment for Chinese video game developers, highlighting Tencent Holdings (OTC:) Ltd’s (HK:) Path of Exile 2 and NetEase Inc’s (HK:) worldwide successes: “Marvel Rivals”.

The games are a big step forward in China’s efforts to grab a bigger share of the $165 billion global games market outside of the $45 billion domestic sector, analysts said in a note.

Tencent’s Path of Exile 2 has emerged as a formidable competitor to Blizzard’s Diablo II, boasting polished gameplay and a dedicated fan base, with more than a million players spending 30- 60 dollars, which indicates its strong appeal.

Meanwhile, NetEase’s (NASDAQ:) Marvel Rivals set records by attracting 20 million players shortly after launch, a success that signals a strategic focus for NetEase to now target a user base comparable to its more with the 40 million acquired by Naraka Bladepoint early on.

Both titles have enjoyed significant popularity on platforms like Steam, with peak concurrent users reaching 579,000 for Path of Exile 2 and 481,000 for Marvel Rivals analysts emphasize that these games are well-positioned as live streaming service titles capable of generating revenue for years to come.

The success of these releases also highlights the strategic advantages of Chinese developers, which include cost-effective R&D, innovative intellectual property, and freedom from the contentious cultural debates of Western games.

Bernstein maintains “Outperform” ratings on Tencent and NetEase, citing their ability to challenge Western rivals such as Blizzard and Electronic Arts Inc (NASDAQ:) in the profitable live service gaming space.