Bottom line: Live streaming gamer DouYu should get relatively strong demand for its $500 million New York IPO, while a smaller listing plan by younger coffee specialist Luckin is likely to die on the vine.
Coffee specialist Luckin brews up Wall Street IPO
One of the longest runs I can recall for New York IPOs by Chinese firms continues to chug ahead, with two new filings, one by live streaming game operator DouYu and the other by a high-tech Starbucks (Nasdaq: SBUX) challenger called Luckin. This particular IPO window is now rapidly creeping up on its second anniversary and doesn’t seem to show too many signs of running out of steam.
The big difference between companies coming to market now is that many are younger and still losing big money, compared with companies earlier in the wave that were older and mostly profitable. That’s not too surprising, since usually the most profitable companies move to the front of the line because they’re naturally more attractive. Read Full Post…
Bottom line: Tencent and NetEase will become long-term beneficiaries of a cleanup of China’s online game sector, despite their lack of new launches so far following the recent end of a 10-month freeze on approval of new titles.
No new approvals for Tencent, NetEase
China’s 10-month freeze on approval of new online games has official ended, but don’t tell that to industry leaders Tencent(HKEx: 700) and NetEase (Nasdaq: NTES). China’s gaming regulator has officially just published its latest list of newly approved game titles, which is its third since it resumed such approvals in late December. (English article)
As with the first two lists, observers are focusing more on who wasn’t represented rather than who was. And as with the first two lists, both Tencent and NetEase were absent once again. That raises the question of what the regulator may be trying to do, and whether this could have long-term ramifications for China’s two leading online game companies. Read Full Post…
Bottom line: Tencent’s WeGame could stand a 50-50 chance of success in moving abroad, since the company already has a proven track record in games and will face relatively low privacy protection concerns due to the less-sensitive nature of gaming.
Tencent takes its gaming global
Despite their huge success at home, none of China’s big Internet companies has ever scored a major victory outside its home market, despite a number of low-profile attempts. Social networking giant Tencent (HKEx: 700) is about to become the latest to take a stab at the market, with word that the company will soon launch an international edition of its gaming platform called WeGame.
There are a number of reasons why Chinese Internet companies have yet to really crack any major foreign markets, underscoring the uphill battle Tencent will face. The largest is probably well-established competition in most places, both from local players as well as global giants like Amazon (Nasdaq: AMZN) and Google (Nasdaq: GOOG). The second biggest element is probably trust, since many foreigners are a bit suspicious of these Chinese companies and their ability to protect customer privacy. Read Full Post…
Bottom line: Tencent could be forced to take more measures to control addictive play of its popular “Honour of Kings” game, which could take a short-term toll on its gaming business.
Military critical of Tencent hit game
Internet juggernaut Tencent(HKEx: 700) has been in nonstop headlines lately for its smash hit game called “Honour of Kings”, along with its stock price that keeps reaching new highs. The company must certainly be feeling a bit uneasy from all the publicity, especially since Tencent tends to be quite low-key in line with the style of founder Pony Ma. But equally worrisome is the negative publicity “Honour of Kings” has been getting due to its addictive nature.
There’s a reason that Tencent and some of its major peers can continue to post strong double-digit growth despite their huge size. In Tencent’s case the reason lies at least partly with its phenomenal success as a game developer and operator, and also its related ability to create strong online communities from such gamers. Read Full Post…
Bottom line: NetEase’s new global expansion could stand a good chance of success due to its strong record with self-developed titles, which could help it pass Baidu in market value over the next 1-2 years.
NetEase holds developer forum in San Francisco
The company that made its name from a series of games based on the famous Chinese novel Journey to the West is trying to turn that story into reality, as NetEase (Nasdaq: NTES) eyes expansion outside its home market. The West contained in NetEase’s latest announcement is quite different from the West in the classic novel, the former referring to North America and Europe while the latter refers to India.
But other similarities between the novel and this new global expansion do abound in NetEase’s new announcement that it has just held its first-ever developer’s forum in the West. In both cases, the main character is traveling into unfamiliar terrain in pursuit of major rewards. And in both cases, each faces big challenges before attaining those goals. Read Full Post…
The dog days of summer may be descending on Shanghai, but one place that won’t be too steamy this year is the city’s annual game fest, formally known as ChinaJoy, that takes place in July. The organizer of the country’s biggest gaming trade show has thrown cold water on people who attended in the past to ogle scantily clad models, saying it will enforce a strict dress code at this year’s edition.
This particular move follows a similar ground-breaking prohibition on excessive skin at the Shanghai auto show last year, a move that was greeted with cheers from true car enthusiasts but boos from some who said it dampened the show’s festive atmosphere. I tend to side with the former group, and applaud this broader movement that’s trying to clean up our business culture here in Shanghai and make it more professional and globally respectable. Read Full Post…
Bottom line: An unexpected mid-sized transaction between Baidu and Perfect World could indicate the former is preparing to buy the latter, with an aim to building up a major new player in the online gaming and literature spaces.
Baidu eyeing Perfect World?
Leading search engine Baidu(Nasdaq: BIDU) has reportedly just sold its online literature unit to the recently privatized Perfect World, in a rare reversal for China’s big Internet companies that have been far more active as buyers over the last 3 years. The deal is relatively small, with a reported sale price of 1.2 billion yuan, or about $190 million.
Media are focusing on the fact that Baidu paid far less when it bought the literature unit for a reported 190 million yuan from the same Perfect World just 2 years ago, meaning Baidu earned quite a nice profit on the investment. But more intriguing is the possibility that this move could presage an acquisition of Perfect World by Baidu, which looks quite logical for a number of reasons I’ll describe shortly. Read Full Post…
Bottom line: The new purchase of 3 smaller rivals by Ourpalm could position the company as a consolidator for China’s fragmented gaming sector, and could be followed by one or more similar purchases in the next year.
Ourpalm buys 3 smaller rivals
A newly announced deal will see online game operator Ourpalm (Shenzhen: 300315) combine with 3 smaller rivals in a relatively large deal that could lay the foundation for a major new player to drive much-needed consolidation in the space. The new company looks interesting for a number of reasons, including Ourpalm’s existing connection with leading movie maker Huayi Bros, which could become an important strategic partner for the company.
Ourpalm could also become a strong platform to absorb some of the smaller Hong Kong- and New York-listed gaming companies that have struggled for investor attention due to stalling profit and revenue growth caused by their lack of scale. Potential players for future tie-ups could include recently listed Hong Kong players like Linekong (HKEx: 8267) and Forgame (HKEx: 484), or New York-listed Sungy Mobile (Nasdaq: GOMO), whose shares have all languished since their IPOs. Read Full Post…
I’m not a close follower of global game console leaders Microsoft (Nasdaq: MSFT) and Sony (Tokyo: 6753), but the latest reports of the latter’s launch plans for its PlayStation in China seem to reflect the recent state of disarray at the ailing Japanese giant. Microsoft was quick to formulate a China plan for its popular Xbox after Beijing recently lifted a decade-old ban on foreign consoles, forming a joint venture and launching the consoles last month. By comparison, only sporadic reports have emerged over that time about Sony’s plans, including the latest confusing reports that indicate the company will try to launch its PlayStation 4 in China by the end of the year. Read Full Post…
Big stock moves for veteran online travel agent eLong (Nasdaq: LONG) and newly listed mobile game firm Ourgame (HKEx: 6899) are shining a spotlight on the need for consolidation in many of China’s online sectors, where these smaller players lack the resources to thrive over the longer term. Shares of eLong suddenly soared more than 20 percent in the latest session on trading volumes not seen for years, which will inevitably lead to speculation of a looming buyout offer. Meantime, Ourgame shares tanked 17 percent on their first trading day in Hong Kong, as investors yawned at the chance to buy into yet another mid-sized Chinese gaming firm. Read Full Post…
Techies have been buzzing about the huge potential of the mobile Internet for much of the last 2 years, but the latest headlines from social networking (SNS) giant Tencent (HKEx: 700) and recently listed mobile game developer Sungy Mobile (Nasdaq: GOMO) show the space is still rife with growing pains. Tencent is discovering that its wildly popular WeChat mobile messaging service is attracting not only hundreds of millions of legitimate users, but also masses of spamsters and scam artists and is trying to clean up the platform. Meantime, Sungy has just announced quarterly results that might look good for a company in any other space, but were clearly a disappointment for investors who were looking for meteoric growth. Read Full Post…
