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How is Tencent's WeGame going to affect Steam in China

What is Tencent WeGame, why do they announce it now and how is it going to affect Steam?

Yuan Zeng, Blogger

April 26, 2017

5 Min Read

On 20th April 2017, Tencent officially announced that it's TGP (Tencent Games Platform) will be renamed as Tencent WeGame, and will no longer host any client or mobile games but only PC games. It is a major step forward into the long forgotten Chinese PC games marketplace and a declaration of war on Steam. In this post, I want to share my thoughts on what it means to the Chinese gaming market, and give you – my dear western readers some insight and background information.

The total gaming market size is US$24b based on CGIGC 2016 gaming industry report. However, as we can see, the market is rapidly consolidating, and growth rate significantly slowed. Mobile games contributed to half of the market while PC Standalone game is merely 0.1% (~$26m). Please note that this report fails to identify whether the estimation included Steam or not. On the other hand, we are seeing a significant increase in the PC standalone games with a 140% YoY growth rate – thanks to Steam. From SteamSpy, we can see that Chinese Steam user base skyrocketed from 6m 2015 to 18m in 2017.

I still remember back in 2003, after purchased my first legal copy of Counter Strike in China, I registered this funky platform – Steam. I hardly use it because there aren’t many official servers for CS in China, and I mainly play it with my college roommates in our dorm or in Cybercafés. Steam's explosive growth in China is because of Dota 2, when perfect world published it in China, Steam account is mandatory. Players start to see a vast library of games that they did not know exists before. With the introduction of Alipay and WeChat pay in late 2015, Chinese players finally caught up with the rest of the world, suffering from the post Steam sales syndrome. GTA 5 sold 843k copies in China at $30, CSGO sold more than 1m copies at around $7. These number showed that even though the Chinese PC market size is a fraction of the mobile or online games market, it is still an astonishing force.


Tencent clearly sees the exact number of Steam transactions on its own Wechat pay and decided this money should be earned by its Interactive Entertainment Group. That is why it can no longer be ignored by the gaming goliath. In fact, Tencent already tested the water back in early 2016, they quietly put "Don't Starve" on the shelf of TGP and sold 1m copies (@$4) within a month. You wouldn't be surprised if you know TGP already has more than 200m registered users. Players have been enjoying "League of Legend", "DnF", "Crossfire" and other Tencent games on the platform since 2013.

Now back to the topic of WeGame. During the presentation of UP 2017, Tencent announced that WeGame is a platform dedicated to global developers and players, both can enjoy its multi-dimensional services. Launch titles include Stardew Valley, Rocket League, Portal Knight, Minecraft, Skyline Cities, and promised 170 games by the end of 2017.

For players, it provides gaming info, purchase, download, live streaming and community services. Chinese players can enjoy more localized content, including better translation, stable connection, and localized community. It is based on Tencent's QQ, Wechat, and Qzone social media experiences.

For developers, domestic and foreign, it provides services to connect Chinese players, developer support, publishing, sales, localization, and operation. Tencent also emphasizes on small companies and indie support.

Tencent already dominated the online and mobile games market, this move towards the single player and standalone games is simply a strategy to have them all. It definitely has a positive impact on players on the localization side. Steam's current localization largely relied on publishers' choice, major ones have no problem doing it, but it is hard for small and indie devs. Tencent's mandatory localization will become a wake-up call for publishers on Steam, in the end, more Chinese players will be enjoying great games from all over the world.

Of course, the grand vision is one thing, players' perception is another.

As Tencent announced Rocket League's official representation, the game's steam store page exploded. Concerned over Tencent may potentially alter the game's business model, Chinese players spammed the review section with Tencent bashing comments, and protesting the game is now region locked for Chinese players.

It is true that Tencent is the biggest gaming company in and out of China. However, in the eyes of many hardcore players, Tencent does not hold a stellar reputation. It is infamous for copying successful games from abroad in the early years, and later has some very aggressive business model in the F2P era. There is a saying among the Chinese player community “Tencent will try to get every game, if they can't get it, they will copy it, if they can't copy it, they just buy the company” This is kind of true when you look at CrossFire is a reskin of Counter Strike, acquiring Supercell and Riot. Industry gossip has that Riot isn't very happy with Tencent's recent mobile MOBA success, thinning the player-base of League of Legend in China and against Riot's no mobile policy. For mobile developers, Tencent is also known for its 90% channel fee in China - that's right, Tencent takes 90% of the total revenue and developer gets only 10%. Their argument is that the 10% on Tencent is much bigger than elsewhere.

The future

How is WeGame going to affect Steam or the market in China? In the short run — great! Because it makes the pie of legal games distribution bigger and pushes more Western companies to think about localizing their games for China.

There is a saying in China: “He who is bare-footed does not fear the ones with shoes” Because Tencent is a Chinese company, it means it has to obey the laws and regulations of China. Blockbuster games such as GTA 5, Battlefield, or Warhammer are unlikely to pass the censorship of Chinese government. The “bare-footed” Steam will still be the go-to gray market for players who want to play the latest triple-A titles.

In the long run Steam still faces many uncertainties due to China’s ever-tightening grip on digital publications and the internet. It’s no surprise that many players are concerned about Steam’s future rather than rejoicing at having new platform.

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