Games giant Tencent has said that app stores are “over-earning” at the expense of developers while pledging to launch fewer new games in the coming years.
The games giant, which owns Supercell, Riot, plus large chunks of Epic Games, Ubisoft and others, reported its Q124 financials earlier this week.
Tencent’s games earnings came to ~48.1bn RMB, or $6.7bn, in the three months ended March 31. 34.5bn RMB (~$4.8bn) of that total was from China, and 13.6bn RMB (~$1.9bn) was from international markets.
Speaking in a webcast afterwards, chief strategy officer James Mitchell was questioned about the 30% share of IAP revenue Apple and Google take through their app stores. He responded:
“We do believe that app stores are currently over-earning at the expense of app providers, including ourselves, both in China and even more so internationally. But for the purposes of our business plan, we assume that those revenue-sharing arrangements remain as they are today.”
Mitchell went on to outline the “challenging” climate for new game launches, noting that the company will be more conservative in terms of new launches as a result.
“As evergreen games become better and better, then every new game is competing, not only against other new games released around the same time, but also against every existing game or the best of all the existing games that have survived and evolved to become evergreen games.”
“And that’s true on PC, it’s true on mobile, it’s true on console, it’s true in China, it’s increasingly true internationally as well, where you can see the time spent on the big consoles is more and more centred around the gigantic evergreen games like Fortnite, like Call of Duty. And so, our response to that is to continually raise the bar on the new games we actually bring to market and focus on fewer but bigger and better new games.”
Elsewhere in its financial results Tencent called out Supercell’s Brawl Stars, which saw DAU more than double and gross receipts more than quadruple year-on-year internationally. International games revenue grew 3% year-on-year, while gross receipts rose 34% year-on-year due to a “resurgent” Brawl Stars and growth for PUBG Mobile.
In China, revenue was down 2% but gross receipts were up 3% YoY. Valorant, mobile LoL spin-off Fight of the Golden Spatula and Lost Ark growth offset decreases for Honor of Kings and Peacekeeper Elite.
Tencent chairman and CEO Ma Huateng also referenced “team reorganisations” on “several” of its leading games, which has resulted in “an increase in games gross receipts” in the last quarter.