ByteDance, owner of the short-video app TikTok, has increased its investment in Roblox competitor Reworld by nearly 100 million yuan (US$15.3 million), according to people familiar with the matter, as the company seeks its own so-called metaverse platform in its escalating rivalry with video game giant Tencent Holdings.
The latest restructuring initiative is a testament to Tencent’s determination to take on Douyin, which recently launched its own mobile payment service to compete against WeChat Pay, in China’s fast-growing online video market segment. Douyin has 600 million daily active users (DAUs), dwarfing those on Weishi, which has fewer than 50 million DAUs.
Moonton is the latest example of an independent Chinese gaming studio whose valuation has skyrocketed on the back of a bitter bidding war between two of China’s biggest internet companies. Beijing-based ByteDance has been aggressively moving into gaming in a bid to further monetise its vast user base, horning in on a market long dominated by Shenzhen-based Tencent, which operates the world’s largest video game business by revenue.
Despite a growing gaming division with more than 3,000 new hires, ByteDance’s search for a flagship game was advancing at a snail’s pace. After a few of its self-developed titles flopped last year, experts said the social media firm needed a headlining purchase to reinspire confidence, according to analysts.
The SAMR launched an antitrust probe into Alibaba’s e-commerce business in late December, and demanded that its marketplaces end their exclusive deals with merchants and aggressive pricing strategies. Complaints from Alibaba’s rivals, including JD.com and Pinduoduo, reportedly sparked that probe.
ByteDance likely wants to spark a similar antitrust probe against Tencent. Douyin currently reaches over 400 million daily active users in China, but it’s still much smaller than WeChat and QQ.
Roblox is focusing on collaborations with schools and educators in the country, according to its Chinese website, where it promotes the platform as a tool for science, technology, engineering and mathematics (STEM) students.
Tencent has been strengthening its short video-sharing and live-streaming features in the past two years, as competition against Douyin intensified.
“These smaller studios know they are coveted goods, and they know that speed in is key for the likes of ByteDance and Tencent now,” Kantan’s Toto said. “This combination of cutthroat competition and super dynamic industry growth will only continue to drive up prices and valuations for potential targets for ByteDance and Tencent going forward.”
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