Alibaba Takes On Tencent With Mobile Game Hosting Platform

Alibaba Group Holding Ltd., the owner of China’s biggest e-commerce business, will start a platform hosting mobile games to compete with Asia’s largest Internet company, Tencent Holdings Ltd. (700)

Alibaba is building a platform to promote and distribute third-party mobile games, Liu Chunyu, president of a newly formed unit focusing on the digital entertainment business, said in an e-mailed statement sent by the company today. Game developers will get 70 percent of the revenue and Alibaba 20 percent, with 10 percent going to charity, according to Alizila, a website run by Alibaba.

Alibaba has been aggressively developing mobile services by building its own operating system and strengthening apps for shopping and messaging. Tencent’s instant-messaging app WeChat has also introduced mobile games to tap the spending power of its 270 million monthly active users.

“Many other Internet companies are offering mobile gaming services, and Alibaba also wants to be part of it,” Ricky Lai, an analyst at Guotai Junan International Holdings Ltd. in Hong Kong, said by phone. “Alibaba is offering more of the revenue split with developers compared with other companies, so they could attract a lot of mobile games.”

Alibaba began offering its own instant-messaging service called Laiwang in September.

More than 84 percent of China’s Internet users regularly access instant messaging, making it the most popular online application in the country, followed by search engines with about 80 percent usage, according to data compiled by Bloomberg.

Tencent President Martin Lau said in November the company will invite third-party developers to write games for WeChat and expects third-party games to eventually constitute the majority of offerings.

WeChat revenue may reach 4.9 billion yuan ($810 million) this year as the company moves faster than expected in monetizing the application, John Choi, an analyst at Daiwa Securities Group Inc. in Hong Kong, wrote in a Nov. 8 note.

To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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