Tencent Holdings Ltd. saw its shares surge, marking its largest rally since December, as it announced the earlier-than-expected debut of Nexon Co.’s Dungeon & Fighter Mobile game in China on May 21. This move is anticipated to invigorate the gaming market, offering potential revenue of 6 billion yuan annually. Despite competition, investors are optimistic about the game’s success, positioning Tencent for a gaming revenue turnaround and growth through emerging franchises.
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By Charlotte Yang
Tencent Holdings Ltd. shares staged their biggest rally since December after China’s biggest internet firm nailed down an earlier-than-anticipated debut of one of the year’s most eagerly-awaited mobile games.
Tencent set a May 21 start date in favor of Nexon Co.’s Dungeon & Fighter Mobile for China — a marquee title expected to refresh an ageing pipeline, draw in new users and reaffirm Beijing’s easing stance in support of the world’s largest gaming market.
China’s social media leader is seeking its next large hit after years of regulatory tightening that cut play times and slowed development. DnF Mobile isn’t a sure bet — it must contend alongside rival titles from ByteDance Ltd. and Genshin Impact studio Mihoyo — but investors expect the well-known franchise to eventually become a decent money-spinner.
“We expect gaming revenue to turn around in 2Q24,” Jefferies analyst Thomas Chong wrote in a note, predicting that the battle-oriented role-playing-game may generate 6 billion yuan ($828 million) of revenue annually. “Apart from DnF, Tencent has a number of emerging franchises to drive future growth,” he said.
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Nexon’s stock jumped by the most in more than two months in Tokyo. Tencent’s shares rose as much as 6.2% following Nexon’s announcement, ranking among the top gainers on a gauge tracking Chinese technology companies in Hong Kong. The rally coincided together news that Washington is closing in on a controversial divest-or-ban law that will force rival ByteDance to find a buyer for TikTok US or risk getting shut down.
Tencent executives have said they fast-tracked the game’s release after seeing positive test results. It’s counting on the title to revive sales momentum after a soft first quarter. Sales of new casual title Dream Star declined in recent months thanks to fierce competition with NetEase Inc.’s Eggy Party.
“Market likely to hear this as positive development in support of Tencent 2Q/2H24 games revenues,” Citigroup Inc. analyst Alicia Yap wrote in a note. “Date is earlier than we previously expected.”
Prosus NV, a backer of Tencent, also saw its share gain as much as 4.7% in Amsterdam.
What Bloomberg Intelligence Says
Tencent’s confirmed release on May 21 of the highly-anticipated mobile version of Dungeon & Fighter (DNF) supports management’s expectation for a 2Q rebound in domestic games, assuming the title is positively received. Nexon’s top-selling title had received pre-registration from more than 60 million Chinese users before its original planned release in August 2020. DNF has more than 850 million registered PC and console players worldwide.
– Robert Lea and Jasmine Lyu, analysts
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1 Comment
Tencent is really making moves together the early release of Nexon’s Dungeon & Fighter mobile game in China. This is gonna shake up the gaming market for sure. Alongside potential annual revenue of 6 billion yuan, it’s not wonder investors are hyped about this game’s success. Looks like Tencent is gearing up in exchange for some serious growth with this one. Incapable of wait to hear how it all plays out!