China's online gaming weekly (Mar 18):What do we expect from Tencent’s UP2016

Weekly changes:

Mobile Cross Fire jumped to the 2nd by grossing ahead of Clash Royale andWWJ this week. Longtu’s Sword and Magic reached top 10 grossing soonafter its commercial launch on Mar 17 on both iOS and Android. Longtu is thereputable game publisher for the hit mobile title Dota. Tencent saw its no. oftop 100 grossing games decline to 29 from 31 last week, whereas Neteasemaintained at 8.

UP2016: game pipeline, e-Sports, pan entertainment and hardware

Tencent’s annual interactive entertainment conference UP2016 will be held onMar 25 in Beijing. We expect pan entertainment will continue to be the keyfocus for UP2016, following the initiatives on games, anime, literature andmovies set out in UP2015.

Game pipeline. Tencent will likely announce two brand new PC games atUP2016. One is 2.5D dark fantasy themed and the other sci-fi themedshooting game. Also, we expect more updates on the recently signed MapleStory 2 and War Thunder. Chinese beta testing of Maple Story 2 may beannounced. Besides, we expect announcement of more IPs and related gameadaption at UP2016.

e-Sports for mobile games. As Tencent launches more hard core mobilegames, e-Sports becomes more relevant. Honour of Kings, We MOBA, WeFire and more are already included in mobile TGA (mobile Tencent GameArena). At UP2016, we expect more developments on mobile e-Sports.

Pan entertainment. Game IP is the centre of Tencent’s pan entertainmentstrategy. Going forward, Tencent plans to extend more of its game IPs intoother areas of entertainment particularly movies. QQ Speed and QQ Dancerare in the pipeline. Movie adaption of Moonlight Blade may also beannounced at UP2016.

Hardware development. VR is the apparent focus at UP2016, followingremarks on the VR eco-system and unified SDK from Tencent Developer Dayat GMGC2016 in early March. There will likely be more updates on VR andminiStation e.g. with accounts, payment and hardware.

Tencent’s 4Q15 results: mobile games the bright spot

Online games revenue grew 11% QoQ and 33% YoY to RMB16bn, 9% aboveour forecast. Mobile game revenue expanded 33% QoQ and 72% YoY toRMB7.1bn, beating our expectation of Rmb5.7bn. Mobile games accountedfor 33% of online game revenue in FY15. Tencent operated 6-8 out of top 10grossing mobile games during the quarter. Going forward, Tencent willcontinue to diversify IPs, broaden genres and upgrade game centres toenhance user engagement.