Tencent overtook Sony and Activision Blizzard to become the world's largest game company in revenue of US$8.7 billion

Market consulting firm Newzoo released a report saying that Tencent once again ranked first among the 25 largest listed game companies in terms of game revenue. In 2015, Tencent's game-related revenue reached US$8.7 billion, and in 2016 it increased 17% to US$10.2 billion. In 2016, total revenue of the 25 largest listed game companies increased by 17% year-on-year to US$70.4 billion.

Original title Tencent has once again become the world's largest game company: revenue exceeds Sony, Activision Blizzard

Beijing time On March 24, market consulting firm Newzoo released a report saying that Tencent once again ranks first among the 25 largest listed game companies in terms of game revenue. In 2015, Tencent's game-related revenue reached US$8.7 billion, and in 2016 it increased 17% to US$10.2 billion. In 2016, total revenue of the 25 largest listed game companies increased by 17% year-on-year to US$70.4 billion.

Large game companies continue to consolidate, and this trend is even more obvious, with the top 10 companies accounting for 54% of industry revenue. Tencent owns games such as Crossing the Fire Line, and it has also invested in companies such as Riot Games, Supercell, and Epic Games. Tencent accounts for 10% of the global gaming market. Supercell is a subsidiary of Tencent, which controls 84% of the shares, and if Supercell's revenue is included, Tencent's market share reaches 13%.

Industry-wide revenue growth in 2016 was largely attributed to the top 10 gaming companies, which posted strong growth, with revenue up 24% year-over-year to $53.7 billion.

Some of the growth has come from acquisitions, such as Activision Blizzard's acquisition of King. Still, most of the growth is done organically and comes from industry leaders, which shows that today's market leaders have a sustained competitive advantage.

Looking at the companies ranked 11th to 25th, total revenue was approximately US$16.7 billion, which was basically the same, with almost no growth. If we look at individual companies, the "destiny" of companies is different. Some perform well, and some have seen a significant decline in revenue.

It's interesting to note that purely large mobile game companies (such as Gree, Gung-Ho, Mixi) don't perform best. The best performers are traditional game companies such as Take-Two, Square Enix, and Ubisoft. Last year, Sony and Activision Blizzard were the second and third game companies, with revenue of $7.8 billion and $6.6 billion respectively.

Netease's game revenue increased by 50% year-on-year, the fastest growing among the 25 listed game companies, with revenue reaching US$4.2 billion in 2016. Mobile games have become Netease's growth driving force. In February, Netease accounted for 4 of the five highest revenue iOS games in China; it also accounted for 3 games on the Android platform. Netease should continue to maintain growth in 2017.

Among Netease's mobile games, the best-performing one is "Yin Yang Shi", which has been the best-selling game since its release in September last year; this shows that "Yin Yang Shi" can compete with Tencent's "King of Glory".

Activision Blizzard ranked second in revenue, with a year-on-year increase of 42%, mainly because the company acquired King and "Overwatch" continued to be popular.

Among the top 10 game companies, only Nintendo experienced a year-on-year decline in revenue of 6% to US$1.8 billion. Although "Pokemon Go" was a great success, it did not bring much direct revenue to Nintendo."Pokemon" only stimulated sales of other games, such as the "Pokemon" series of games, and also increased sales of the Nintendo 3DS.

In December last year, Nintendo launched the much-awaited Super Mario Parkour, which generated $50 million in revenue in its first few months. Considering the large number of games downloaded,$50 million is not a lot. Nintendo's latest mobile game, Fire Emblem: Heroes, is doing well in Japan, but has had little reception in the West. Wii U hardware sales fell rapidly in 2016 as the market expected Nintendo to launch Switch, and the new product was finally released in March this year.

Look at Sony. In 2016, it was the second largest publicly traded game company, with revenue increasing 33% year-on-year to US$7.8 billion.

Newzoo pointed out that it would be interesting to compare the revenue trends of Nintendo and Sony in 2017. Nintendo focuses on the mobile market while adhering to the traditional "pay-to-play" model. Unlike Sony, it fully embraces the "games-as-a-service" model in the game console field. For example, Sony has added streaming products to PlayStation Now.

Editor: Nancy