Tencent and NetEase, two of China's biggest gaming companies with a long-standing rivalry, have been competing in the mobile gaming arena for years. However, NetEase has recently gained the upper hand with its hit battle royale game, Eggy Party, which has rapidly become one of China’s most popular and downloaded titles, boasting 30 million daily active users.

This success has intensified the competition between the two companies, especially since Tencent shareholder Epic Games delayed the release of a mobile version of Fall Guys, giving room for Eggy Party to thrive in China. As a response, Tencent is reportedly working on its own game to compete with the success of both Eggy Party and Stumble Guys, which capitalized on Fall Guys' delay by launching overseas.

Historically, Tencent has outperformed NetEase in the casual gaming market, but the surprising triumph of Eggy Party has captured the attention of NetEase CEO William Ding, who is now actively involved in its development to sustain its success.

Ding views Eggy Party as a testing ground for the use of generative AI in user-generated content and expects the game to have a shelf life of over a decade, showcasing his confidence in its longevity.

Eggy Party's success has become a cause for concern for Tencent, which had invested billions of dollars in strategic acquisitions to find its next big hit. While Tencent expects a significant revenue boost from the recent domestic release of Valorant, Eggy Party continues to put pressure on the company to deliver.

Comparing their stock prices, Tencent currently trades at more than twice the value of NetEase but has seen a mere 4% growth in the year so far, whereas NetEase has experienced a substantial 35% growth in the same period.

The secret behind Eggy Party's triumph lies in NetEase's more creative culture, where new game ideas are continuously pitched, giving their developers more creative freedom. On the other hand, Tencent has been heavily reliant on monetizing its legacy titles, such as PUBG Mobile and Honor of Kings.

As the battle between these gaming giants continues, it remains to be seen how each company will evolve and innovate to maintain their position in the fiercely competitive mobile gaming market.

Source: Lewis Rees, Staff Writer at PocketGamer