Zenna Apps: The deal between Tencent and King is a pattern

First, an introductory question: many people today more or less understand how LINE and KAKAO work. But the situation with WeChat, as a younger platform, is not so clear. Could you tell us in general terms what it offers, what is its fundamental difference from Korean and Japanese messengers? WeChat is in many ways an analogue of KAKAO and LINE.

But in addition to what these messengers offer, WeChat supports a number of service solutions: bank payments, taxi ordering, goods stores. All the functionality of WeChat is available to users from one multitasking application: the developers did not split it up, offering each of the functions in a separate application, as LINE or KAKAO did. 

But the essential difference, rather, is not in the set of functions, but in how the messenger itself is used by the Chinese: business deals, payment of taxes, ordering goods, walkie-talkie instead of printed messages, dating. If Korean and Japanese messengers are, to a greater extent, a set of entertainment, then WeChat affects other categories as well. We can say that this is a full-cycle service solution, one convenient and effective solution to all the “troubles”. 

Today, WeChat is more and more penetrating into the daily routine of the average Chinese. It is thanks to the chosen service strategy that the number of users and their LTV is constantly growing exponentially. 

When they talk about creating a special version that supports a particular messenger, they usually mean that a new version of the game gets into the App Store or Google Play, where instead of the social SDK from Facebook there is an SDK from, for example, Kakao. But we all know perfectly well that there is no Google Play in China, hence the question through which market is Tencent going to distribute Candy Crush Saga for WeChat?This is more a question for the WeChat team than for me.

At the moment, Tencent’s own gaming platform occupies only 10% of the Android market. For comparison, Baidu has 40%, 360.com – 25%, WanDouJia – 12%. In turn, the App Store has also grown significantly.

It seems to me that WeChat will not ignore this fact. The company will go the same way as KAKAO for now, offering its social SDK. Socialization is the key aspect of all messengers. By the way, the messenger’s user base has 355M users.

Why do you think King has just started cooperating with a Chinese company? Facebook is banned in the Middle Kingdom, how did the British company manage to make money in this market up to this point (they are in the Top 70 on the App Store)?Rather, it’s the opposite here:

It was Tencent who went to cooperate with King. We know that WeChat started offering cooperation to foreign developers quite recently. 

I do not know how much King has earned in China, but there are a number of opportunities to be successful in this market. Do not forget that the main publishers in China are all the same offer stores that offer assistance in attracting traffic for an equity participation of 30-40%. All of them, including Tencent, have huge user bases. In addition, there are about 15 social networks and platforms in China, including QQ, Weibo, Youku, etc. There are many methods of promotion and socialization, direct and indirect. 

What does this deal give Tencent, she could have made her own Candy Crush Saga clone for a long time and not share the profits with King?Candy Hash is a mass brand.

And the key word here is mass.

Tencent chose a more correct strategy: buying already successful studios or participating in the capital. The purchase of a 5% stake in CJ E &M, exclusive to the publication of all Netmarble games, is to minimize the risks and costs associated with the development of gaming products and quick guarantees of profit.

How much do you think this deal will increase King’s revenue?It’s hard to say, but without a doubt, it’s significant.

Thanks for the interview!