Bernstein highlights ‘turning point for Chinese video game companies’ like Tencent and NetEase By Investing.com
Bernstein noted a significant milestone for Chinese video game companies as Tencent and NetEase (NASDAQ: ) achieved international success with their recent launches. In December, Tencent’s “Path of Exile 2” and NetEase’s “Marvel Rivals” were recognized as global hits, marking a pivotal moment for the companies in the competitive global video game market.
Bernstein estimates that global video game revenue will reach approximately $209 billion in 2023, with the Chinese market accounting for approximately $45 billion. This leaves a significant opportunity, approximately $165 billion, for Chinese developers to expand globally.
Bernstein noted that Tencent currently holds a mid-single digit share of the global market. The company believes that NetEase’s “Marvel Rivals” represents a breakthrough in the company’s efforts to increase its presence outside of China. The success of Asian developers has been attributed to factors such as lower research and development costs, innovative intellectual property and increased creative freedom, which could help them gain market share from Western competitors.
The report also discusses the importance of understanding the console and PC gaming segments. Historically, the focus has been on mobile gaming in China, but with the smartphone market maturing, Bernstein expects Tencent and NetEase to target console and PC gaming growth. The adoption of Unreal Engine 5 is seen as a factor that will help bridge the gap between mobile and traditional gaming platforms.
Bernstein also addressed the interpretation of Steam’s concurrent user data, suggesting that the game’s daily active users (DAU) could be up to three times its peak daily users. The company provided guidance on how to evaluate key engagement and monetization metrics, indicating that a range of outcomes are possible.
For Tencent, Bernstein expressed confidence in the company’s strength in gaming, pointing to several successful titles and dismissing concerns about a possible slowdown in gaming in 2025. The company also downplayed the implications of Tencent being labeled a “military company” by the US, looking at recent market weakness as a buying opportunity.
Investors have questioned NetEase’s creative prowess in 2024, but Bernstein now sees potential signs of the company’s ability to achieve global success. Despite concerns about a possible decline in mobile accounts in the first half of 2025, Bernstein suggests that any decline in the share price could be limited as investors look forward to the potential launch of “Anant” in 2026.
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