Tencent is building a international version of its PC games distribution platform WeGame, which, for the first time, will put it in direct competition with Valve's Steam platform in markets outside of China. Tencent strategic target is to build its distribution capability outside of China. Meanwhile, Valve's Steam is not officially available in China, but it serves gamers on the mainland from its Hong Kong servers and many games are localised into simplified Chinese to attract Chinese buyers.
Tencent is building a international version of its PC games distribution platform WeGame, which, for the first time, will put it in direct competition with Valve's Steam platform in markets outside of China. Tencent strategic target is to build its distribution capability outside of China. Meanwhile, Valve's Steam is not officially available in China, but it serves gamers on the mainland from its Hong Kong servers and many games are localised into simplified Chinese to attract Chinese buyers. In a bid to avoid censure and go legal, Valve has announced it is working with local publisher Perfect World to bring a Chinese version of Steam to the local market - Steam China. There is no confirmed release date for Steam China as yet.
Tencent dominance of the Chinese market comes from its control of content discovery, user acquisition and distribution, but in international markets its value-chain influence is much less significant. Hence, its reasons for building its first-party distribution capability in this way. Tencent also recently took a minority share of messaging platform company Snap, which itself is building a capability to act as a distribution and consumption channel for games. Snap's first major foray into the sector is the introduction of AR selfie games, Snappables.
Tencent plans to release its in-house titles worldwide via WeGame and is also courting third-party publishers to become more competitive with Steam in China itself. WeGame recently held a press conference about its games pipeline for the second half of 2018 with 30 major titles including Monster Hunter: World, Fortnite and Dynasty Warriors 8 confirmed to be coming to the platform. This increasingly diverse game portfolio covering all popular genres and a number of well-known titles underlines Tencent’s preparation for Steam’s official entry into the Chinese market.
Valve, while dominant in PC games distribution in international markets, is likely to face region-locking and censorship challenges in the Chinese market with its Steam China official offering. This will inevitably result in only a slow stream of approved games coming to the platform. Tencent is also better positioned in terms of its social platform integration and its ability to leverage those platforms as marketing and user acquisition networks. However, Valve has some significant advantages, not least its dominant position in international markets meaning developers and publishers will always support the platform, suggesting that Valve will not necessarily be a pushover in the Chinese market.
Concerning the titles that are coming to WeGame in China, Fortnite’s PC launch schedule in late July is not surprising as the game started registrations back in April and obtained government approval back in June. The launch of the PC version of Fortnite throws some shade on the official PC version of PUBG in China, which Tencent also holds the exclusive license for. A release date for the PC version of PUBG has yet to be confirmed, although of course the game has been unofficially available in China via the international version of Steam for many months and has done very well. If Fortnite achieves strong popularity on PC and generates significant revenue after launch, Tencent may continue with the official mobile version of PUBG and may have less impetus to release it on PC. However, if the international version of Steam is blocked more aggressively in China, it may push ahead with the Chinese version of the game.
Besides Fortnite, Monster Hunter: World surprised gamers in China as it is the first time Capcom have taken a mainline Monster Hunter game to PC. The title has passed censorship in China and Tencent is busy working on the localisation to introduce the game in simplified Chinese language. The game will also be released on the international version of Steam but only in traditional Chinese. The relatively low price for the WeGame version compared to Steam and better server stability in China is likely to appeal to Chinese gamers representing a win for Tencent's platform.