How ByteDance plans to crack the gaming industry – TechCrunch

For the past few years, the parent company of short video app Tiktok, ByteDance, has been working to diversify its revenue streams beyond advertising and is finding more ways to demonetize its hundreds of millions of users. One area that is being targeted is gaming, which has historically been a lucrative business in China’s Internet economy.

According to the market research firm, China is the world’s largest gaming market, generating revenue of $ 40.85 billion in 2020. Newzu. The United States went behind by $ 36.92 billion.

But competition is also intense. Giants Tencent and NetEase have been dominating for a long time and younger players like Mihoyo and Lilith have been successful. According to Market research firm Analysis, Tencent captured half of the Chinese gaming market in 2019, while NetEase and 37 Interactive commanded 16% and 10% respectively, reducing breathing space for smaller rivals.

Regardless, ByteDance is ahead, giving a brand name, Nuversegame, And a website for his gaming business for the first time last month. Its strategy includes a style-spanning portfolio, a hiring spree, a proven monetization plan and a focus on both domestic and foreign markets. during his Short term with bitdance, Kevin Mayer was put in charge of many foreign businesses, Including gaming.

Bytdance, David seems unaffected by Goliaths when it comes to sports. As one of the company’s gaming executive Yan Shaw wrote A year ago in a social media post: “Gaming is a content business. Monopoly is difficult to maintain [in this industry] As long as there is patience. “

Fight for talent

In recent years, ByteDance has hired a large number of former employees from BAT, an abbreviation for the three most prominent tech firms in China: Baidu, Alibaba and Tencent. Yan himself work On strategy at Tencent for two years before joining ByteDance in 2015. Poaching and job-hopping are common in China’s fast-changing tech industry, baiteddans have been known to pull out of generous salaries and many tech workers are lured by the prospect of getting employees. Someday the options become public in front of the firm.

Ambitious employees may also feel stagnant after a long period at Alibaba and Tencent, both of which are more than 20 years old and where space for career advancement is limited. ByteDance, in comparison, is only nine years old and still in a rapid growth phase, tells TechCrunch, a Beijing-based headhunter for technology companies.

“The current phase of ByteDance and new businesses are giving these people the right platform to achieve their ambitions,” says the headhunter.

In gaming too, ByteDance has gone on a recruiting spree. According to a person with knowledge, the company’s gaming headcount today is around 3,000, up from just 1,000 last year. These employees are working in various gaming studios under Beijing, Shanghai’s leading tech hub, ByteDance, from Beijing, Shanghai, Hangzhou to Shenzhen.

How big is the team of 3,000 people? 37 Interactive, China’s third-largest gaming firm, had about 4,000 gaming employees as of January, According to a company executive. It took the company 10 years to reach this scale. Bytdance began exploring the games only about five years ago.

Bytdance declined to comment on the story.

Sports factory

Being late in the game can have benefits. Have seen how Tencent and other predecessors allow ByteDance to learn to deal with the gaming market. For one, ByteDance is working on a variety of genres simultaneously, from disposable mobile games to indie titles with unconventional designs or themes. This makes Bytes different from Tencent, said Daniel Ahmed, a gaming analyst at Nico Partners. The world’s largest gaming company Tencent cut its teeth Board and card game Before gradually expanding to other genres in the 2000s.

Of course, only one with deep pockets, like ByteDance, can strive for a diversified portfolio from day one. With a well-built advertising business, Over All, along with its short video app Doyen and news aggregator Tutiao $ 7 billion Raised from equity funding over the years, ByteDance has been able to fulfill its horizontal expansion not only in sports but also education And mother-in-law.

In addition to hunting for talent from other tech giants, ByteDance also relies on swallowing small companies to boost its workforce. Since 2018, ByteDance has invested in at least 11 gaming companies, six of which were wholly AcquisitionAccording to public disclosures. The acquired assets and talent were later incorporated into ByteDance’s gaming studios. Aquayi-Hiring is an old and proven formula in ByteDance. Kyle Zhang, product manager, is also credited with removing the Chinese version of TyTalk, Doyin from the ground, after Bytdance bought his photo-sharing startup.

Like many gaming firms, ByteDance’s monetization scheme is two-way: distribution of third-party titles and original productions. Quality games do not come overnight, so the strategy allows its gaming unit to receive some revenue as it bets on one of its own functions to be a cash cow. Casual games are great for commercials, which are usually placed between levels. More complex games rely on user loyalty and in-app purchases are the natural way to earn money.

ByteDance’s many licensed casual games have so far made it into the top 10 iOS free games in China, including a car racing game. Drift race, Playing music Yinye Kiyukiu, And puzzle games Brain out. While these collaborations do not yet make big money, the initial traction proves the feasibility of ByteDance’s traffic strategy.

ByteDance stated that its app family had 1.5 billion monthly users in 2019 (there may be user overlap between apps). In a way ByteDans is marketing the game by placing native advertisements in the content feed of the users. The video, says Ahmad of Nikko Partners, “is interactive, easy to use, easy to click, and can get a lot more conversions than traditional ads.”

In some cases, the advertisement may prompt users to download a standalone gaming app. But like WeChat and most popular apps in China, Doyin and Tutiao support third-party “mini apps” within their own platforms. For instance, users can play light games on Douyin the way they can on WeChat.

With hundreds of millions of monthly users, ByteDance already has a good understanding of people’s tastes and behavior It knows which games to recommend. In theory, the more people see and react, the more accurate its predictions are.

Gaming developer of ByteDance explains, “Through targeted ‘recommendations, our’ algorithms’ will automatically show mini games presented to users in various forms.” The booklet. “There is an equal and equal chance of getting an early performance in all sports.”