Alibaba enters mobile gaming industry with $145m investment

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People walk at the headquarters of Alibaba in Hangzhou, Zhejiang province, April 23, 2014.
REUTERS/CHANCE CHAN/FILES
People walk at the headquarters of Alibaba in Hangzhou, Zhejiang province, April 23, 2014. REUTERS/CHANCE CHAN/FILES

Chinese tech giant Alibaba is investing RMB1 billion ($145 million) in the mobile gaming industry, as the group continues to expand its reach in the digital realm, it said in a statement.

Alibaba announced the partnership with Mail.Ru Group, TFJoy, Efun and ONEMT to establish the “Global Strategic Alliance of Game Distribution” on March 16.

China is the biggest market for online gaming, and is forecasted to hit a size of $12 billion by 2020, CNBC cited a PricewaterhouseCoopers research.

However, players in this industry in the country are facing the challenges in terms of passing government censors and the restriction of social media use.

The newly established consortium targets to bridge this gap by providing upgraded gaming experience to local users, as well as to bring more offerings between China and other parts of the world, including Russia, Europe, Japan, Middle East and the US.

Alibaba Games will use big data for accurate distribution and precise recommendation system, the Hangzhou-based firm said.

Units under the tech titan, including Alibaba Digital Media & Entertainment Group, UCWeb, Youku, Alibaba Pictures and Alibaba Literature, will integrate resources to maximize the value of game intellectual property, “building a circulation chain for the IP derivatives,” said Xiaopeng HE, president of Alibaba Mobile Business Group.

He added UCWeb, with its massive traffic entry globally, will play a significant role in the distribution of Alibaba Games.

“The development in mobile games market in the five biggest international market – Europe and the US, Japan and South Korea, the Middle East, Latin America and Southeast Asia, is uneven. European, American, Japanese and South Korean markets are already considered mature markets, while the Middle East in the past two years is seeing rapid development, and Latin America and Southeast Asia as the emerging markets show very high potential in the mobile games consumption. We are doing very well in emerging markets like India and Indonesia already,” said Simon Shi, president of Alibaba Games.

It is a showcase for Alibaba’s strategy of going beyond e-commerce and payment, even after the firm has expanded to movie and entertainment.

Entering the gaming sector, Alibaba Games will compete directly with NetEase and Tencent, the two largest players which altogether take up a 60 per cent market share.

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