Tencent Holdings CEO and co-founder, Pony Ma, has warned that the tech giant’s gaming business faces a significant challenge from competitors – but remains hopeful about its AI development. 

During Tencent’s annual meeting on Monday (29 January), Ma said it appeared that the company had “achieved nothing” in its gaming unit while its competitors delivered a range of new successful hits. 

“Gaming is our flagship business…But in the past year, we have faced significant challenges,” Ma said reported by Chinese media outlet Jiemian.

Adding: “We have found ourselves at a loss, as our competitors continue to produce new products, leaving us feeling having achieved nothing.”

Tencent, which gets 30% of its revenue from gaming, has had its recent releases fall short of expectations, according to Ma.  

However, its previous titles PUBG Mobile and Honor of Kings, continues to provide steady revenue to the company due to their high player counts. 

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The company’s rivals have had more success with their recent releases, such as miHoYo with Genshin Impact and NetEase with Eggy Party. 

However, despite Tencent falling behind in the gaming sphere, Ma believes the company is catching up with AI development. 

“We can finally follow the pace of the first-tier companies,” Ma said, “we don’t count ourselves as the most leading but at least we are not too behind.”

Mobile gaming remains huge but deals in China have slumped

Mobile gaming is bigger than the console and PC gaming markets combined, contributing nearly 57% of the $173bn global video games revenue in 2020.

The entire mobile gaming market was worth $98bn in 2020 and is expected to grow to $272bn by 2030, at a compound annual growth rate of 11% over the period, according to research company GlobalData.

The growing maturity of streaming, cloud gaming services, and mobile esports, combined with the fact that mobile platforms are close to technical parity with PCs and consoles, means most gamers will embrace mobile gaming in the next few years, according to GlobalData’s Thematic Research: Mobile Gaming report.

Joseph Simpson, analyst at GlobalData, told Verdict that more triple-A games are getting mobile versions, which is good news for the sector.

“In 2023, Apple announced that iPhone 15 Pro smartphones will run triple-A games, like Resident Evil Village and Assassin’s Creed Mirage,” Simpson said.

“This is a key development, allowing triple-A game publishers to reach even larger audiences,” he added.

Despite this, the value of capital raising gaming deals in China has plummeted since 2018, according to GlobalData’s deal database.

In 2023, the value of gaming deals in China totalled $158m, according to GlobalData.

This was a significant decrease from 2020, which saw deals total $10.3bn.

The value of gaming deals in China peaked in 2018 at a total value of $16.9bn.