Chinese e-commerce giant Alibaba Group Holding may have struck gold with its strategy simulation game, Romance of the Three Kingdoms: Strategy Edition.
The game, created by its subsidiary Ejoy, pulled in record revenue of USD 85.4 million in May, bringing its lifetime revenue since it was launched in September to close to USD 500 million, according to recent data released by app analytics firm Sensor Tower.
“Alibaba had largely been a silent player in the gaming business up until this point. But the continued success of this title has put Alibaba on the map for sure,” Liao Xuhua, gaming analyst at Beijing-based Analysys International, said.
While it is only available in China, Romance of the Three Kingdoms: Strategy Edition (whose official English name is yet to be set) is now the sixth most profitable game worldwide, surpassing long-running hits such as Niantic’s Pokemon Go and Sony’s Fate/Grand Order, Sensor Tower data from last month showed.
In its home country, the title trailed behind only Tencent Holdings’ two marquee titles, PUBG Mobile and Honor of Kings, in terms of revenue, according to the same data.
Alibaba did not immediately respond to queries.
While Tencent, the world’s biggest gaming company by revenue, has long dominated mobile gaming in China, analysts say the time may be ripe for Alibaba to become a bigger player in the industry.
“As China’s mobile gaming market becomes saturated, it is also becoming predictable,” Liao said. “With high quality games like Romance of the Three Kingdoms: Strategy Edition, Alibaba can certainly have a meaningful market share in this sector.”
The stakes are high, with the global market for video games forecast to reach USD 159.3 billion this year, of which mobile games are estimated to account for USD 77.2 billion, according to research firm Newzoo.
The industry has also been boosted by people staying home more during the coronavirus pandemic. Games revenue across all platforms in China was roughly 30% higher in the first quarter of 2020 than the same period last year, according to estimates released in April by Niko Partners.
Liao said Romance of the Three Kingdoms: Strategy Edition could have gained a domestic advantage because there have been fewer new games launched in recent years due to tightened control by China authorities over game licenses.
Other similar strategy and simulation games, such as NetEase’s Immortal Conquest and IGG’s Lords Mobile: Kingdom Wars, are at least three years old.
“Alibaba has worked out a new and refreshing simulation model that is faster and more user-friendly to challenge the old guards of the simulation game genre,” Liao said.
The company’s moves into gaming in recent years are a change in direction from co-founder Jack Ma’s previously voiced views about the industry. In a speech given to an audience at Columbia University in 2010, Ma said that he would not enter the online gaming business as he considered online gaming bad for China. At the time, China’s one-child policy was still in effect, and Ma said families could not afford to have their only children addicted to online games.
But in 2014, the e-commerce giant started venturing into game distribution. It acquired UCWeb, including popular mobile gaming platform UC 9game, while it worked to develop its own online game marketplace, Alibaba Mobile Games Platform.
This platform failed to gain traction, and the company shifted its strategy away from focusing on game distribution to development.
Its acquisition of Guangzhou-based developer Ejoy in 2017 is widely seen as Alibaba’s biggest commitment to game development.
“The acquisition of Ejoy in 2017 allowed Alibaba to acquire a talented development team and gain additional experience in games development to create the hit titles they are releasing today,” said Daniel Ahmad, a senior analyst at Niko Partners.
Liao said Alibaba’s gaming business has transitioned from “the UC era to the Ejoy era,” and Alibaba’s acquisition of Ejoy is finally paying off.
The deal took several years to produce results for Alibaba as Ejoy still had active contracts to produce games for other publishers it had to honor, a person familiar with the situation, who requested anonymity as the information is private, told South China Morning Post.
Ejoy’s last title before Romance of the Three Kingdoms: Strategy Edition—Tale of Winds—was published by Zlong Games, about a year after Alibaba acquired the developer. Tale of Winds was also a hit, with more than 16 million all-time installs and USD 400 million in player spending, according to Sensor Tower.
Alibaba is the parent company of the South China Morning Post.
This article was originally published in the South China Morning Post.