Further Indian ban on Chinese games like PUBG Mobile unlikely to hurt companies much, experts say

Tan KW

Publish date: Thu, 30 Jul 2020, 11:57 PM

When India issued a sweeping ban of 59 Chinese apps last month after a deadly border clash between the nuclear-armed neighbours, many gamers were relieved to find that PUBG Mobile was not on the list.

Although two other popular Chinese mobile games - Mobile Legends: Bang Bang and Clash of Kings - were blocked, Tencent Holdings’ smash hit, whose full name is PlayerUnknown's Battlegrounds Mobile, was spared.

This relief may be short-lived, however, as the blockbuster game is now among 275 more Chinese apps Indian regulators are scrutinising for national security and user privacy violations, according to a report by English-language Indian newspaper The Economic Times on Monday.

As India moves to edge out Chinese tech influence in the country, Chinese gaming companies risk losing access to about 300 million online gamers in India, according to estimates by German data provider Statista for financial year 2019.

But while the recent developments in India may have hurt some Chinese tech companies or frustrated their plans to expand in the country, a further ban is unlikely to be a major threat to most gaming companies, analysts told the Post.

“India accounts for just a small fraction of the global games market, at about just 1% of the more than US$150bil of global games sales, so for large global publishers the market has a small influence on their overall results,” Matthew Kanterman, a research analyst from Bloomberg Intelligence, said.

For example, although PUBG Mobile has been installed about 180 million times to date in India, representing roughly 24% of the game’s total installs, the revenue it generates is still a fraction of its earnings globally, according to app tracking firm Sensor Tower.

The game, along with its China-specific version Peacekeeper Elite, has been the highest-grossing mobile game for nine straight months since last September. With the coronavirus pandemic boosting the gaming industry in recent months due to more people staying home, the game raked in over US$226mil in revenue in May alone, Sensor Tower data showed.

In comparison, PUBG Mobile has generated an estimated US$38.5mil spending from players in India to date, which is just 1.2% of all spending on the title even though it is currently India’s top-grossing game on Apple’s App Store and the second-highest grossing game on Google Play, according to Sensor Tower.

“This puts its lifetime revenue per download at US$0.21 (89sen) in India, compared to US$9.45 in the US,” Sensor Tower’s head of mobile insights Randy Nelson told the Post.

Still, Chinese games’ sales and development in India will be stymied in India if a wider ban is enacted, according to Darang Candra, South-East Asia director at gaming consulting firm Niko Partners.

“Tencent might also lay off their staff in India due to the negative effects,” he said.

With the future uncertain, Chinese companies are now adopting a much more careful approach when it comes to India, said Liao Xuhua, a gaming analyst at Beijing-based Analysys International.

“There is a strong wait-and-see attitude among companies. Not a small number of companies are also reducing investment and lowering targets for the Indian market,” Liao said.

Rather than directly operating in the country, some companies are opting to invest in India’s sizeable market through other means. For example, Tencent and Alibaba Group Holding - the Post’s parent company - still have investments in several Indian start-ups, Candra said, despite India’s recent move to curb foreign direct investment from bordering countries including China.

Tencent and Alibaba did not immediately reply to queries regarding their investments in India.

The largest gaming company in the world by revenue, Tencent also has a stake in games by other publishers that are less likely to be affected by bans targeting Chinese apps.

Kanterman and Liao both said that even if PUBG Mobile is banned in India, they would expect Garena’s Free Fire and Activision’s Call of Duty Mobile - two other hit games with heavy ties to Tencent - to help cushion the impact for the Chinese gaming giant.

Tencent owns a major stake in Singapore-based Sea, which owns digital entertainment company Garena, while Call of Duty Mobile is a joint project between Tencent and Activision.

“Tencent still has a global presence even with games it doesn’t publish directly in certain markets which further bolsters its position,” Kanterman said. “Its relationship with Activision Blizzard to co-develop Call of Duty Mobile is a great example given the title’s global reach and with Activision publishing the title in India, it may escape this round of app restrictions.”

- SCMP

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