Alibaba Officially Enters the Games Industry

Giant e-commerce company from China, Alibaba, doesn’t seem to be messing with its plans to enter the mobile game industry by creating a new division that will exclusively create and launch games made by Alibaba.

The new division of Alibaba Digital Media and Entertainment Group will be led by Zhan Zhonghui, the former COO of internet and gaming company Net-East and the owner of the new gaming company Ejoy. just acquired Alibaba last week.

Big Names in Alibaba’s Gaming Division

Reporting from an internal letter received by China Daily, Zhan said that if Alibaba is in the game business by combining research and development with the operations division, it is hoped that it can create games that will be popular in the world and get good reception from world gamers.

Besides Zhan, big names in the online gaming industry are also rumored to be joining Alibaba’s newest game unit. Among them are Chen Wei’an who is the product manager of World of Warcraft and Starcraft 2 at Ejoy and Wu Yunyang who is the former main developer for the popular online game Fantasy Westward Journey will also join to develop in-house games on Alibaba.

Game Market Growth in China

Alibaba’s big step in the gaming industry is quite surprising to many because Jack Ma is known to be vocal about the game industry. Reporting from China Daily, in 2008 Jack Ma once said that he ‘would rather starve to death than have to play games’. In 2010 Alibaba also issued a statement that the company would not invest a dime in video games.

However, this seems to be changing considering the massive and promising growth of the game market in China. Based on reports from game companies in Beijing, CNG as well as International Data Corp., showing game sales in the first quarter of 2017 jumped 26.7% to USD15 billion where most of China’s game market is controlled by Tencent and NetEase. Although the Chinese game market is dominated by these two big players, Alibaba is optimistic that there is still room for more big players in the Chinese game industry and also the world.

Alibaba vs Tencent

Alibaba’s move into the gaming industry cannot be separated from the business competition between Alibaba and Tencent. As described above, Tencent is one of the big players in the Chinese gaming industry that has succeeded in creating many popular games that are played by millions of active gamers.

On the other hand, it turns out that Alibaba and Tencent are also competing in the e-commerce field where Tencent is the largest shareholder of JD.com which is Alibaba’s biggest rival in e-commerce in the Asian region. In addition, Tencent is also the owner of Garena, which is an e-commerce operator Shopee which also competes with Alibaba’s subsidiary company, Lazada.

Alibaba’s Footprint in the Game Industry

For your information, this is not the first time Alibaba has tried its luck in the gaming industry. In early 2017, Alibaba invested USD 145 million or around Rp 1.9 trillion to build a global distribution network for mobile games, particularly in emerging markets, such as the Middle East, Latin America and Southeast Asia. Alibaba also invested USD120 million in Kabam, an American-based mobile game developer.

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