On the Shoulders of Giants – The Next Fortnite?

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tencent fortnite video game investing
October 25, 2018

Today, we want to give you a peek behind Fortnite’s success. From their monetization model to their gameplay, they’re doing everything right…

And making billions as a result.

But they haven’t done it on their own.

Two Chinese companies, one a massive corporation and the other a small gaming company, played a large part in Fortnite’s success.

The One Company That Can Make or Break a Video Game

You may have never heard of Tencent before. It’s one of the largest companies in the world. It owns:

  • The world’s largest gaming company
  • The world’s largest social media company
  • One of the world’s most valuable technology companies
  • One of the world’s largest venture capital firms and investment corporations
  • Most of China’s music services, which are the world’s largest and most profitable

Everything Tencent touches turns to gold.

But where they really make their money is in games. As of March 2018, it is the largest video game company in the world. In the second quarter of 2018, 48% of Tencent’s revenue ($5.3 billion) came from gaming.

That’s more than seven times Fortnite’s revenue in the same time period.

Tencent’s huge position in the market has turned them into a video game powerbroker. A deal with them is a stamp of approval on a game, and a near-guarantee of success.

When Tencent became the exclusive distributor of Fortnite in China, they quickly amassed 10 million pre-registrations for the game.

They’ve helped make top games in the world, like Clash of Clans, League of Legends and Honor of Kings – the highest-grossing mobile game in 2017 – into household names.

How?

For one, Tencent rakes in a lot of money.

In their latest quarter, they earned more than $2.5 billion in profit. So they can throw massive amounts of money behind every new game release.

Tencent also owns messaging and social media app WeChat. Through the app, they can promote new game releases to more than 1 billion monthly active users.

But the biggest value a Tencent partnership offers to games like Fortnite is access to the largest gaming population in the world: China.

In China, games face stringent approval requirements by the government. But a partnership with Tencent all but guarantees a new game’s approval.

The Company That’s Making the Next Fortnite

Fortnite also owes its success to a small Chinese gaming company. That company was responsible for a big portion of Fortnite’s development.

And now, the company is making its own game – in China, the best place on earth to make and launch a new video game.

Game development in China is extremely cheap. For example, the company we’re talking about launched its first game in 2012… and made a 1,300% return on its investment.

Games can be produced and iterated extremely fast, which is important when you’re creating the next Fortnite. And competition in China is still limited, since there are no Activision Blizzards or TakeTwos there yet.

Tomorrow, we’re releasing a special coverage report. Inside the report, we’ll reveal the single company that is ready to launch the next Fortnite in China.

They have partnered with Tencent in a big way. And they’ve already procured vital approval for their new game with the Chinese government.

You won’t find this company with Google. “Games” isn’t even in the name.

But it’s got some of the biggest names in gaming behind it. And it’s ready to take off.

Expect the most comprehensive report on the video game sector in your inbox tomorrow. And in it you’ll find the analysis on the company we believe will make a big splash in the sector.

Regards,

Katusa Research

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