The Rise of Mobile Messaging Service as Game Distributor

The Rise of Mobile Messaging Service as Game Distributor

By Ben Chiang on November 13, 2013 

Kakao Talk and Line’s latest financial results epitomized the success of building profitable business upon mobile messaging platform. In-game purchases contributed more than half (about 53%, or US$ 53.7 million) to Line’s revenue in Q2 of this year while KakaoTalk announced earlier this year that its game platform generated US$ 311 million for the first half of this year. It seems Asian messaging services now find a new and rosier revenue source in addition to the ‘traditional’ sticker business.China’s WeChat followed suit and launched its own game platform couple months ago with later introduction of five titles that basically all made it to the Top 1 place under China Apple App Store’s game category.

To date WeChat has launched four titles ranging from match-3 (Tiantianaixiaochu), musical (Jiezou Dashi) to endless running game (Tiantian Kupao), which was said to cash in US$ 16.38 million in the first month after its debut, according to sources from its developer. Tencent expects WeChat to pump up US$ between 818 and 981 million (between RMB 5 and 6 billion) by next year.

Those track records surely intrigued Chinese stranger social networking service – or to put it more straightforwardly, an app to help people hook up – Momo. The service launched a title named Momo Paopaotu (Momo Bubble Rabbit) earlier this month and then the title made it all the way to the top place of App Store with daily average downloads of over 1.8 million.

Tang Yan, founder of Momo recently announced more than 80 million accounts and claimed breaking even. Similar to Kakao Talk and Line, Momo counted on mobile games and sticker shop to make money.

Mobile Messaging System as Game Distributor

Not only these aforementioned successes testified that mobile messaging services could make big money with games and stickers, but also they demonstrated mobile messaging system’s potential in working as a mobile game distributor to either rival against or complement traditional app markets such as Baidu’s 91, 360, Wandoujia and so on, we call them the first generation of game distribution channel. While mobile messaging platforms like WeChat, Momo and some aspirants including Yi Xin (by NetEase and China Telecom), Lai Wang (by Alibaba) are deemed as the next generation of game distribution channel.

According to Tencent’s latest financial results out this afternoon, its mobile QQ/WeChat game business recorded RMB 842 million in revenue or 11% qoq growth, which translates to a uprising market. And as channels like 91 and 360 keep using their dominant positioning in the market to squeeze more revenue out of developers, we expect some app makers turning to new channels, and this speaks to more opportunities in mobile gaming market for services like Momo, Yi Xin or Lai Wang.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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