Tencent's New Game 'DreamStar' Shakes Up the Gaming Scene: Will it Outshine NetEase's Smash Hit?
Portfolio Pulse from Anusuya Lahiri
Tencent Holdings Ltd (TCEHY) launched a new game 'DreamStar', seen as a competitor to NetEase Inc's (NTES) 'Egg Party'. DreamStar is part of Tencent's 1.4 billion yuan investment in game development. JPMorgan analysts predict DreamStar could reduce NetEase's revenue by 2-3%, leading to a reduction in revenue forecasts for NetEase for the next two quarters. Goldman Sachs estimates DreamStar could earn 5-6 billion yuan in its first year, while Egg Party is expected to generate 7-8 billion yuan annually. NetEase recently became China's fourth-largest internet company, but Tencent remains the largest. NTES shares dropped by 1.24% to $103.14.
December 15, 2023 | 7:49 pm
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POSITIVE IMPACT
Tencent's launch of 'DreamStar' could potentially boost its gaming portfolio and revenue, reinforcing its position as China's largest internet company.
Tencent's strategic investment in 'DreamStar' is likely to enhance its gaming portfolio and attract users, which could lead to increased revenues and a positive impact on its stock price in the short term.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
NetEase may face revenue declines due to competition from Tencent's 'DreamStar', with JPMorgan analysts predicting a 2-3% revenue drop and NTES shares already falling by 1.24%.
The release of 'DreamStar' by Tencent is expected to compete directly with NetEase's 'Egg Party', potentially reducing NetEase's revenue and negatively impacting its stock price in the short term as reflected by the recent share price drop.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80