Alibaba Will Launch A Mobile Gaming Platform To Compete With Tencent

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It’s been a busy week for Alibaba Group. The Chinese Internet giant just debuted Weibo Payment, a new payment platform developed for microblogging platform Sina Weibo, and today the company took another significant step for its mobile ecosystem by announcing plans to launch a mobile gaming platform. Like Weibo Payment, Alibaba’s mobile gaming platform will compete directly with products from Tencent.

Though Alibaba is already best known for dominating China’s large and rapidly growing e-commerce market, the company has taken several steps over the last year to create an ecosystem that can potentially meet almost all of its users’ online needs. For example, in addition to its mobile initiatives, Alibaba also launched a smart TV operating system in July.

Its mobile gaming platform will allow Alibaba to tap into a potentially lucrative market. According to China’s GPC, a gaming industry group overseen by the government, the country’s mobile gaming market was worth RMB 11.2 billion, or about $1.9 billion USD, in 2013, up 247% from a year ago. The GPC also said that the number of mobile gamers in China increased 248% in 2013 to 310 million.

As smartphone penetration in China grows, driven by the availability of relatively inexpensive Android handsets, Chinese Internet companies are trying to figure out how to capitalize on the mobile Web. The competition to create an alluring mobile ecosystem will likely heat up in 2014 thanks to the rollout of 4G in China. Tencent is arguably doing the best so far with its mobile efforts, thanks in large part to WeChat and gaming platform. Meanwhile, competitors like Alibaba and Baidu are aggressively ramping up their mobile strategies. For example, Baidu recently purchased app marketplace 91 Wireless for $1.9 billion, the largest acquisition so far by a Chinese Internet company.

Alibaba’s mobile gaming platform will complement its two gaming-related verticals on Taobao, one of the company’s e-commerce sites, and give developers access to payment options, virtual currency and game data that can be stored in AliCloud, the company’s cloud computing subsidiary. One of the key selling points for Alibaba’s mobile gaming platform is its 7:2:1 revenue sharing model, which means that game developers will take 70% of sales, Alibaba 20% to cover the costs of distribution and marketing, and the remaining 10% will be donated to charity.

The company’s existing mobile ecosystem already includes a messaging app called Laiwang, which was designed to compete against WeChat, mobile shopping apps, Alipay Wallet, and a stake in mobile browser UCWeb, which claims 400 million users worldwide.

[Image: Phil Campbell on Flickr]