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After its secondary listing in Hong Kong, Chinese gaming company NetEase is going to expand globally using prominent franchises like “Harry Potter” and the “Lord of the Rings”.
NetEase Inc, the Chinese gaming firm, is set to go global with adventure-themed games. This comes after its secondary listing in Hong Kong, NetEase is looking to make games themed after big adventure franchises to appeal to international gamers. The company has announced earlier in the week that it has created a mobile game called “The Lord of the Rings: Rise to War”.
The game is based on J.R .R Tolkien’s Lord of the Rings series of novels and hugely successful Hollywood blockbuster trilogy.
This comes after the gaming company released “Harry Potter: Magic Awakened”. The game based on the JK Rowling novels and was a result of a partnership between the firm and Warner Bros. Interactive entertainment.
At the time of filing this report, NetEase Inc (HKG: 9999) stock price was 128.80 HKD (+1.66%). Meanwhile, at Nasdaq where the stock is listed under the ticker NTES, it closed at $409.30 (+0.47%) yesterday and now in the pre-market, it is 1.09% up, at $413.76.
NetEase Works with Big Brands, Feels Good after Secondary Listing
Partnerships with major franchises seem to be at the core of the largest gaming company after Tencent Holdings Ltd (HKG: 0700).
“For NetEase, our globalization strategy is powered by strong in-house R&D capabilities, while partnerships with world-famous IP (intellectual property) powerhouses not only further enhance this strength, but also contribute to our ambition to deliver more popular titles in the global markets,” the firm told the sources.
The partnerships that Netease has with major brands allows them to generate revenue from the Chinese market. The Chinese market is one of the world’s largest gaming markets. The Chinese are known for their love for gaming among other things.
The introduction of international brands into China is a well-known profit spinner for those who have the foresight to do such.
Netease raised $21.09 billion Hong Kong Dollars from the Hong Kong Secondary market. The company is looking to invest a lot of that money in other gaming companies. NetEase told sources:
“With each minority investment, we offer both the vast resources of NetEase as an established developer and the creative freedom to keep working on whatever they are most passionate about.”
This phenomenon of stake acquisition is a major strategy that Tencent also uses. The difference is that Tencent acquires majority stakes. Already, Netease has acquired stakes in Niantic and Canadian gaming company Behaviour Interactive. Niantic is well known for its “Pokemon-Go”.
Many within the gaming community think that this will enable NetEase to gain further ground in the gaming world. As its cash flow builds up, NetEase could go on to make bigger moves.
Bigger Issues Are at Stake
One inherent threat that looms on the horizon is the U.S.-China trade issue.
Gaming is a core part of the intellectual property market. A significant change in this market based on tensions could affect NetEase negatively. The U.S. is in an election year. President Donald Trump is known for his negative view of collaborations between U.S. and Chinese companies.
Should he win, NetEase and others will face a series of peculiar challenges. This is one more hurdle that the gaming coming may have to face.
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