Tencent launches party game DreamStar, analysts say poses a threat to NetEase

HONG KONG — Chinese tech giant Tencent Holdings on Friday (Dec 15) launched DreamStar, a new party game that has been widely anticipated by users and pegged by analysts to pose a threat to domestic arch rival NetEase.

DreamStar, in which gamers play as cartoon characters to race in an obstacle course, is seen as Tencent's move to take on NetEase' massively popular game Egg Party, a surprise hit which has helped lift NetEase shares by more than 40 per cent this year.

JPMorgan analysts said in a note on Thursday that the launch of DreamStar could impact NetEase revenue by two per cent to three per cent. The bank also trimmed its forecast for NetEase revenue for the next two quarters by four per cent and five per cent respectively.

Egg Party is forecast to be on track to earn an annual revenue between seven billion yuan (S$1.3 billion) and eight billion yuan this year, according to a Goldman Sachs note.

As Tencent's answer to Egg Party, Goldman expects DreamStar to earn between five billion and six billion yuan in its first year.

NetEase's market capitalisation reached US$67 billion (S$90 billion) on Friday, a day after surpassing food delivery giant Meituan to become China's fourth-biggest internet company.

Tencent remains China's biggest internet company. It is the world's biggest video games provider and it operates China's leading social network app WeChat.

Tencent has been in search for new hit gaming titles as competition from other game developers like NetEase and miHoYo, producer of Genshin Impact, intensifies. Tencent unveiled its most ambitious console title, Last Sentinel, this month.

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