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Last week Tencent and Pokemon unveiled Pokemon Unite, a jointly-developed cross-platform MOBA for smartphones and Nintendo Switch. As commentary, I wrote:

“Yes, Tencent already owns the biggest MOBA franchises on PC (League of Legends) and mobile (Honor of Kings). Yes, Tencent/Riot are still planning on launching [LoL: Wild Rift] on both mobile and console. No, Tencent does not care about cannibalization, so long as its own children win in the end. For that reason, Tencent is often described by both insiders and outsiders as a shark womb: shark embryos cannibalize their littermates in the womb, with the largest embryo eating all but one of its siblings”

As Riot’s previous Revenue Lead of League of Legends: Wild Rift, a co-developed project with Tencent as well, I received multiple messages from readers probing for my thoughts with questions like: “Does Tencent hate Riot?”

Tencent Games, the world’s largest video game company, is often misunderstood by outsiders, and even after working on Wild Rift for several years, I have to admit that my understanding of the politics at the leadership level is still cursory at best. However, in this post I will try to provide as accurate a representation as possible on the context and timeline of events that have occurred up until now in the mobile MOBA space. (As a bonus, mobile battle royale history will also be covered.)

Before diving into Tencent’s external relations, to set the scene we first need to understand the history of Tencent’s internal teams. Tencent has various internal game development studios, but two stand out in particular as the most successful to date: TiMi and Quantum/Lightspeed. These two studios are relentless rivals (think Ash and Gary from Pokemon).

As I mentioned last week, Tencent’s R&D process is analogous to a shark womb, and purposefully designed as such, as internal competition is encouraged and handsome incentives are reserved for the fittest that survive. For example, after Tencent’s biggest domestic competitor NetEase found initial success in the mobile battle royale space with Knives Out and Rules of Survival, Tencent, similarly to what NetEase had done, spun up multiple teams to begin production in parallel. At key milestones, progress was judged and the laggards were subsumed by the winners until there were only two: TiMi’s PUBG: Army Attack and Quantum’s PUBG: Exhilarating Battlefield. Rather than picking one, Tencent decided to launch both and evaluate with real data which version players loved more. That ended up being Quantum’s version, a closer “carbon copy” to PUBG on PC, and Quantum reaped the rewards both domestically and abroad.

While Quantum won this chicken dinner, TiMi wasted no time in queuing up for the next round, and their strategy was to reach higher up the IP value chain. Six months after the mobile releases of PUBG, TiMi inked a partnership with Activision, and a little over a year later Call of Duty: Mobile released to massive success outside of China.

This chain of “IP escalation” from:

Unbranded, fast-follow mobile port to
Incumbent-branded mobile port to
$20B+ IP-branded mobile port

… is not unique to the mobile battle royale space. With the announcement of Pokemon Unite, we are witnessing this dueling pattern emerge again with mobile MOBAs.

The biggest mobile MOBA currently on the market is TiMi’s Honor of Kings. Launched in 2015, it has consistently remained China’s #1 top grossing app (not game) for almost five years, though has for the most part failed in penetrating Western markets. While still in development, Tencent actually approached Riot several times with prototypes to seek an IP partnership. Unfortunately, these pleas fell on deaf ears: Riot leadership viewed the idea skeptically as a fad, similar to Zynga’s Facebook games (which, to their credit, they were right to avoid).

Similarly to PUBG’s process, TiMi and Quantum had each been developing their own mobile MOBA versions, but TiMi took more aggressive liberties in copying League of Legends for theirs. In fact, after launch Tencent publishing would explicitly leverage LoL’s brand in promotional materials to market TiMi’s HoK without Riot’s express permission. This led to some internal conflict, which ultimately was resolved through negotiation.

While HoK significantly cannibalized LoL’s Chinese revenues month after month, Riot leadership eventually started coming to terms with the new normal. No, this was not a fad: hardcore gaming experiences can not only exist, but also thrive on mobile. A full year later after HoK’s release did Riot finally allowed a skeleton crew to begin collaborating with Quantum, TiMi’s rival, on a mobile version of LoL.

While it took Tencent less than three months to ship PUBG on mobile and one year to ship CoD: Mobile, League of Legends: Wild Rift has still been in development for more than 3.5 years. Comparing projects across different genres may not be fair, but with Pokemon Unite’s announcement last week, we are able to use that project’s timeline as a more appropriate benchmark. TiMi, running the same playbook as it did with battle royale, one-upped Quantum by partnering with the world’s highest-grossing media franchise in July 2019, and less than one year later Pokemon’s cross-platform MOBA has already been announced.

One question remains: how will Wild Rift fare with this new challenger approaching?

Wild Rift’s primary value proposition to Riot has always been to grow the League of Legends audience beyond its original PC fan base. For the West, this source of growth would primarily come from console, and for everywhere else, especially Asia, mobile.

Unfortunately, Wild Rift’s console development has significantly lagged behind its mobile counterpart, so Pokemon Unite will have a significant head start on the Switch, and in the U.S. 71% of Switch owners "own at least one other current-gen console.”

The challenges to surmount on mobile seem even greater, as HoK and its spin-offs (e.g., Arena of Valor) have already dominated China and neighboring countries for half a decade. Recently Niko Partners published a report on female gamers in Asia, "one of the region’s fastest growing gaming audiences.” Here is one case study from the report I wanted to highlight in particular:

“In 2018, Chinese developer Xishanju’s CEO Guo Weiwei reported that female gamers made up nearly 50% of Jianxiaqingyuan’s (JX3) user base, despite females typically only accounting for 20% of massively multiplayer online role playing games (MMORPGs) in Asia.

It’s worth noting that unlike other MMORPGs that primarily use Japanese-style aesthetics or Western-style realism, JX3 uses a colorful and palatial visual style that evokes the Tang Dynasty’s classical paintings, including people in beautiful traditional Chinese outfits flying around and battling in Wuxia martial arts style”

The truth is, while Western audiences may scorn the distinctly Chinese aesthetic of TiMi’s Honor of Kings as “knock-off,” many Chinese female players, whom comprise about half of HoK’s player base, consider League of Legends’ art to be too Western—too frightening and/or too sexualized.

As competition increases globally in game development and regional studios are better able to serve regionally divergent tastes (e.g., by platform, aesthetic, etc.), it will become increasingly difficult for IPs to achieve the same levels of international success they once easily did years ago. There are, of course, rare exceptions—the most notable being Pokemon.