Gaming stocks saw broad gains in Hong Kong trading. At the time of writing, LINEKONG (08267) rose 7.94% to HK$0.34; BOYAA (00434) increased 5.41% to HK$3.12; BILIBILI-W (09626) advanced 3.55% to HK$210.2; XD INC (02400) climbed 3.06% to HK$74.2; NTES-S (09999) was up 1.39% to HK$185.3; and TENCENT (00700) gained 0.36% to HK$560.5.
The positive movement follows a recent Goldman Sachs research report which highlighted that Apple announced a reduction in commission rates for the App Store in mainland China last week. Additionally, Google stated in early March that it would lower in-app purchase commissions on the Google Play store from 30% to 20% or less, while also opening up third-party payment options, allowing developers to use billing systems outside of Google's own.
Goldman Sachs believes the fee reductions by these two major companies will lower channel costs for mobile game developers and publishers, helping to expand their profit margins. The saved costs could potentially be redirected towards increased research and development investment. This would provide startups and small-to-medium enterprises with a longer development runway, fostering overall industry growth and encouraging more innovative products.
The report further suggested that the changes to the Google Play store could also pave the way for easier overseas expansion by domestic companies. More significantly, Apple's move might set a precedent and serve as a key bargaining chip for game developers to pressure domestic Android channels in China into implementing similar reforms. If these domestic Android channels follow Apple's lead and reduce their commission rates, the profitability of game publishers and developers could see further improvement.
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