Date
17 November 2017
Chinese mobile gaming firms are rushing to list their shares to build up war-chests for product development and potential acquisitions. Photo: Technode.com
Chinese mobile gaming firms are rushing to list their shares to build up war-chests for product development and potential acquisitions. Photo: Technode.com

Get set for new IPO wave from mobile game firms

China’s mobile gaming sector is set to unleash a new wave of initial public offerings (IPOs) in the coming months, with game publishing platform iDreamSky — which filed plans last Friday for a Nasdaq float — leading the charge.

THL A19 Ltd. is the biggest shareholder of iDreamSky, with a 26.6 percent stake. It is worth noting that THL A19 is a subsidiary of tech giant Tencent.

In fact, iDreamSky has been working closely with Tencent. The android version of a popular game Subway Surfers launched by the mobile game publisher was the first game that players could purchase through Tencent Payment. iDreamSky’s Chinese version of the worldwide hit game Fruit Ninja will also be launched on Tencent’s instant messaging app Weixin shortly.

Many more gaming firms are in the IPO queue. Beijing-based Linekong Entertainment is reportedly planning to go public in Hong Kong. Kalends, Locojoy and Snail Game are all preparing for their IPOs, according to 21st Century Business Herald.

From developers to distributors, gaming firms of all kinds are clearly rushing to list their shares to secure funding ahead of others and build up war-chests for product development and future M&A needs while the market window is still open.

Despite the hype surrounding the fast-growing industry, the gaming business is also known for its notoriously short product life cycle (a game does not stay popular for long), high failure rate (very few games make to the blockbuster list) and rapidly shifting technology.

The fast evolution of online games can be reflected in the shift from browser games to mobile games in just a few years. The latter blossomed since 2012 as smartphones became the must-have gadgets for many people.

The next trend? It should be the ‘living room games’ market. As internet-connected TVs are gaining popularity in Chinese households, industry insiders predict that the living room will be the next warzone for online game players.

With Tencent’s backing, iDreamSky may draw quite a bit of attention. But for investors, picking the right gaming plays is a bit tricky.

The performance of earlier listings tells investors a thing or two about the high volatility and diverse fortunes of players in the sector.

Mobile game developer Ourgame International (06899.HK) has seen its shares slide 13.6 percent since their debut on the Hong Kong bourse last month. Forgame (00484.HK) now trades at HK$25.75, down 49.5 percent from its IPO price. Boyaa Interactive (00434.HK) gained over 180 percent (its offering price was HK$5.35, and the price reached HK$15.16 this Feb) from its offer price at a point but has retreated substantially. It is now only 48 percent above the IPO price, at HK$7.91.

– Contact the writer at [email protected]

RC

The mobile game sector’s fundraising wave

A wave of mobile games IPO is coming in the second-half of this year, led by mobile game publishing platform iDreamSky, which filed for an Initial Public Offering (IPO) on NASDAQ last Friday.

THL A19 Limited is the biggest shareholder of iDreamSky, holding 26.6 percent stake of the latter. It is worth noting that THL A19 is a subsidiary under tech giant Tencent.

In fact, iDreamSky has been working closely with Tencent. The android version of a popular game Subway Surfers launched by the mobile game publisher was the first game that players could purchase through Tencent Payment. iDreamSky’s Chinese version of the worldwide hit game Fruit Ninja will also be launched on Tencent’s instant messaging app Weixin shortly.

Many more gaming firms are in the IPO queue. Beijing-based Linekong Entertainment is reportedly planning to go public in Hong Kong. Kalends, Locojoy and Snail Game are all preparing for their IPOs, according to 21st Century Business Herald.

From developers to distributors, gaming firms of all kinds are clearly rushing to list their shares to secure funding ahead of others and build up warchests for product development and future M&A needs while the market window is still open.

Despite the hype enjoyed by the fast growing industry, the gaming business is also known for its notoriously short product life cycle (a game does not stay popular for long), high failure rate (very few games make to the blockbuster list) and rapidly shifting technology.

The fast evolution of online game can be reflected in the shift from browser games to mobile games in just a few years. The latter blossom since 2012 as smartphone becomes the must-have gadgets for nearly every people.

The next trend? It should be the ‘living room games’ market. TV-sets that are connected with the internet is gaining popularity in China households, industry insiders thus generally predicted that the living room will be the next warzone for the online game players.

With Tencent’s backing, iDreamSky may draw quite a bit of attention. But picking the right gaming plays proves to be tricky.

Examples from previous listings can tell investors one thing or two about their high volatility and diverse fortunes.

Mobile game developer Ourgame International (06899.HK) that debuted in Hong Kong Stock Exchange last month has fallen 13.6 percent since listing. Forgame (00484.HK) now trades at HK$25.75, 49.5 percent down from its initial offering price. Boyaa Interactive (00434.HK) surged 1.8 times higher than its offering price at a point but has retreated substantially to 48 percent or HK$7.91.

– Contact the writer at [email protected]

 

EJ Insight writer

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