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After PUBG Ban in India, PUBG Distances Itself from Tencent Games

Editor, TRANSFIN.
Sep 10, 2020 10:02 AM 4 min read
Editorial

Last Wednesday, the Indian Government banned 118 (more) apps, most of them being Chinese apps, citing national security concerns. Included in this list was PUBG, the wildly popular online multiplayer battle royale game that has had millions of Indians hooked since its release in 2018. 

With over 40 million active users and north of 170 million downloads, India unquestionably is a key focus area for the game publisher. In that context, it is hardly surprising to see PUBG explore restructuring workarounds in its pursuit to re-enter Indian markets soon.

To pacify the Government’s ire and assure them of its good intentions, PUBG Corp., which manages PUBG, has said it will no longer give China’s Tencent Games the right to publish its mobile game in India. Instead, PUBG Corp. Will take on all of PUBG’s publishing responsibilities in India.

Wait...what?

Well, the full picture is as clear as mud, so let’s break it down to make head or tail of what’s going on.

So, is PUBG a Chinese app?

No...and yes.

PUBG Corp. Is an affiliate of video game company Bluehole Studio. Bluehole is headquartered in Bundang-gu, South Korea - not China.

So, why all the hullabaloo about PUBG’s supposed Sinicised origins?

Enter, Tencent, the $600bn multinational Chinese conglomerate.

You see, PUBG was initially introduced as a PC game in 2017, but struggled to secure a foothold in China. So Bluehole partnered with Tencent Games to develop a mobile version of the same, which was released worldwide in 2018 and became a colossal success.

Oh, and Tencent bought a 10% stake in Bluehole in mid-2018.

BTW: PUBG Mobile’s popularity dwarfs its PC peer’s. In 2019, the mobile game garnered 400 million players, 50 million of them being daily active players. PUBG PC, meanwhile, has only 800,000 daily active players.

So, to sum up: The product was the brainchild of a South Korean company (the game was actually designed by an Irish national, Brendan Greene). But it was distributed through a Chinese MNC, whose fingerprints are all over the game. (In fact, when the mobile game is launched, players first see the Tencent Logo and then the PUBG Corporation logo!)

 

The India-PUBG-Tencent Triangle

Like it or not, PUBG is a big deal for Indians - and vice versa.

Also, PUBG is a cash cow for Tencent Games, which reportedly earned $1.3bn from the mobile app last year.

In fact, to picture just how important the PUBG business is to Tencent, notice how the company’s stock reacted to news of the app ban on September 2nd:

Following PUBG Ban in India, PUBG Distances Itself from Tencent GamesAnd it’s a two-way street. India is PUBG’s largest market by users, hands down. A towering 24% of the app’s 734 million worldwide downloads come from the country. This then eases sharply to 17% from China and 6% from the US in second and third place. That being said, extrapolating India’s lofty user share to revenue contribution would be foolhardy. The Indian market is largely ARPU dilutive for the publisher. In fact, it is not even in the top three markets from a revenue generation standpoint. 

However, the Indian market nonetheless is worth fighting tooth and nail for. A solid user base with a robust growth profile, favourable long-term macro tailwinds and smartphone ubiquity coupled with cheap data, promises aspirational rewards in the end game for PUBG.  

India’s relationship with PUBG is a love-hate one. This isn’t even the first Indian PUBG ban, actually. In early 2019, Gujarat banned the game, saying it was "too addicting and violent". Some educational institutes like Vellore Institute of Technology forbade its usage in campuses or hostels. A Goan minister called the game “a demon in every house”, and it even led to an 11-year-old filing a PIL in the Bombay High Court asking for the game to be removed from app stores.

Talk about a complicated relationship!

 

What’s Happening Right Now?

PUBG is trying to reopen its India business by distancing itself from Tencent. Whether that will be sufficient to placate authorities’ concerns remains to be seen. As of today at least, the game remains missing from the Google Play Store and Apple App Store in India.

Nonetheless, the geopolitical nuances that are dictating these developments can’t be discounted. So long as tensions between India and China remain palpable, catering to Indian PUBG fans’ nostalgia for their beloved game will be low on the totem pole.

Meanwhile, in tandem with the “Atma Nirbhar Bharat” agenda, a Bengaluru-based gaming publisher is expected to launch a PUBG-like multiplayer game called...FAU-G (Fearless and United Guards). Whether fans of the former will warmly embrace the game’s made-in-India avatar is anybody’s guess! But betting on India’s mobile gaming market, which is backed by cheap data, an influx of low-cost smartphones and a gaping PUBG shaped hole, is perhaps one worth making.

FIN.

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