Tencent's New Game 'DreamStar' Shakes Up the Gaming Scene: Will it Outshine NetEase's Smash Hit?

Tencent Holdings Ltd TCEHY, a prominent Chinese tech giant, recently launched "DreamStar," a party game creating buzz among users and seen as a potential rival to NetEase Inc's NTES popular game "Egg Party." 

DreamStar, which features cartoon characters racing in an obstacle course, marks Tencent's strategic move against NetEase, whose Egg Party has significantly boosted its shares by over 40% this year, Reuters reports.

Dream Star is part of Tencent's strategic investment of 1.4 billion yuan ($196 million) in game development.

Also Read: Nvidia Faces Fierce Competition in China, Tencent and Huawei Lead the Charge

Analysts from JPMorgan anticipate that DreamStar's release might reduce NetEase's revenue by 2-3%. 

Consequently, they have lowered their revenue forecasts for NetEase for the upcoming two quarters by 4% and 5%. 

Egg Party, meanwhile, is expected to generate an impressive annual revenue of 7 to 8 billion yuan (approximately $980 million to $1.1 billion), as per Goldman Sachs.

Goldman Sachs also projects that DreamStar could earn between 5 and 6 billion yuan in its first year. 

This launch comes when NetEase recently achieved a market capitalization of $67 billion, surpassing Meituan to become China's fourth-largest internet company. 

However, Tencent still holds the title of China's largest internet company, being the world's top video games provider and operating WeChat, China's leading social network app.

In the context of increasing competition from other game developers like NetEase and miHoYo, the creator of "Genshin Impact," Tencent actively seeks new successful gaming titles. This effort includes the recent unveiling of "Last Sentinel," their most ambitious console title.

Also Read: Tencent's New Console Gamble: Can 'Last Sentinel' Redefine Future Gaming?

Price Action: NTES shares are trading lower by 1.24% at $103.14 on the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.