Caixin
Jan 02, 2021 01:02 PM

Tencent, Huawei Failed to Conclude Revenue-Sharing Restructuring Plan by the Year-End

What's new: Tencent's online games were removed and later restored on Huawei's app store Friday in a dispute over revenue sharing between the two Chinese tech giants.

On Friday afternoon, Huawei said in a statement that it had pulled Tencent's games from its app store in response to Tencent's "unilateral request of a significant change" to how the two companies work with each other., temporarily halting any cooperation on online games.

The breakdown in cooperation between the companies on online games is thought to have resulted from the two sides' failed negotiations on their revenue sharing plan for online games, in which Tencent requested Huawei to reduce its 50% cut by the year-end, industry sources told Caixin.

The games were restored after the two companies engaged in subsequent talks and reached an agreement for Huawei to maintain its 50% revenue cut for the time being, Caixin has learned.

Why it matters: The episode is part of broader ongoing disagreements between Huawei and a number of game developers in respect to revenue sharing plans. Huawei, which has been struggling to survive recent U.S. sanctions, insisted on taking a 50% cut in games’ revenues sold on its platform, while game developers, such as Tencent, requested the telecom giant should follow Apple's arrangement of a 30% cut for online games sold on its app store.

The incident also revealed that China’s gaming industry regulators have been granting fewer permits to game developers for their games to be released online, this is thought to have caused a revenue shortfall forcing them to renegotiate their revenue sharing structure with app store partners.

Quick Takes are condensed versions of China-related stories for fast news you can use.

Contact reporter Lu Zhenhua (zhenhualu@caixin.com) and editor Marcus Ryder (marcusryder@caixin.com)


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