Chinese tech giants are racing to build the metaverse, and technology conglomerate Tencent Holdings Ltd. may be best positioned to take an early lead in the country, analysts say.
The metaverse is a virtual environment in which individuals may interact and share their experiences. Gaming and social elements, celebrity encounters, and virtual and augmented reality possibilities might all be included in relevant apps. According to a Morgan Stanley analysis from 2022, China’s total addressable market is estimated to be approximately $8 trillion, making it an appealing place to create metaverses in terms of population size.
The metaverse, on the other hand, may be constrained by China’s prohibition on digital currency and continued gaming and censorship regulations.
Tencent has several advantages when it comes to developing a metaverse offering
Despite the regulatory challenges that all players in the market face, Tencent has a number of advantages when it comes to developing a metaverse offering, including a sizable cash reserve, a dominant position in the local gaming industry, a large social network, and financial technology services, including a payment platform.
Tencent should be able to construct and fill a metaverse ahead of its major rivals, NetEase Inc. and TikTok-parent Beijing Byte Dance Telecommunications Co. Ltd., through a mix of tuck-in acquisitions and enhancements to its gaming skills, experts said.
Tencent, NetEase, and ByteDance did not answer to requests for comment on their metaverse initiatives from S&P Global Market Intelligence.
Gamifying its social apps
Tencent has made some initial efforts in virtualizing its social platforms. Tencent introduced a 3D interactive area dubbed Super QQ Show on its QQ messaging network earlier in 2022, allowing users to chat, watch programs, and play games together. In March, the business applied to the Chinese National Intellectual Property Administration for virtual concert patents.
Su views QQ Music as a way for Tencent to make the music sharing component of QQ more gamified. “I could see them incorporating one of those tapping music games like ‘Tap Tap Revenge’ into their music streaming applications,” Su said. Users must tap their fingers to the beat of the music in tapping music games.