Player Spending in Overseas Markets Powers 37 Interactive Entertainment’s Q1 Growth

(Source: 37 Interactive Entertainmen)

Chinese gaming and entertainment company 37 Interactive Entertainment reported a steady increase in revenues and surging profits in the first quarter of 2020 as the company pivots more to markets outside China, where regulations on games are not as strict as the mainland.

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37 Interactive Entertainment’s revenues for the first three months of 2020 increased 33.8% year on year to RMB 4.34 billion. Net profits attributable to shareholders for the period spiked 60.4% to RMB 729 million compared to the same period last year, making 37 Interactive Entertainment the most profitable mainland-listed gaming company in Q1.

The company also forecasted strong year on year net profit growth of 35.5% to 45.2% for the first half of 2020, or RMB 1.40 billion to RMB 1.50 billion, attributing the growth to increased revenue from its mobile titles.

In addition to diversifying its content offering in the mainland China market, with over 30 scheduled game releases in 2020, 37 Interactive Entertainment has also been moving to secure larger shares of other Asian markets, especially the Southeast Asian market, as well as countries like South Korea and Japan. In 2019, the company brought in RMB 1 billion from markets outside China.

This focus on non-mainland markets has continued in 2020. 37 Interactive Entertainment was the 10th highest-grossing Chinese gaming company in March, according to a report from analytics firm Sensor Tower, primarily attributable to the skyrocketing revenues from MU: Across Time, a mobile title launched in Taiwan and Hong Kong in February. Player spending in the title in March soared 740% month over month to around $5 million, or around RMB 35.4 million.

37 Interactive Entertainment’s revenue for 2019 was RMB 13.22 billion, growing 73% year on year. Net profit attributable to shareholders for the period more than doubled to RMB 2.12 billion.

As game approvals, which are essential for games to monetize in mainland China, become increasingly difficult to come by, Chinese gaming companies have been exploring opportunities in overseas markets to boost growth. Tencent, for instance, said in its 2019 Q4 results that its international gaming revenue more than doubled year on year to account for 23% of its total gaming revenue.