"Major Banks" Citigroup: Google Play's billing reform benefits game developers, Tencent and NetEase will benefit

Citi published a research report stating that the bank believes the policy reform of Google Play may mark an important milestone in the charging structure of mobile platforms, likely benefiting Chinese gaming companies with significant overseas mobile publishing businesses and encouraging more studios to explore overseas opportunities. As Google Play splits the standard 30% in-app purchase service fee into a 20% service fee for new installations or specific incentive programs, along with a 5% optional billing charged by the Google billing system, this could lead to a gradual improvement in gross margins for gaming companies, depending on the domestic/overseas and platform mix. With this breakthrough, the bank believes other major app stores may also follow suit to maintain their competitiveness and openness, creating a more favorable tailwind for upstream developers/publishers, especially in the online gaming industry.

Within the bank's coverage, it believes this development could benefit leading gaming companies such as Tencent (00700.HK) and NetEase-S (09999.HK), as well as companies with a significant proportion of overseas business, particularly Century Huatong (002602.SZ)