Is it better for Tencent to focus on developing new games or optimizing monetization of current popular titles?

Introduction

The trade-off between developing new games and optimizing monetization of current popular titles is a critical decision for Tencent's gaming division. This scenario involves balancing innovation and growth with maximizing returns from existing assets. I'll analyze this trade-off by examining the context, potential impacts, and key metrics, then design an experiment to inform our decision-making process.

Step 1

Clarifying Questions (3 minutes)

• What's the current revenue split between new games and existing titles?

• Why it matters: Understanding the revenue distribution helps assess the potential impact of focusing on either strategy.
• Hypothetical answer: 60% from existing titles, 40% from new games launched in the last 18 months.
• Impact: If existing titles generate the majority of revenue, optimizing monetization might be more immediately impactful.

• What's our current market share and competitive landscape?

• Why it matters: Market position influences whether innovation or optimization is more critical for maintaining leadership.
• Hypothetical answer: Tencent holds 30% market share, with increasing competition from emerging mobile game developers.
• Impact: Strong competition might necessitate new game development to maintain market position.

• What's the average lifecycle of our popular games?

• Why it matters: Game longevity affects the potential returns from monetization optimization.
• Hypothetical answer: Top titles typically remain popular for 3-5 years before significant decline.
• Impact: Longer lifecycles could justify increased focus on monetization optimization.

• What's our current capacity for new game development vs. optimization?

• Why it matters: Resource availability influences the feasibility of each strategy.
• Hypothetical answer: We have a strong optimization team but are understaffed in new game development.
• Impact: Resource constraints might favor monetization optimization in the short term.

• Are there any upcoming industry trends or technologies that could disrupt the gaming market?

• Why it matters: Future trends could impact the long-term viability of current games vs. new developments.
• Hypothetical answer: VR and cloud gaming are gaining traction but aren't mainstream yet.
• Impact: Emerging technologies might necessitate investment in new game development to stay relevant.