Written by | Wu Kunyan

Edited by | Wu Xianzhi

The ByteDance Games business, once rumored to be packaged for sale, has revived.

A brief overview of its game business's several changes since the major adjustment in November 2023, from an initial large retreat and waiting for the right price, to being shelved due to low external offers, to announcing the re-incubation of the game business in March and recently introducing external executives to officially restart the business line, all within just half a year.

Similar to its previous large retreat, ByteDance's decision-making is consistently swift. Agility has always been the A-side that ByteDance relies on for rapid development, yet its B-side is its hesitation towards non-TikTok core businesses.

Over the past few years, we have witnessed ByteDance expanding significantly in businesses such as games, VR, education, and TikTok food delivery. These were either chasing trends or following predecessors' footsteps, yet they all ended in strategic contractions. This reflects ByteDance's lack of strategic focus on long-term investments outside its main business, and also highlights its struggle to find growth points beyond TikTok.

As ByteDance's overseas business, TikTok, encountered difficulties, the strategically abandoned yet unsold game business re-entered the decision-making circle's view.

Similar to Baidu and SF Express re-entering the e-commerce market, the fundamental reason for ByteDance's game business returning to its strategic map is the discovery that market opportunities still exist, and as a newcomer, it can grasp new variables in the industry—AI for Baidu, live e-commerce for SF Express, just as UGC and AI for ByteDance.

The issue is that these so-called new variables also mean there are no proven paths. Whether AI or UGC, for ByteDance Games, they are not too different from the trends it pursued in the past.

Tencent excels at creating platforms, while NetEase excels at creating content. These game manufacturers of the same scale as ByteDance have found suitable paths in their past years of development, even making breakthroughs in recent years. So, what does ByteDance excel at creating?

Liang Rubo Looks for a "Story"

Based on past successful cases of ByteDance's distribution and self-developed games, what ByteDance excels at creating can be called momentum—the information flow traffic from TikTok has the ability to create momentum for games and quickly attract new users.

However, with TikTok's profitability demands from game traffic purchases, and the increasingly intense niche operation of the industry due to product refinement in recent years, ByteDance's strength in this area does not have a moat effect for the gaming industry. More importantly, with the development of e-commerce, TikTok's traffic pool has already reached its peak. As a result, when facing the strong demand of other game manufacturers, ByteDance instead needs its own business to make concessions.

A streamer from ByteDance's self-developed hit game "Crystal Core" once complained to us that since the announcement of the cuts, ByteDance has significantly reduced its investment in "Crystal Core," leading to a lack of fresh blood in the game. Recently, it even introduced an item called "Thunder Dragon Soul" that requires spending 129 "648s" (about 80,000 yuan), seemingly "harvesting" veteran players at the end of the game's lifecycle.

"Look at 'DNF Mobile' with the entire WeChat cooperating in its promotion, and then look at 'Crystal Core'. This is the difference between having a father and not having one."

The internet and games are just a chance encounter. To forge a deeper bond, ByteDance needs to elevate its "product strength" to the same dimension as its "marketing strength." This is why when ByteDance entered the gaming industry, it tried to become a giant overnight through acquisitions—industry insiders said that there was nearly a 50% premium on the $4 billion price ByteDance paid to acquire Moonton Technology.

Regarding the current ways for ByteDance to strengthen its game business's product and content strength, ByteDance CEO Liang Rubo had already expressed his views when he decided to dismantle the game business last November.

He believes that games can be roughly divided into three categories: first, games developed based on cutting-edge technologies such as AIGC