Yahoo! Inc. (YHOO) Might Profit From Online Mobile Games Market in China With Alibaba

Ahead of its potential IPO on September 18, Alibaba Group Holding Ltd is all set to breach the mobile games market with aggressive acquisitions and development facilities. Mobile game development will help the company excel in the highly competitive Chinese Internet market. This might help Yahoo! Inc. (NASDAQ:YHOO) to earn more with its Alibaba investment.

Alibaba is already exploring its options and the company purchased stake in a U.S. mobile-game publisher. In addition to it, it has partnered with several Chinese and US mobile game developers to gain an upper hand in the market. Alibaba is hiring staff in China and South Korea to develop mobile games and associated research.

Yahoo! Inc. (YHOO)

According to a report published by the research firm Newzoo, China has over 350 million mobile games, significantly higher than the combined number of mobile gamers in the U.S. and Japan. The country had mobile revenue of $2.28 in last year and it is likely to increase three-fold to $6.6 billion by 2016. On the contrary, U.S. will grow its revenue to $6.4 billion trailing behind China and Japan will have mobile game revenue of $6.1 billion.

TENCENT HOLDINGS ADR (OTCMKTS:TCEHY) is the primary rival of Alibaba Group Holdings Ltd in online gaming industry. Tencent Holdings leads the current mobile gaming market in China with a majority of its revenue ($3.2 billion) coming from mobile games for the second quarter 2014. Considering the large potential in Chinese mobile gaming industry, there is a significant scope for the growth of late movers.

Earlier, Yahoo! Inc. (NASDAQ:YHOO) is planning to sell up to 140 million shares in the first public offering of Alibaba’s shares in September. The tech-giant is likely to make up to $10 billion, which will help Yahoo! Inc. (NASDAQ:YHOO) stand up against its competition. However, the company is still looking for a way to save the tax money generated from this offering.

This article has been written by Prakash Pandey.

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