Report: Tencent pivoting from licensed games to own works

According to Reuters, Tencent is changing up its development strategy. Rather than devote its time into making mobile games for "foreign franchises," it'll focus on its own, original titles.

Sources told the outlet "hundreds" of staff that spent years working on Assassin's Creed Jade for Ubisoft have now been transferred to Tencent's just-launched DreamStar. As a result, Jade is now expected to launch in 2025.

Previously, Tencent was making phone spinoffs for Elden Ring and Nier. The latter was eventually scrapped, in part because it wanted to pay 10 percent in licensing fees to Square Enix rather than the standard 15-20 percent.

In the past year, the company has faced several "setbacks" with its licensed lineup. Along with shuttering Apex Legends Mobile, its mobile Call of Duty game now has a rival in Activision Blizzard's very own Call of Duty Warzone Mobile.

Tencent is feeling the pain right in its wallet

In a recent earnings call, Tencent CSO James Mitchell said the tech giant would "focus on fewer bigger budget games." Instead of banking on any successful property it sees, it'll be more selective about what gets adapted.

Making licensed games can be expensive. Along with royalty fees between 15 and 20 percent, Apple takes a 30 percent cut, and user acquisition expenses can cost another 30-40 percent.

As Reuters notes, Tencent isn't just flinching from licensing fees. The company has had some dips in its mobile revenue in the past year, along with outright bombs like its in-house title Undawn.

The company remains committed to the game industry, but it's easy to see why CEO Pony Ma feels it just hasn't accomplished much in the past year.