ByteDance Games is cautiously crossing the river with NetEase and Tencent.

Author | Liu Baodan

Editor | Zhou Zhiyu

After four months of massive contraction in the gaming business, ByteDance has set its sights on the gaming track once again.

On March 14th, Wall Street News learned that ByteDance sent an internal memo to the gaming department. After a strategic repositioning, the gaming business will return to an incubation state. In the next phase, the core of the gaming business will focus on patiently maintaining stable operations.

Although the internal memo did not directly indicate the focus of future incubation in the gaming business, information released through the organizational restructuring of ByteDance's gaming division suggests that the next focus will likely be on User-Generated Content (UGC).

According to the internal memo, under the gaming department, a new secondary department "Gaming-UGC" has been established, with Luo Ji appointed as the department head. This indicates a significant rise in the importance of UGC within the gaming sector.

At the same time, the head of the gaming business, Yan Shou, will transfer to the company's finance department. Taking over the ByteDance gaming business will be Hua Wei, the head of human resources at Bytedance Group. In the future, he will manage UGC, Mutong, and Chaoxiguangnian.

Gaming industry analyst Zhang Shule believes that with Chaoxiguangnian facing layoffs in the past, someone must be held accountable for the failure. In the context of restarting incubation, personnel adjustments are inevitable. "Hua Wei lacks gaming-related experience and is more like a strategic commander. ByteDance may undergo structural adjustments in the top-level design of gaming."

For traditional gaming businesses, ByteDance has been in talks for the past few months for a potential sale, which is still ongoing.

On March 14th, Wall Street News learned from insiders that ByteDance's gaming projects, including the second-dimensional tactical competitive project (S1) from Shenzhen Gravity Studio and the second-dimensional open-world project (J5) from Jiangnan Studio, which were cut in November last year, have been taken over by Tencent. Former Chaoxiguangnian employees have joined Tencent's wholly-owned subsidiary, Saluos Network Technology (Shenzhen) Co., Ltd.

However, regarding market rumors that Oasis Studio, with the game "Crystal Core," has found a buyer in FunPlus and will complete the transfer by 2025, an anonymous insider from ByteDance stated that this information is false.

Four months ago, ByteDance Games announced a significant business contraction, emphasizing a focus on exploring innovative games and related technologies. It appears that ByteDance's gaming strategy will now concentrate on UGC and cutting-edge technologies.

Although ByteDance has not yet disclosed the next steps for the gaming business, they have already begun recruiting for UGC.

According to information from recruitment platforms, ByteDance is hiring positions in UGC gaming, including editor development and u3d game client development. It is understood that u3d is a very popular cross-platform game development engine that supports the creation of 2D, 3D, Virtual Reality (VR), and Augmented Reality (AR) games and applications.

When it comes to ByteDance's reinitiation of incubating UGC games, industry insiders believe that UGC games are more aligned with ByteDance's content platform attributes. Compared to traditional games, ByteDance can leverage its content platform and technological advantages more effectively.

Zhang Shule believes that ByteDance is essentially a UGC model, which gives it cross-border experience in controlling, guiding, and elevating UGC. However, the direction ByteDance will take with UGC games remains uncertain - whether it will be common sandbox games, party games sparked by "egg babies," or a completely new approach. "ByteDance, skilled at enticing content creators, may take an unexpected path."

Jiang Han, a senior researcher at Pangu Think Tank, believes that UGC games have lower development costs and higher user stickiness, which can help ByteDance quickly build a reputation in the gaming market. However, UGC games also face challenges such as unstable content quality and copyright protection issues that ByteDance needs to address.

Five years ago, ByteDance made a big push into game development and publishing, acquiring more than twenty game-related companies and investing up to 30 billion yuan. In 2021, games became one of ByteDance's six major businesses, with high expectations. However, in just over two years, ByteDance's gaming sector has undergone significant contraction.

Now, ByteDance's gaming division has finally returned to the incubation stage. UGC games are currently the hottest game track, with established internet companies like NetEase successfully defending their position with "Egg Baby Party," and gaming giant Tencent laying out "Dream Star." After the aggressive expansion phase, ByteDance also aims to grab a share of the market.

Once again, ByteDance's gaming division is embarking on a new direction.