WHEN Tencent Holdings Ltd. made its first big foray overseas with an adaptation of its blockbuster mobile game “Honor of Kings” in the summer of 2017, executives thought they had a sure-fire success on their hands.

The multi-player role-playing game, in which players hack and slash their way through battle arenas, had 55 million daily active users in China and was raking in roughly US$145 million a month, making it the company’s top grossing game.

But missteps in development and marketing, exacerbated by a rift with Tencent’s U.S.-based Riot Games subsidiary, has seen the international version, called “Arena of Valor,” flop in Europe and North America.

Tencent has now all but written off its original plans for “Arena of Valor” and disbanded the game’s marketing team for Europe and the United States, two company sources with direct knowledge of the matter said.

“In those markets, we are really just letting it live or die on its own course,” one source said, adding the game currently has just 100,000 daily active users in Europe and 150,000 in North America.

The company has since revamped its approach to overseas markets, paying more attention to local needs and turning to partnerships, such as the one forged with Singapore-based Sea Ltd. to handle marketing. It is also expanding further into desktop and console-based games.

But the sobering failure of “Arena of Valor” raises questions about Tencent’s international savvy at a time when it is trying to expand its WeChat messenger and other services beyond China.

“Tencent lacked distribution channels and experience in user demographics, so they did not know how to compete,” said IHS Markit games analyst Cui Chenyu.

The company, which drew a third of its US$85.5 billion in revenue last quarter from videogames, is eager to boost growth abroad as it grapples with problems in its home market.

China has intensified efforts to regulate games it sees as too addictive, while an overhaul of regulatory bodies in China has hurt the industry, with a nine-month-long freeze in approvals for new games only just starting to thaw.

One blunder the company has made, a Tencent sources said, was to replace the “Honor of Kings” characters, which are inspired by Chinese mythology with figures from European folklore and Western comic-book heroes like Batman and Superman.

“In retrospect, this was meaningless and is actually now hurting us,” said one source, adding that the company should have been more confident in the appeal of Chinese culture.

“Because the game is different in China and overseas markets, it’s difficult for us to organize an international tournament of the game.”

Tencent also realized too late that hardcore gamers in the West prefer desktop-based games and that many consumers in Europe and the United States did not have access to 4G Internet connections needed for sophisticated mobile games, the sources added.

The popularity of “Honor of Kings” also owes much to its huge community with players connected by Tencent’s WeChat and QQ platforms. But efforts to replicate that on Facebook fell flat as not enough PC gamers were on the platform, they said.

In contrast to its European efforts for “Arena of Valor,” Tencent has outsourced the marketing and operation of the game in Southeast Asia to Sea, which has used its extensive and relatively low-cost sales force to promote the game. Sea said last August the game had achieved daily active users of 14 million.

(SD-Agencies)