Benzinga | Aug 3, 2021 04:10AM EDT

Alibaba Rival JD Plans A Gaming Foray: What You Need To Know

Chinese e-commerce player JD.com Inc (NASDAQ:JD) is pumping in money in its gaming business to ensure it becomes the go-to place for young customers to shop all gaming-related goods, CNBC reported on Monday, citing a company executive.

JD Plans To Parallel, Not Compete, With Others: Alibaba Group Holding (NYSE:BABA) rival's retail unit had last month firmed up a strategic partnership with Tencent Holdings Ltd' (OTC:TCEHY) gaming unit to focus on developing tournaments and marketing collaboration.

The partnership with Tencent is being seen as an attempt by JD to build an ecosystem around gaming that will drive the growth of its other businesses, the report noted.

Besides Tencent, JD has also announced plans to work with companies such as Chinese PC-maker Lenovo to develop smartphones for mobile gaming. That collaboration will help JD distribute the phones through its retail ecosystem and also target gamers through its shopping app.

In addition, JD is aiming to scale up its e-sports teams JD Gaming that it launched in 2017 and the mobile gaming team named JD Esports.

See Also: Here's Why Alibaba Rival Tencent's Stock Is Plummeting Today

Gaming Shows 'Huge Potential:' "At the end of the day, I think the entire industry is still at the incubation stage. So from our perspective, it's an investment...but we do see a huge potential," Daniel Tan, president of JD Mobile Devices, noted.

"We need to incubate the entire ecosystem before we think about ... how do you cash out. It's about participating, it's about being involved with young people, associating with young people. And that's the kind of consumers we want, you know ... they will use JD."

Unlike Tencent and NetEase Inc (NASDAQ:NTES), JD does not make its own games but could look at the possibility of co-investing in gaming companies with a partner, the report noted, adding that it can use its vast network to collect customer feedback and pass it on to its partners to improve the gaming products.

As per the CNBC report, global e-sports revenue is forecast to surpass $1 billion for the first time in 2021.

Price Action: JD shares closed 0.86% higher at $71.49 on Monday.

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