iCandy (ASX:ICI) share price falls 4% despite positive update

The iCandy (ASX: ICI) share price has dropped 3.7% today, despite a partnership announcement to launch into China. Let's take a look.

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The iCandy Interactive Ltd (ASX: ICI) share price is falling today, on news of a partnership announcement to launch into China. At the time of writing, the iCandy share price is down 3.7% to 13 cents.

Strategic partnership

In today's release, iCandy advised that it has entered a game publishing agreement with Ohayoo to localise, market and publish the Masketeers game.

Ohayoo is a Chinese leading game publisher that further develops international hits for the domestic market. In addition, the company runs effective marketing campaigns to capture consumer appeal. In the last 18 months, Ohayoo reached more than 500 million game downloads.

This makes the game publishing company one of the fastest growing mobile game platforms in China.

Terms of the deal

Under the agreement, iCandy will allow Ohayoo to localise, publish and market Masketeers in mainland China for 3 years. The game will be available on both iOS and Android platforms, as well as third party app stores in China.

As payment, iCandy will receive a portion of the revenue generated by the Masketeers game. The commercial arrangement stipulates that 15% to 35% of revenue will handed on to iCandy.

Just recently, Masketeers reached a record revenue of $1 million in 63 days, highlighting the popularity of the game.

Addressable market

In 2019 alone, China recorded over US$36.5 billion in gaming revenue. Since then, industry consensus is that China has eclipsed the United States as the world's largest gaming market.

iCandy's growth strategy is to win the Chinese mobile game market through its strategic partnership. Forecasts predict that by 2023, China's mobile game segment is expected to reach 497 million users.

What did management say?

Commenting  on the partnership agreement, iCandy chair Kin W Lau said:

iCandy is entering an exciting growth phase. We are absolutely thrilled and honoured to partner with Ohayoo. The Chinese gaming market is a new strategic market for iCandy at our growth phase, as it is the world's largest gaming market now.

This partnership with Ohayoo puts us in a very enviable position, on the fastest track possible to enter the gaming market of China, getting exposure to a large part of the Chinese online community almost immediately.

About the iCandy share price

The iCandy share price has fallen heavily since its meteoric rise back in early October, down 44% from its all-time high of 23.5 cents. However, the company's shares reached a low of 1.1 cents in March, so that's a 1082% increase even after today's decline.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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