By Li Hongmei

E-commerce giant Alibaba Group announced on Jan. 8 its entry into mobile phone gaming platforms, offering attractive deals to developers in order to challenge the dominance of rival Tencent.

Alibaba said it plans to launch a platform for mobile games and end the unreasonable profit-sharing model prevalent in the market by offering free use of its services to developers of single-player games during the first year of their use.

From the second year, Alibaba will take a 20% share of the sales of a game, while the developer will receive 70%. The remaining 10% will go to charities for rural education.

The announcement boosted the performance of shares of several companies involved in the mobile phone gaming business, with Hong Kong-listed Boyaa Interactive surging 30.65% and Singapore's IGG Inc closing 29.78% higher on the Hong Kong board.

Also on Jan. 8, IGG announced a three-year exclusive licensing deal with Tencent, which would own the rights for the Singaporean company's Castle Clash game in China. The game would make its debut in China on Tencent's mobile social gaming platform in March.

Kevin Xu, chief operating officer at IGG, said the company would pay attention to the development of Alibaba's new platform and would definitely work with Alibaba if the opportunity arose.

An analyst with Everbright Securities Co told Reuters that developers would have a better chance of survival in the business by working with Alibaba, since Tencent, which runs China's largest online gaming platform, gets a larger cut in sales than developers.

Alibaba spokesman Wang Shuai slammed Tencent for abusing its dominant position in the market and for offering unfair deals to developers, who get as little as 10% of the profits generated from the sales of their games. This is not conducive to the healthy development of the sector, Wang added.

Alibaba's new venture would have the backing of the group's 700 million users registered with its Taobao business-to-consumer shopping site.