(Bloomberg) -- About $7 billion has been wiped off NetEase Inc.’s market capitalization this week as investors worry about competition from rival Tencent Holdings Ltd.’s upcoming party game.

The internet technology firm’s stock dropped as much as 5.5% in Hong Kong on Tuesday, extending its losses this week to almost 11%. Tencent said on Saturday it would launch its new game Dream Star on Dec. 15 across platforms.

The highly-anticipated release will pose direct competition to NetEase’s blockbuster title Eggy Party, which is among China’s most downloaded mobile games. The stock has rallied 39% this year, outperforming the benchmark gauge’s 17% drop.

“For NetEase, which had a successful launch of comparable game Eggy Party in 2023, the competition with DreamStar on users and time spent will be key to watch and possible near-term market concern,” Goldman Sachs Group Inc. analyst Lincoln Kong wrote in a note Monday. 

In Tencent’s Dream Star, players compete on different maps and try to knock out their opponents, among other things. The Chinese gaming company plans to invest 1.4 billion yuan ($196 million) developing its content. Tencent’s shares fell as much as 2.17 Tuesday amid broader market weakness. 

Despite the potential overlap in users for both games, Goldman Sachs expects the total addressable market to expand quickly and cater to many other users, avoiding a situation where the two players just eat into each others’ market share. 

The Wall Street Bank expects Dream Star to deliver gross sales of as much as 6 billion yuan in the first 12 months and cites user growth, retention and iOS rankings as the key catalysts to watch after the release this month. It sees Eggy Party’s sales dropping to as low as 4 billion yuan in 2024, from more than 7 billion yuan this year.

READ: Netease, Tencent to Benefit From China’s Gaming Approvals: Citi

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