As a passive financial investor in the past, Tencent had focused on acquiring minority holdings in gaming companies. However, with this new push, Tencent will strive to own the majority or “even controlling stakes” in companies located outside of China. In addition to this, four persons who are familiar with the situation have stated that it may primarily be targeting “gaming assets in Europe.”
Tencent, the “world’s number one gaming firm by revenue,” is looking at more companies that are working on the metaverse. These companies include Tencent itself.
Tencent shifts focus to majority deals, overseas gaming assets for growth-sources https://t.co/NzSDiDbYEd pic.twitter.com/bEzXHGDdnL
— Reuters (@Reuters) October 1, 2022
A portion of this plan was made public in August when another report from Reuters stated that Tencent wanted to become Ubisoft’s largest shareholder and increase its current investment of 5% in the company that is responsible for Assassin’s Creed, Rainbow Six Siege, Far Cry, and other video games. This plan has already been partially implemented. At the beginning of September, they increased their share to 11%.
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This revelation comes at a time when there have been numerous large acquisitions, such as the agreement for Microsoft to purchase Activision Blizzard for a price of $68.7 billion and the agreement for Sony to purchase Bungie for a price of $3.6 billion.
Reuters says that Tencent is still the largest gaming company in the world based on revenue. Tencent usually buys minority stakes and stays invested as a passive financial investor.
Tencent will try to grow in the future by focusing more on global markets and making sure it has a strong portfolio of games that are at the top of the charts. Tencent put $297 million into Ubisoft in September to get a 49.9% stake and 5% voting rights in Guillemot Brothers Limited, the company that Ubisoft’s founders use to run the company. A month earlier, Tencent raised its stake in FromSoftware, the company that makes Elden Ring games, to 16.25%.
Tencent already owns Riot Games, which may have been a reason why it bought Tequila Works. The company has also added Epic Games, Remedy, Sumo, Marvelous, Dontnod, Klei, Platinum, Bohemia Interactive, Playtonic, Roblox, and Krafton to its portfolio of video game companies. It also owns Funcom, Sharkmob, Turtle Rock Studios, Inflexion Games, and its own Timi Studios.
Crackdowns and new rules in China over the past two years have reportedly created uncertainty for tech giants like Tencent. This has hurt their sales in China and caused a massive selloff in their stocks.
In April, it was said that for the past nine months, the Chinese government had not allowed any new games to be released in the country. Only 45 games, many of which were made in China, were given licenses to be sold there. During that time, more than 14,000 development studios are said to have closed in China. That was also the second nine-month freeze on approvals after one in 2018.
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