Tencent announces course change – must buy big outside of China
Tencent’s search for larger stakes in gaming companies comes as players such as Microsoft, Sony and Amazon increase their presence in the sector. In a conference call in the wake of the quarterly figures presented in August, strategy director James Mitchell stated, according to Reuters, that the company will continue to be “very” active in buying up gaming companies on other continents.
Big in Japan
In September, Tencent became the largest shareholder in the French game developer Ubisoft, with an option to increase its stake from today’s 11 percent to 17 percent.
In June, I bought the Chinese at Copenhagen-based Sybo Games in June, developer of the Subway Surfer mobile game, before securing a 16.25 percent stake in Japanese Elden Ring developer FromSoftware.
Last year, the British game producer Sumo was picked up for a deal valued at 1.3 billion dollars.
In Europe, Tencent, apart from buying a majority stake in “Clash of Clans” developer Supercell for $8.6 billion in 2016, according to the news agency, has focused on minority contracts – including a 9 percent purchase of British Frontier Developments.
Here in the Nordics, Tencent is a major owner of the Swedish gaming company Paradox and Finnish Remedy.
Diet
Since last year, Tencent has repeatedly stated a goal to derive half of its gaming revenue from outside China – up from about 25 percent now. As a step towards this goal, the conglomerate is launching the Level Infinite platform in Singapore in December.
In order to finance the acquisitions of majority shares, Tencent announced large-scale slimming of the portfolio earlier this fall. The tentative target is to be able to sell properties worth 100 billion renminbi ($14.5 billion) during 2022.
Tencent has put behind it some tough years, which have not only kept the Chinese economy stagnant, but also Beijing’s tough regulations in a gaming sector accused of being an «opium» for young Chinese.
During the period, the share fell by as much as 60 percent on the Hong Kong stock exchange.