Tencent Gears Up for Big Gaming Acquisitions in Europe
Chinese giant Tencent intends to increase its investment in Western video game companies. It is mainly interested in acquisitions of developers and publishers, especially those in Europe.
As reported by Reuters, Tencent has plans for numerous acquisitions in the gaming industry.
- Until now, Tencent has focused on investing in smaller companies, many of which were located in China. On top of that, most often the Chinese giant only bought minority stakes. Now the company's approach is set to change.
- According to Reuters' sources, Tencent wants to acquire majority stakes in a number of Western companies. European developers and publishers have been cited as a prime target for purchases.
- It is possible that one of them will be Ubisoft. Tencent currently has an 11% stake in the company (with an option to increase it to 17%), but recently made it clear that it wants much more.
- The change in investment strategy is due to the situation in the Chinese market, whose growth has significantly slowed. The situation is exacerbated by the fact that the local industry is heavily regulated and before release games must be approved for distribution. Moreover, the local authorities introduce new regulations every now and then, to limit the time spent on gaming by minors.
- Tencent is currently the largest company in the game industry by revenue. Therefore, it needs to invest more heavily in markets other than China to maintain growth.
Of course, it should be mentioned that taking controlling stakes or outright buying up studios is nothing new for Tencent. In February of this year, the Chinese acquired 1C Entertainment. The company also owns Fatshark, Funcom, Grinding Gear Games, Klei Entertainment, Riot Games, Sharkmob, Supercell, Turtle Rock Studios and Yager Development, among other studios.
Now, simply put, this process is to be intensified, and the growth strategy will focus on acquiring control of valuable entities, rather than merely obtaining minority stakes in them. On top of that, the company has reduced its investments in China to almost zero and is focusing on Western markets.
The gaming industry is consolidating
The latest info from Tencent is another example of consolidation in the game industry. Large acquisitions have recently been made by Microsoft (including Bethesda and the pending approval of Activision Blizzard deal) and Sony (Bungie and Nixxes). European group Embracer, on the other hand, seems to be buying more studios almost every month. Recently we also wrote that Saudi Arabia intends to invest tens of billions of dollars in the gaming market and take over one of the key publishers in the industry.
