Chinese giant Tencent is now seeking majority stakes and takeovers in European studios and publishers.
The strategy shift comes as the world’s leading video game company by revenue relies on global markets for its future growth, which requires a strong portfolio of successful games, and the concentration in the video game industry is far from complete. It also shows how Chinese companies in the technology sector, such as Tencentare trying to emerge from the shadow of regulation after two years of repression and uncertainty that have weighed on their sales in the country and triggered a massive drop in their shares.
Tencent shifts focus to majority businesses, overseas gaming assets for growth https://t.co/QMFGWAidCA
– Reuters China (@ReutersChina) October 3, 2022
In addition to its core gaming business, Tencent also aims to acquire global assets, particularly in Europe, related to the Metaverse. While the Chinese company has a long history of investing overseas, long ahead of new regulations in China, it is looking for innovative companies with talented management teams that can grow independently.
Tencent wants to invest heavily in Europe because of China
Last August, Tencent reported its first drop in quarterly revenue, partly due to a lack of gaming licenses in China and regulations limiting gaming time. Online gaming revenue fell 1%, both in China and overseas. Hong Kong-listed shares have fallen about 60% over the past two years. On the other hand, since Beijing strictly restricts the licensing of games in the country and still suspends the licensing of foreign IP games, Tencent is forced to take control of foreign game companies and their IP rights.
Level Infinite, the key to success in Europe for Tencent
Since last year, Tencent has repeatedly indicated that it wants to generate half of its gaming revenue outside of China, compared to around 25% right now. With this in mind, she launched a new publishing brand in Singapore called Level Infinite. Note that Riot Games, Turtle Rock, Sumo Digital, Digital Extremes, Funcom, and Splash Damage are in Tencent’s lap.