Tencent is the world’s largest gaming company. But have you actually heard of them before now? Tencent is huge in China, but most of their fame in the west comes from owning various game studios built here, who often bring translated versions of Tencent’s games to the west under their own banner.
Tencent is described by Wikipedia as “a Chinese investment holding company whose subsidiaries provide media, entertainment, payment systems, internet and mobile phone value-added services and operate online advertising services.” So how did this company, established in 1998 and worth over $330 billion, become the largest gaming company in the world?
Let’s go back to the year of 2009. This year brought a lot of changes for those in the west. This was the first year of Obama’s presidency, the middle of a really bad financial downturn the world over, and the beginning of a little game known as League of Legends. Riot Games was founded in 2006 and launched League of Legends, the beginning of the popular MOBA genre (originated by the Warcraft 3 mod Defense of the Ancients), in 2009. The game quickly become one of the most played games in the world, making roughly $1 billion a year through in-game purchases. This figure caught the eye of Tencent, who invested $231 million for a nearly 70% stake in Riot in 2011. By the end of 2015, Riot was wholly owned by Tencent.
The next major investment came in June of 2012, when Tencent dropped $330 million on Epic Games, the makers of Gears of War before selling that franchise to Microsoft. This investment netted Tencent 48.4% of Epic, effectively making the company a subsidiary. At the time of acquisition, Epic also had three other studios under their banner: Epic Baltimore (made up of former Big Huge Games employees), Epic Games Poland (formerly People Can Fly), and Chair Entertainment (the makers of Infinity Blade). Shortly after the acquisition, in August, Epic Baltimore was shut down and in June 2015, Epic Games Poland split off from the company, once again assuming the name of People Can Fly. This acquisition brought the Unreal Engine to Tencent and Epic Games currently has 6 games in the works.
In July of 2013, Activision Blizzard was looking to buy itself back from Vivendi. The maker of Call of Duty and Skylanders, as well as Blizzard’s popular franchises, was going independent in an $8 billion deal. Tencent contributed as an investor and racked up a 12% stake in the company.
Jump forward to March 2014 and Tencent once again drops a big figure. This month marked the firm’s $500 million investment into South Korea’s Netmarble, scoring a 22% stake. This stake is worth nearly $2.5 billion as of publication. Netmarble now is most known for Marvel: Future Fight and Seven Knights, as well as a mobile version of Lineage 2, which in it’s launch month become the highest grossing game in the world, despite only being available in South Korea. Netmarble in July of 2015 invested $130 million into SGN, now known as Jam City, the makers of Cookie Jam, Panda Pop, as well as licensed games including Marvel, Family Guy, and Futurama. The Marvel and Family Guy games came way of TinyCo, a company Jam City nee SGN acquired in July of 2016. The final bit of news regarding Netmarble came in February of 2017 when Netmarble completed its $900 million acquisition of Kabam Vancouver, the studio responsible for Marvel: Contest of Champions and Transformers: Forged to Fight.
Early 2015 was a busy time for Tencent. In February, the company acquired a majority stake in Miniclip, a publisher of mobile and online games. Terms of the deal were not disclosed, but Miniclip had over 500 million downloads at the time. It’s most popular game at the time was 8 Ball Pool with over 100 million downloads.
In April of 2015, Tencent paid $126 million for a 15% in mobile publisher Glu Mobile, most known for the Deer Hunter games, Dash franchise, and celebrity games made on the back of Kardashian fame. Tencent later, in February of 2016, raised their stake in Glu to 21.5%. They also partnered to bring Tencent’s mobile shooter WeFire to the West as Rival Fire.
In May of 2015, Tencent plowed $60 million into Pocket Gems, another mobile gaming developer, for a 20% stake. At that time, Pocket Gems was in the process of launching the hardcore mobile game War Dragons. Their other popular game was Episodes, a mobile storybook-type game. This stake was boosted to 38% with a further investment of $90 million.
On May 27, 2016, Tencent acquired 5% of strategy developer and publisher Paradox Interactive as part of that company’s IPO. Paradox is known mostly for their series Europa Universalis and Crusader Kings. Paradox also owns the rights to White Wolf Publishing’s World of Darkness and Vampire: The Masquerade, which they acquired from CCP Games.
Tencent’s biggest deal came in June of 2016, when the company set aside a massive $8.5 billion to acquire an 84% stake in Finland’s Supercell. Supercell is known for 4 games: Hay Day, Clash of Clans, Boom Beach, and Clash Royale. Despite only having 4 games, the company made roughly $2.3 billion in 2016 alone. It’s latest game, Brawl Stars is currently in soft-launch in Canada and hopefully goes global soon. Despite Supercell not getting any of the $8.5 billion (the shares were bought from China’s Softbank), the company went on a little investment spree of their own. In September 206, Supercell acquired a 51% stake in Badland developer Frogmind for $7.8 million. Then, in April 2017, Supercell invested $2.9 million into Finnish developer Shipyard Games, who are developing a location-based mobile game. Lastly, in May 2017, Supercell acquired a 62% stake in London’s Space Ape Games, the makers of Transformers: Earth Wars and the recently launched Fast Lane.
In July of 2017, Tencent made a small investment in Frontier Developments, the UK-based developers of Planet Coaster. Tencent acquired 3.37 million new shares as the company listed on the AIM Stock Exchange. This amounted to £17.7 million for a 9% stake. The acquisition came at a time of increasing interest in China for theme park and space exploration games.
UPDATE 1: On August 2nd, 2017, Tencent invested in Liverpool-based studio Milky Tea, a mobile studio turned console developer.
This is the story of Tencent’s gaming journey thus far. The company now owns an estimated 13% of the global gaming market, which isn’t bad for the span of 6 years of investing. So what’s next for the company?
Possible future acquisitions could arise from studios Tencent works closely with. Tencent has worked with Rocket League developers Psyonix, Orcs Must Die developers Robot Entertainment, and Path of Exile developers Grinding Gear Games to bring their games to China. There could be acquisitions made there.
More interestingly, rumors point toward a $3 billion purchase of Angry Birds makers Rovio. With all rumors, take this one with a big gulp of salt. For now, maybe the company is just focusing on bringing their latest hit, Honour of Kings to the west, a homegrown title to stand among all their acquired properties and prove that Tencent can play with the other big boys.