Tencent Games, the world's largest gaming company (and China's second biggest tech firm), has its fingers in a lot of pies. In the gaming industry, it has investments in companies like Ubisoft, Activision Blizzard, and Epic (opens in new tab). But in 2020, Tencent closed 300 percent more deals than it had the previous year—adding a whopping 31 gaming companies to its list of investments and acquisitions.
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This all comes courtesy of Niko Partners, the leading market research and consulting firm for Asia's enormous gaming industry. In a recent blog post (opens in new tab), the company outlined several of the biggest market trends for the Asian games market, but the most fascinating is Tencent's aggressive investment into smaller gaming companies.
The list of the 31 gaming companies Tencent invested in can be seen below, but it's worth noting that most of its investments are minor stakes in smaller Chinese companies that don't have much of a global presence.
The investments worth noting, however, are ones like Tencent's undisclosed minor stake in Japanese developer Platinum Games (which happened back in January 2020) followed by its $148 million acquisition of Norwegian developer Funcom. Tencent also sunk $150 million of funding into Roblox in February, while in August it dropped an enormous $1.5 billion to acquire Leyou Technology in August.
If Leyou Technology doesn't ring a bell, they're a Hong Kong-based holding company that itself has its fingers in a lot of different pies. Here's what you need to know:
- Leyou owns Digital Extremes, makers of Warframe (acquired them in 2014)
- Leyou owns Splash Damage, co-developers of Gears Tactics, Dirty Bomb, and other games
- Leyou has a publishing agreement with Amazon for the Chinese release of Amazon's upcoming Lord of the Rings MMO
- Leyou's subsidiary Athlon Games is a shareholder and publishing partner of LCG Entertainment, which now owns the intellectual property of Telltale Games after it went defunct.
Tencent's acquisition of Leyou effectively means Tencent is now the owner of Digital Extremes, Splash Damage, and the intellectual property of Telltale Games. The remaining of Tencent's 2020 investments are mostly in Chinese gaming companies and platform holders, like Huya/Douyo, China's largest livestreaming platform that used to be competitors before merging earlier this year. Both companies were backed by Tencent, and it now owns around 68 percent of the merged company.
It's a lot to keep track of and, as the Niko Partners report suggests, is due to "increasing competition in the games space from large tech firms such as Bytedance and Alibaba, as well as medium sized companies such as Lilith and MiHoYo [the makers of Genshin Impact] that have succeeded in spaces where Tencent has seldom invested in."
That isn't to say Tencent is at risk of losing its spot on the throne as the world's biggest gaming company, but it's interesting to see which companies (and by extension their games) Tencent is putting money into.
If you're curious about all the major gaming companies that Tencent has invested in, we have a comprehensive list (opens in new tab). You can also check out Niko Partners' blog post (opens in new tab) for more insights into the Chinese gaming industry from 2020, or check out the full list of the acquisitions and investments it made last year below.