Game company Tencent is changing its strategy seeking to own a majority or control stake in overseas gaming companies.
Tencent, which used to invest in foreign companies that usually buy small shares, now tends to buy them all to offset slowing growth in its home country of China. Tencent is currently the world’s highest-grossing game company with more than 800 investment companies, including 40% of Epic Game’s shares held by Activision Blizzard, Ubisoft, parent company PUBG Studios Krafton, Platinum, FromSoftware, Marvelous hold.
Developers currently wholly owned by Tencent include Funcom, Riot, Sumo, Turtle Rock, Digital Extremes, and Splash Damage.
Reuters quoted sources as saying that Tencent is aggressively owning a majority or controlling stake in overseas gaming companies, especially in Europe. This strategic shift shows that Tencent’s future growth is increasingly dependent on foreign markets.
Tencent said that the company’s offshore investments have been going on for a long time, a strategy that predates any new regulations. Tencent added that it is looking for “innovative companies with excellent management teams” and will provide room for independent development.
Tencent is resetting its M&A strategy to focus more on buying majority stakes mainly in overseas game companies, as the tech giant aims to expand globally to offset for slowing growth in its home country of China, people with direct knowledge of the matter said.
Tencent Holding has for many years invested in hundreds of growing businesses, mainly in the Chinese market. It often buys back minority shares and continues to invest as a passive financial investor.
However, they are now aggressively looking to own a majority or even controlling stake in overseas targets, especially in European games. This shift comes as the world’s number one games company by revenue is relying on global markets for future growth, which requires a chart-topping game portfolio.
Tencent’s new strategy shows how China’s tech giants are finding their way out of the shadow of the law after two years of repression and uncertainty have weighed on their sales in China. home and caused a massive sell-off in stocks.
In addition to the gaming sector, Tencent is also looking to attract global assets, especially in Europe, regarding the metaverse, one of the sources and another has direct knowledge of the matter for know.
Tencent told Reuters the company has been investing abroad for a long time. It looks for “innovative companies with talented management teams” and allows them to grow independently, the company added.
Tencent’s pursuit of a larger stake in game companies comes as other tech giants like Microsoft, Sony and Amazon are acquiring game assets and related intellectual property. Tencent’s chief strategy officer, James Mitchell, said in August the company will remain active in acquiring new game studios overseas. “In terms of the game business, our strategy is to focus on developing our capabilities, especially in the international market,” he said.