Tencent has continued its massive expansion into the gaming world today after acquiring a minority stake in French developer Dontnod, maker of Life is Strange, Vampyr, i Tell me why.
The Chinese conglomerate has recently been occupied since early 2021 buying a majority stake in Klei Entertainment, which makes the indie survival game Don’t starve.
This expansion will not come as a surprise to those paying attention to Tencent and its relationship with the gaming industry. Tencent, which is already an energy hub in China, has spent the last few years moving to the U.S. and European markets. It’s a logical move for a company that has almost claimed dominance of its home turf, not only outperforming its Chinese competition, but also growing to become one of the world’s largest gaming companies.
Tencent has tried to make its own games to attract American and European players, with mixed results. It released a remake of its own IP, Honor of Kings, one of the most collected and the most downloaded games globally despite its Chinese exclusivity. That remake, called Arena del Valor internationally, it was a mistake. But in 2019 it developed Call of Duty: mobile, which saw the right success for an already established franchise.
Tencent too partnered with Nintendo in 2019, which helped get us started the sale of Nintendo Switch in the massive Chinese market and gave Tencent the chance to create its own Pokémon game, Pokémon unite, as well as a useful ally for Tencent. The gaming cultures of Japan and China are unique, but Nintendo still serves as a model for an Asia-based video game company that kills it overseas.
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But what Tencent lacks to create its own successful games is offset by investing in the makers of others. Tencent already owns Riot Games and has a 40% stake in Epic Games. It also has smaller stakes at several other gaming companies, including Activision Blizzard, Ubisoft, Paradox Interactive and the Discord gaming platform. This is a significant starting point in gaming for any company, and Tencent doesn’t seem inclined to slow down anytime soon.
These money movements have contributed to Tencent its share of critics, more publicly afterwards a Hearthstone the competitor was banned after supporting the Hong Kong protests. Some pointed to Chinese interest in Tencent as a reason for the punishment (Blizzard denied their relations in China were a factor and decreased punishment after the reaction). Banning gambling and taking your profits will never go well for a company. However, it is also worth noting that people have been reprimanded in the competition for minor reasons.
Dontnod’s current share is quite lower in Tencent’s expansion scheme, but it’s proof that the company doesn’t intend to slow down anytime soon.