ByteDance has boosted its Nuverse gaming arm through a wave of signings and in March acquired the Moonton gaming studio.
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GUANGZHOU, China – ByteDance acquired the great mobile gaming studio Moonton, highlighting its ambitions in the video game industry and pitting it against Chinese giant Tencent.
Known as the owner of TikTok or Douyin in China, ByteDance seeks to diversify beyond advertising and obtain a slice of the $ 86 billion mobile gaming market, as well as expanding its presence internationally.
ByteDance’s gaming arm, Nuverse, founded in 2019, was behind the acquisition.
“Moonton is the perfect partner to help expand our gaming strategy in international markets,” said ByteDance in a statement.
Reuters reported that the deal valued Moonton at $ 4 billion, citing two unidentified sources. ByteDance declined to comment on the value of the deal.
“This is a mega business in the global gaming industry, not just in China. Therefore, the craze for mergers and acquisitions in the gaming industry continues, and I believe ByteDance is still looking for other studios,” Serkan Toto, CEO of consultancy Kantan Games, told CNBC.
“Be prepared for a long war between Tencent and ByteDance over the acquisition of game content.”
International boost of ByteDance
Tencent is a world leader in mobile games and is behind some of the main titles. It has managed to do this in recent years through acquisitions and strategic stakes in smaller companies, in addition to developing its own bonds. This allowed Tencent to have a broad portfolio of games that continue to generate money for the company.
It also allowed Tencent to expand internationally, a feat that ByteDance also hopes to achieve.
Moonton is famous for “Mobile Legends”, a multiplayer online battle arena (MOBA) game, where teams fight each other in large virtual arenas. Popular titles in this category include “Honor of Kings” and “League of Legends” by Tencent, developed by Riot Games.
“Mobile Legends” is popular in Southeast Asia. And ByteDance last year partnered with gaming company Gravity to launch “Ragnarok X: Next Generation” in the region.
“Bytedance is taking a global approach to its video game business from day one,” wrote game analyst Niko Partners in a note to customers.
TikTok Leverage
ByteDance operates short video app Douyin in China and TikTok in international markets. Last year, ByteDance said that Douyin had 600 million daily active users and that TikTok had 700 million monthly active users.
The company could use the social media platform to promote games and attract users.
“With Bytedance in charge, the two companies (Moonton and ByteDance) could leverage TikTok / Douyin to promote Mobile Legends in markets like China and the USA, where Tencent’s Honor of Kings and League of Legends: Wild Rift are the dominant mobile devices MOBA Titles, “said Niko Partners.
But ByteDance may not be able to rely solely on acquisitions to be successful in games.
“The biggest challenge for Bytedance will be to create a self-developed success that can operate in the long term. That is why it is signing publishing agreements to publish popular IP-based games and acquiring game development companies with a proven track record of success,” Niko Partners added.