Tencent continued its massive expansion into the gaming world today, after acquiring a minority stake in French developer Dontnod, maker of Life is strange, Vampyr, and Tell me why.
The Chinese conglomerate has been busy since the beginning of 2021, recently buying a majority stake in Klei Entertainment, which makes the indie survival game Do not starve.
This expansion will not surprise those who pay attention to Tencent and its relationship with the gaming industry. Already a powerhouse in China, Tencent has spent the last few years entering the North American and European markets. It is a logical move for a company that has practically claimed dominance in its territory, not only outperforming Chinese competition, but also growing into one of the largest gaming companies in the world.
Tencent tried to make its own games to attract North American and European players, with mixed results. He released a remake of his own IP, Honor of kings, one of the highest grossing and the most downloaded games globally, despite its Chinese exclusivity. This remake, called Arena of Valor internationally, it was a failure. But in 2019, it developed Call of Duty: Mobile, who considered the success adequate for an already established franchise.
Tencent too partnership with Nintendo in 2019, which helped usher in the sale of Nintendo Switch to the huge Chinese market and gave Tencent the ability to make his own Pokémon game, Pokémon Unitand, as well as a useful ally for Tencent. The game cultures of Japan and China are unique, but Nintendo still serves as a model for an Asian-based video game company that kills it abroad.
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But what Tencent lacks to make its own successful games, it pays off by investing in the creators of others. Tencent already owns Riot Games and has a 40 percent stake in Epic Games. Also have minor bets at several other game companies, including Activision Blizzard, Ubisoft, Paradox Interactive and the adjacent Discord gaming platform. This is a significant point of support in games for any company, and Tencent does not seem inclined to slow down anytime soon.
These cash movements brought Tencent its share of criticism, more publicly after an Hearthstone competitor has been banned after expressing support for the Hong Kong protests. Some pointed to Chinese shareholder Tencent as the reason behind the punishment (Blizzard denied their relationships in China were a factor and lessened the punishment after the reaction). Banning the game and taking your winnings will never be good for a company. Even so, it is also important to note that people were scolded in the competition for minor reasons.
Today’s stake in Dontnod is much smaller in Tencent’s expansion scheme, but it is proof that the company has no intention of slowing down anytime soon.