In 2020, Tencent, based in Shenzhen, China, managed to secure more mergers and acquisitions in the games industry than any other company, according to a report by Niko Partners. The company invested in 31 deals, three times more than in 2019.
Tencent, the world’s largest video game vendor, has stakes in over 600 companies, including social networks, music companies, web portals, e-commerce sites, mobile game developers and publishers, internet service providers, payment system developers, smartphone manufacturers, and multiplayer online game developers.
Tencent’s investments last year included acquisitions, mergers, minor and major stakes, and funding rounds. Of these, 23 were investments in Chinese companies, including the $1.5 billion acquisition of Leyou Technologies, which owns Splash Damage and Warframe developer Digital Extremes.
“Tencent’s approach to M&A can be traditionally characterised as somewhat conservative, investing primarily in firms that have a proven hit or established product or service,” Niko said in a statement. “This year, the company has been more proactive with its investments in the gaming space.”
The report added that Tencent has invested in smaller and newer companies than in the past in order to compete with rivals like Alibaba and TikTok owner Bytedance. Although Niko believes that Tencent is in no danger of losing its lead in the games industry, it is beginning to feel increasing competition in the sales charts.
Last year, Tencent’s investments included the following:
- $148 million acquisition of Funcom, a Norwegian developer and publisher
- Participation in a $150 million Series G round of funding for Roblox, a US online game platform and game creation system
- $65 million investment in a 20% stake in Marvelous, a Japanese video game developer and publisher, and anime producer
- $30.9 million investment in a 5% in Century Huatong, a Chinese online game developer
- $810 million investment in the merger of Huya and DouYu, two Chinese streaming platforms
- $1.5 billion acquisition of Leyou Technology, a Hong Kong game holding company
- Participation in the $100 million Series B funding round for VSPN, a Chinese esports firm
- $25 million investment for a minor stake in Lockwood Publishing, a UK game developer and publisher
- $6.9 million investment in a 5% stake of Fruits Game, a Chinese game developer
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