Tencent Games, the world’s biggest gaming company managed to secure more Merger and Acquisition deals than any other gaming company in 2020.
According to a report by Niko Partners, Tencent invested in 31 gaming companies, up by 300% of its total 2019 deals. The investments were a mix of acquisitions, mergers, minor and major stakes, and funding rounds. The majority of the investment deals (23 out of 31) involved other Chinese companies, but there were some notable Western companies as well. The report also included mentions of the $1.5 billion acquisition of Leyou Technologies, owners of Splash Damage, and Digital Extremes.
The report also points towards a change in Tencent’s M&A strategy, with the company now more focused on investing in companies that are often smaller or at a much earlier stage.
“Tencent’s approach to M&A can be traditionally characterized as somewhat conservative, investing primarily in firms that have a proven hit or established product or service,” the firm said.
“This year, the company has been more proactive with its investments in the gaming space.”
The sudden change in the M&A strategy was due to increasing competition in the games space from other Chinese rivals such as Alibaba and Bytedance, both of which are on their way to claim Tencent’s number 1 gaming company position.
“Tencent is in no danger of losing its No.1 position in the games market, but it is beginning to feel some pressure as other companies have been able to disrupt its grip on the top ten grossing games chart,” said Niko Partners in the report.
Below are some notable Tencent’s 2020 deals (in chronological order):
- A minor stake in Japanese developer Platinum Games.
- $148 million acquisition of Norwegian developer and publisher Funcom
- Increased stake in China-based Bilibili to 18%
- A minor stake in German studio Yager for an undisclosed amount
- Participated in a $150 million Series G round of funding for USA-based Roblox
- A minor stake in French mobile publisher Voodoo for an undisclosed amount
- $810 million investment in Chinese games streaming platforms Huya and DouYu
- $1.5 billion acquisition of China-based Leyou Technology
- A majority stake in GTFO developer 10 Chambers for an undisclosed amount
- 20% stake in China-based Nuanyu Technology
- $25 million investment for a minor stake in UK-based Lockwood Publishing
- A 19.25% stake in China’s Dream Game Studio for an undisclosed amount
- A minor stake in Capstone Games for an undisclosed amount
