Tencent reportedly plans to buy more majority stakes in video games companies to continue earnings growth and counteract falling share prices.
Sources tell Reuters that Tencent will aggressive buy up more majority stakes in overseas games companies. The Chinese gaming giant, who earned $33 billion in 2021 and more than Xbox and Nintendo combined, wants to spark growth in gaming as domestic games revenues stagnate due to strict regulations. Tencent's solution is to buy more stake in overseas countries with the hopes of riding consistent revenues.
Reuters reports that Tencent is targeting companies in Europe. This is on the heels of Tencent acquiring nearly 50% of controlling stake in Guillemot Bros. Limited, a company run by the founders of Ubisoft. The Guillemot brothers sold stake in their company in order to fend off a hostile takeover from Tencent. As part of the deal, Tencent's stake in Ubisoft can rise as high as 9.9%, but can't exceed this threshold for 8 years.
Tencent's push comes at a time when major games comapnies are snapping up developers, publishers, and IP en masse. Take-Two Interactive recently purchased Zynga for $12.7 billion, Sony acquired Bungie for $3.7 billion, and Microsoft is poised to make the largest merger purchase in the history of the games industry with the buyout of Activision-Blizzard shares for $68.7 billion.
Saudi Arabia is also willing to spend $13 billion to acquire a major video games publisher.
Tencent's potential targets include the likes of CD Projekt RED, the Polish game developer responsible for Cyberpunk 2077 and The Witcher, alongside Remedy Entertainment, who Tencent already has a minority stake. Polish developers People Can Fly,
and Techland are other major targets.