Tencent is reportedly refocusing on ‘aggressively seeking’ full games company acquisitions

Chinese gaming giant Tencent is reportedly switching its acquisition strategy and “aggressively seeking” to own majority or controlling stakes in overseas game companies. That’s according to a new report from Reuters, which claims that the conglomerate is putting more focus on buying companies outright, following years of investing in minority stakes, as it attempts to offset slowing growth at home in China. Tencent, which is the world’s biggest video games company by revenue, has already invested in more than 800 companies. That includes a 40% stake in Epic Games and holds shares in Activision Blizzard, Ubisoft, PUBG Studios parent company Krafton, PlatinumGames, FromSoftware and Marvelous Inc. However, Tencent has made fewer full acquisitions. Currently, it owns 100% of developers such as Funcom, Riot Games, Sumo, Turtle Rock, Digital Extremes and Splash Damage. According to Reuters’ sources, the tech giant is now aggressively seeking to own majority or controlling stakes in overseas targets, “notably in Europe”. The shift in strategy is reportedly due to the company’s newfound reliance on global markets for future growth, as China strengthens regulations at home. Tencent told Reuters the company had been investing abroad for a long time, “long before any new regulations” in China. It looks for “innovative companies with talented management teams” and gives them room to grow independently, the company said. Tencent confirmed during an earnings call in August that it would remain active in acquiring game studios overseas. “In terms of the game business, our strategy is … to focus on developing our capabilities, especially in the international market,” it said. “We will continue to be very active in terms of acquiring new game studios outside China.” M&A activity in the games industry hit a record $85 billion in 2021 and has been forecast to reach $150 billion this year, with huge deals such as Microsoft’s acquisition of Activision Blizzard and Take-Two’s buyout of Zynga having already been announced. Earlier this week, Saudi Arabia’s state investment fund announced it will invest a further $37.8 billion in the games industry acquisitions, including around $13 billion to acquire “a leading game publisher”.