Money’s no object when it comes to Tencent’s plan to own video gaming
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Money’s no object when it comes to Tencent’s plan to own video gaming

According to an industry report released last week, Chinese Ecommerce giant Tencent was the world’s biggest investor in video game companies last year. For the 12 months ended March 31, Tencent “led or participated in over $4 of every $10 invested in games companies worldwide.” This might not be a surprise to investors who have closely watched the Chinese technology landscape: Tencent has long been the country’s undisputed king when it comes to mobile gaming, and owns the world’s most popular mobile gaming title.

Tencent’s share price has risen by 66% over the past 12 months

graph 2304 tencent

 

SOURCE: Yahoo Finance

In this last year, Tencent has taken new ground, becoming the world’s largest games business by revenue. This is down, in large part, to its coveted position in China, which data firm consultancy Newzoo claims is the world’s “top video-games market with estimated sales of $32.5 billion last year.”

According to the report, Tencent was involved, either from the sell- or buy-side, in mergers and acquisitions that amounted to more than three quarters of the total value of video game sector deals throughout the year. It was a strong year all around, too, as the firm behind the report, Digi-Capital, a U.S. based company that caters specifically to the sector, subsequently revealed that investment in the gaming industry hit a record high. More than $4.2 billion was put into gaming companies over the whole twelve months.

Some highlights from Tencent’s year: In March, it pumped more than $1 billion into China’s two biggest video game livestreaming platforms (Douya and Huya), and spent €370 million for a 5% stake in French gaming veteran Ubisoft Entertainment (famous for the bestselling Assassin’s Creed series). In June, the company invested a further $72 million in Ourpalm Co. Ltd., a Chinese mobile-game developer in which it now holds a 2% stake.

Disclosure

Dominion holds Tencent in its Global Trends Ecommerce Fund.


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