Tencent is Still Feeling its Way in the Game Going Abroad

Consumer Discretionary Author: Jiawei Wu Editor: Yiru Qian Sep 14, 2022 03:21 PM (GMT+8)

It is still an extremely complicated proposition for Tencent to break the inherent methodology and cognitive barriers to achieve globalized industrial upgrading.


French game developer Ubisoft said in a statement on September 7th that Tencent acquired 49.9% of the shares of its largest shareholder, Guillemot Brothers, for EUR 300 million (USD 299.31 million), while gaining 5% of the voting rights. After this increase, Tencent's shareholding in Ubisoft doubled to 9.99%.

Some time earlier, on August 31, Japan-listed Kadokawa Group announced that Tencent and Sony had spent a total of JPY 36.4 billion to take a stake in the company's game developer From Software (FS Society), after which Tencent held 16.25% of FS Society's shares, becoming the second largest shareholder.

"Successive large capital increases are not common, and are likely to ease the pressure of tightening domestic version numbers." Since the suspension of game number approval in July last year, to the reopening in April this year, Tencent and NetEase still have not gotten the number. "Coupled with the impact of the general environment such as the disappearance of the demographic dividend, increasingly strict regulation of minors and slowing growth of head products, the domestic game market has entered the era of stock, and accelerating the expansion of overseas markets has become the most priority strategy."

Unlike the unbreakable dominant position in the domestic market, Tencent is in the leading position among listed game companies going abroad, but the challenges from fierce competition with Lilith, miHoYo,  NetEase, 37 Interactive Entertainment and other manufacturers going abroad, still exist. According to the latest financial report, Tencent Q2 international market game revenue of CNY 10.7 billion, overseas revenue accounted for 25%, slightly higher than the 24% of Q1.

In addition to R&D, localization will be the focus of Tencent's game going abroad strategy. In addition to continuing to absorb and acquire global talents and studios to improve R&D strength, on the other hand, it is also necessary to improve user penetration in localization operation. For all overseas manufacturers such as Tencent, NetEase and miHoYo, whether they can successfully realize cultural export is also related to whether the vitality can last.