Capcom may enter China market via Tencent Holdings
Japanese game developer Capcom is potentially making a deal with China’s Tencent Holdings. This could mean a big boost to the Tencent empireBy Theon Leong 09 Apr, 2014
News broke out recently that the Japanese game developer Capcom could potentially be buying shares of Chinese companies. According to a report on Chinese news site 17173, Capcom has been in substantial negotiations with Tencent Holdings, and may have reached a deal. If this news is true, then it would appear that Tencent would continue to be an entertainment gold mine for foreign companies.
There has been an increase in merger and acquisition activities both, overseas and locally by Tencent in recent years, like its partnership with JD.com to take on Alibaba in the domestic e-commerce market. There have also been many moves to establish an increasingly large interactive entertainment empire, backed by foreign gaming investments, over past years.
Tencent has invested in more than 10 overseas companies, with the biggest investment going to American game company Riot Games, owner of the highly popular League of Legends series, which also has a large following in China. At the end of 2011, it had invested US$3.94 billion (RMB24.4 billion) and received 92.78 per cent equity in Riot.
Statistics show that League of Legends holds a stranglehold on the massive online battle arena (MOBA) gaming market in China, having a relatively stable player base of 1.4 million on average daily. Comparatively, Dota 2 only has average of 50,000 players daily.
In 2012, Tencent received an undisclosed amount of shares from Epic Games, famous for its Gears of War and its Unreal engine. Tencent had actually acquired a minority stake in the company since its inception during its first call for foreign investments 21 years ago. Subsequently in 2013, when well-known game developer Blizzard spent US$58.3 billion to buy back French parent company Vivendi’s shares of its company, Tencent was apparently involved in the transaction as well and it currently owns six per cent of Blizzard’s shares.
With possible news of a partnership between the two giants, Tencent could receive a large boost for its latent giant of an empire in the future with Capcom properties such as the Resident Evil and Street Fighter series. The latter may need to figure out its mobile gaming plan though, as the free-to-play market is big in China.