Tencent's Gaming Empire Is About To Get Bigger
The world's largest video game publisher is continuing its aggressive growth. A new press release has announced that Tencent, by way of their subsidiary Image Frame Investments, will purchase Leyou Technologies Holding, whose portfolio includes video game studios Digital Extremes, Athlon Games, and Splash Damage.
Tencent's statement of intention to purchase Leyou ends a year of speculation as to the fate of the Hong Kong-based technology. In Dec. 2019, Leyou first indicated that it was in conversations with Tencent-backed iDreamSky to sell a controlling interest in the company. Those talks apparently fell through, as did rumored discussions with the Zhejiang Century Huatong Group and the Sony Corporation.
According to the press release, an overwhelming majority of participating shareholders (97.7%) voted to approve the purchase of Leyou. The Chinese technology giant will spend $1.3 billion to close the deal, according to PCGamesInsider, a final price tag that is in line with the $1.4 billion iDreamSky approached Leyou with back in 2019.
Purchasing Leyou would be the latest move in Tencent's long history of snapping up valuable technology companies with proven track records and profitable products. Some of the company's highest-profile purchases over the past decade include its complete takeover of Riot Games, which developed League of Legends, a 40% stake in Epic Games, the team behind Fortnite, and even a 5% investment in rival publisher Ubisoft.
Adding Leyou Technology Holdings to Tencent's portfolio will add successful studios to the company's roster while enhancing its library of live, revenue-generating games. Leyou owns Digital Extremes, a company with a history stretching back to the 1990s and boasting a resume that includes early games in the Unreal series. In the last decade, Digital Extremes has become best known for Warframe, a loot shooter that has been live since 2013, logged 50 million registered users in 2019, and is due for a next-generation upgrade.
While Digital Extremes may be the highest-profile studio changing hands in the Tencent take over of Leyou, other companies involved in the deal have impressive histories as well. Splash Damage specializes in multiplayer experiences and has developed the online components of games such as Gears of War 4 and Batman: Arkham Origins. Also included in the deal is Athlon Games, currently developing a Lord of the Rings MMO in partnership with Amazon slated for release in 2022.
Big corporate buyouts such as this have exposed some of the shadier sides of Tencent's business practices, not the least of which are the types of privacy concerns that resulted in the intervention of the White House in 2020. However, the Chinese conglomerate has developed a reputation for being reasonably hands-off with its purchased studios' projects, so hopefully this change will be mostly unnoticeable to fans of properties now owned by Tencent.