Tencent Acquires Controlling Stake in Chinese Video Game Studio Wangyuan
Chinese social media and gaming giant Tencent Holdings has acquired a controlling stake in Wangyuan Shengtang, an established local video game studio known for its popular Swords of Legends series. The acquisition, made through Tencent’s investment vehicle Guangxi Tencent Venture Capital, will allow the company to diversify its revenue stream and gain access to the premium franchise. This move aligns with Tencent’s strategy of expanding its gaming empire and reinforces its position as a powerhouse in the industry.
In addition to the stake acquired from Wangyuan, Tencent also increased its existing stake in the studio from 23 percent to 31 percent. With a total stake of over 94 percent, Tencent now holds a majority share in Wangyuan. This acquisition will provide Tencent with valuable intellectual property, development strength, and marketing and distribution channels, further enriching its gaming portfolio.
Meng Xianming, the founder of Wangyuan, will continue to serve as the company’s chief executive under Tencent’s ownership. Insiders reveal that Tencent has promised to give free rein to the core game development teams at Wangyuan, allowing them to maintain their creative autonomy. This partnership will leverage the strengths of both companies, as Tencent’s focus on online and mobile games complements Wangyuan’s expertise in delivering high-quality single-player experiences.
Wangyuan’s Unique Business Model and Success With Swords of Legends
One of the key reasons behind Tencent’s increased stake in Wangyuan is the studio’s unique business model. Unlike Tencent’s approach of offering games for free and monetizing through in-game purchases, Wangyuan sells its games upfront. This differentiates Wangyuan from other developers and adds to the diversity of Tencent’s gaming offerings. Notably, the studio’s popular Swords of Legends franchise has already sold 6 million copies as of July 2021, demonstrating its strong market appeal.
A Promising Partnership: Tencent and Wangyuan’s Collaboration on Ash Echoes
In addition to the Swords of Legends franchise, Tencent and Wangyuan have also announced a partnership on a new title called Ash Echoes. Developed by a Wangyuan subsidiary, the game will be co-published by both companies for domestic and overseas markets. This collaboration highlights Tencent’s commitment to expanding its presence beyond China and transforming into an international gaming business.
Tencent’s Gaming Business Strategy: Expanding Overseas
Tencent’s Chairman and Founder, Pony Ma Huateng, recently emphasized the company’s strategy of expanding its gaming business overseas. With the acquisition of Wangyuan and their existing partnerships, Tencent is determined to leverage its experience and resources to become a major player on the global gaming stage. This international expansion is seen as the best opportunity for Tencent to solidify its position and further strengthen its gaming empire.
In conclusion, Tencent’s acquisition of a controlling stake in Wangyuan marks a significant move in its revenue diversification strategy and further solidifies its dominance in the gaming industry. This partnership will enable Tencent to access valuable intellectual property and expand its gaming portfolio with the popular Swords of Legends franchise. With a focus on international expansion, Tencent is positioning itself as a global gaming powerhouse.
Analyst comment
This news can be seen as positive for the market. Tencent’s acquisition of a controlling stake in Wangyuan will allow the company to diversify its revenue stream, expand its gaming empire, and reinforce its position as a powerhouse in the industry. With access to valuable intellectual property and the popular Swords of Legends franchise, Tencent’s gaming portfolio will be enriched. Additionally, the partnership with Wangyuan on the new title Ash Echoes showcases Tencent’s commitment to expanding overseas and becoming a major player in the global gaming market. Overall, this move is expected to have a positive impact on Tencent’s market position and revenue.
