Tencent Acquires Majority Stake in US Online Games Company

Shenzhen-based Tencent reportedly paid almost $400 million to expand its stake in US social games developer Riot Games. From VentureBeat:

The deal is another validation of the social game business, which is one of the hottest sectors for user growth and acquisitions. And it shows that big international players such as the Chinese internet giant are moving in on the fast-growing market for social games in the U.S. …

“We shared a philosophy and built a mutual respect with Tencent,” said Brandon Beck, CEO of Riot Games, in an interview. “It is an interesting time for games. Social and mobile games are very interesting, but it’s not our focus. We are very focused on core game experiences, which are also evolving from a packaged good to an online service.” …

The deal by Tencent is the biggest cross-border incursion made by a Chinese company in the games business. Early last year, China’s Shanda Games bought Mochi Media, a Flash game platform company in San Francisco, for $80 million. Other big deals in social and mobile games include Disney’s purchase of Playdom for up to $763 million and DeNA’s purchase of Ngmoco for $403 million.

Last month, Techcrunch asked “When will China’s Internet giants open the acquisition wallet?”:

… Part of this is cultural. American Internet entrepreneurs are more likely to want to sell their companies these days. But in China, it’s like the late 1990s: Success equals an IPO. On the other side of the bargaining table, American companies like to buy technology, engineers and potential competitors and aren’t afraid to potentially overpay to get what they want. Chinese Internet companies have the cash and the stock currency: Tencent is the third largest Internet company in the world by market cap and Baidu is the fifth. But so far, they’ve been loathe to do big acquisitions that would dilute the corporate culture.

February 5, 2011 12:30 AM
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