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Steam is responsible for three of the ten most popular new games released in 2018. Does Tencent’s overseas legions continue to grow?

GameLook report/Not too long after the start of the year, ” Phantom Beast Parlu ” was launched on the Steam platform”, as well as “Mistlock kingdom” and other popular products. GameLook took this opportunity to conduct statistics on the top products that players have been playing this year.

Tencent has three products in the top 10 new games for 2024. You will not know this if you do not watch the video, but you’ll be surprised when you do.

Inflexion Games, a Canadian studio, developed the 8th-ranked “Legend of Nightingale”, an open-world construction and survival game. Tencent acquired this studio in early 2022. This studio has been a part of the “self-developed” category for a long time. Inflexion Games CEO Aaryn flynn was interviewed by the media at the start of the month. She praised the relationship between Tencent and Inflexion as being “relaxing and supportive”, and said that “Tencent has the most long-term perspective we’ve ever seen .”

Tencent has invested in both Keen Games and Eleventh Hour, the developers of “Last Epoch”, and “Mistlock kingdom”, which ranked third and forth respectively. Tencent is a minority shareholder in developer Eleventh Hour. Tencent, Hiro Capital and Keen Games have jointly invested $10 Million.

Tencent Games, a company that is often overlooked, has grown rapidly in recent years in the PC/console market, where it has become a major player for foreign manufacturers.

Tencent is the largest shareholder of the Larian Studio, the studio behind “Baldur’s Gate 3”. Tencent owns 30% of the Larian Studio. The sales of “Baldur’s Gate 3” have exceeded 10 million units.

The companies that are behind “Alan Alan 2”, “Armored Core 6”, “Fearless Contract”, and the other e-sports award winners (Rist) have either received investment from Tencent or are Tencent studios.

Tencent’s list of acquisitions is much more extensive: the company acquired Sumo Group, the Canadian developer behind “Warframe”, for US$1.27billion, fully acquired Sharkmob, the developer for “Warhammer 40k Undertow”, and invested US$1.6billion in shares. It also became the biggest shareholder in Techland, which developed “Dying light”, acquired Digital Extremes for US$1.4billion, and invested heavily in the production “Forza Horizon” prior to Gavin Raeburn

Tencent’s investment strategy in the Western market for overseas consoles and PCs is “stable” and “ruthless”. The game companies that it has acquired either have a strong track record of development or are headed by solid producers. Tencent’s acquisitions are characterized by “3A” (high quality) and “high development”. Tencent does not want to spend tens or hundreds of billions in capital costs to acquire powerful developers.

A single PC/console studio can cost up to 10 billion yuan. It can be used to develop more than ten “Genshin Impact”, if placed on the Chinese market. GameLook is curious about how this economic account could be calculated, given the long cycle of console/PC game releases and their high rate of return.

How can Tencent’s game products in other countries close the Internet, and create a strong ecosystem that is comparable to Microsoft, Sony and Nintendo, as they continue to appear? Tencent continues to make big moves.

Will the Epic Store be a good location to shut down the Internet with 30 million active users daily?

Tencent’s reputation as a “free-range” studio has been a positive one. Tencent’s massive overseas investment of tens or hundreds of millions of dollars is not just to obtain share dividends from the game makers and create IP for mobile games. Tencent is a giant in the gaming industry that is patient and long-termist. However, when everything is “ready”, Tencent will also look to revamp its product line.

When this moment arrives, how will Tencent make the product a reality? GameLook is willing to make a wild prediction.

The Epic Games Store, for example, is one possible location. Tencent currently holds 40% of Epic’s shares and is just one step away to becoming the largest shareholder. EGS is not on the same level as Steam which is a PC platform. However, it has been growing steadily over the last few years.

Epic’s latest annual report shows that there are now more than 270 millions PC users on the Epic Game Mall. This is an increase of 40,000,000 from 2022. The total number of Epic accounts across all platforms has also reached 804,000,000. The Epic Game Mall’s daily active users are expected to reach 36.1 million in 2023. Monthly active users will also reach 75 millions, an increase of 68 million from last year.

Epic Games Store will launch more than 1,300 PC games in 2023. The platform has over 2,900 titles, which is an 88% increase since 2022. In 2023, including Epic’s games, gamers spent over $950 million at the Epic Games Store, an increase of 16% from 2022.

Epic Games Store has a number of unique features. The company, for example, is preparing to launch a mobile app store. Epic has the chance to grow its business globally, even though this is mainly a response to Apple opening up third-party iOS licenses to the EU.

In the Chinese market, Tencent’s EGS store is a success. Its cooperation with NetEase MiHoYo and NetEase has been a great success.

In the Epic Game Mall, Chinese and Foreign manufacturers dance harmoniously. According to the most recent annual review, Chinese Products such as “Genshin Impact”, “Honkai Impact: Star Rail”, and “Red Dead Redemption 2”, are in competition with “Cyberpunk 2020”, etc. The top revenue ranking is shared by both overseas games and domestic ones. Epic has officially named “Black Myth: Wukong”, “Zero”, and other games as the “most anticipated” games.

Epic Game Mall, with its strategy of free distribution and sharing content, has gained a lot of popularity in China. Not only do they have millions on platforms like Bilibili but also make money from the players. The company was nicknamed E Bao and enjoys a very unique reputation.

Epic Games’ global market dominance is so great that it surpasses Tencent WeGame in a way. It is easy to imagine a day when a Tencent with a strong financial position will increase its stake in Epic Games and help the company expand their PC and mobile businesses. They would also integrate Tencent’s most popular games, such as “League of Legends”, “Fearless Contract”, and other titles. Tencent, in this process will also become “an important force” within the gaming industry.

What is Tencent doing to the global gaming industry?

Tencent has been a big owner for only a few short years. If the cycle was extended by ten or twenty more years, the acquired studios would not only be a “new force” but also a “money-printing machine” to Tencent. They will become even more important. This could have a major impact on Tencent’s gaming capabilities and its business direction. According to GameLook’s analysis, Tencent’s acquisition of these studios has at least three important strategic levels.

Tencent can firstly expand its self-developed global system by participating in international game publishing. Liu Ming was interviewed in 2022 by foreign media. He stated that the company’s goal is to “explore our expertise around world” and have a variety of expertise and capabilities available for local online operations all over the world. We are now trying to build our global distribution system and want to make (our regional teams), not just local market agents, to be publishers.

This strategy has already begun to bear fruit. Tencent’s Level Infinite, for example, has become the leading global cross-terminal brand in the past few years. This is based on the experience and knowledge gained from international distribution of “Warhammer 40k”, “Nikke” and other products. In the case of Level Infinite’s recent launch of “Honor of Kings”, the brand was able to help the game reach more than 50 different countries and regions. It achieved a good result by relying on local resources that were efficient to promote the game.

A second important aspect is that Tencent can use the information to improve its own self-research capability. Tencent has acquired many 3A studios in the past. Many of these studios have stated that they will exchange resources both ways. Tencent offers non-financial assistance to manufacturers, such as cloud services or game operations. 3A manufacturers also share their game development experiences with Tencent. Tencent is looking to improve its own research capabilities and pursue high-quality game products.

Tencent has been developing more and more “Operation Delta”, “Need for Speed: Assemblage”, and other projects, such as “Reverse War: The Future” in recent years. The acquisition of experience in development is a key factor for the establishment of “big products” with AAA production standards and multi-terminal, cross-platform projects such as “Reverse War: The Future”. Tencent Photonics revealed its 3A self-developed product “Last Sentinel”, at the TGA last year. Steve Martin, a veteran overseas producer and co-founder of LightSpeed LA’s studio, also founded the LightSpeed LA studio.

For content-based industries such as games, a sufficient amount of rich content is enough to create a barrier for business growth. Consider the cloud gaming industry as an example. Google’s Stadia service died due to lack of games. Xbox’s Phil Spencer announced the day before yesterday, that Xbox’s cloud game service has been used for more than double-digits of time. This gives them confidence to invest in cloud gaming construction.

We divide the console market often into three camps, Sony, Microsoft and Nintendo. Each company has a diverse range of game studios. Level Infinite, a brand with the slogan “A New Level of Infinite Possibilities”, states that Tencent will become the fourth pole of the gaming industry after attracting related manufacturers. Under the moat content, create game services that are more unique, and bring unlimited possibilities to gaming industry.

Source: Nico Partners / gamelook-com-cn

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