Meanwhile, Saudi Arabia Vows a Mega-Acquisition of Its Own
For the past several years, the Chinese government has been cracking down on its domestic video game industry, restricting access and game play for kids, limiting new game releases, and squeezing billions of dollars for “social responsibility programs” out of its video game companies.
As a result, Chinese video game companies are now dealing with intense domestic growth restrictions, even as the global video game industry explodes. In hopes of taking advantage of a market that seems to get more “unallowed” at home, video game giants like Tencent and NetEase are now looking abroad, more than ever, to find a pathway to growth.
Now, these growth plans, along with an announcement out of Saudi Arabia, could mean fantastic news is on the horizon for investors in US-based video game companies.
We’ll get to this in just a moment.
First…
According to a report in Reuters, Tencent is “aggressively seeking” to acquire either majority or controlling interests in overseas video game companies. Previous to this report, Tencent had a long-standing investment strategy of taking smaller, non-controlling stakes in video game companies.
It already has positions in over 800 gaming and game related companies, both foreign and domestic: including stakes in Activision-Blizzard, Krafton, Ubisoft, Epic Games, Marvelous, FromSoftware and others.
But few of its positions are of the controlling nature, and the company has made only a handful of full acquisitions. However, according to Reuters, Tencent is now on the hunt to change this.
To stay on the “good side” of its government, a representative from Tencent told Reuters the company has been investing overseas “long before any new regulations” in China.
But…
“In terms of the game business, our strategy is… to focus on developing our capabilities, especially in the international market. We will continue to be very active in terms of acquiring new game studios outside China,” the rep said.
Simply put, the future of Tencent, and other Chinese gaming giants like NetEase may lay solely in foreign expansion.
Meanwhile…
Saudi Arabia’s Savvy Gaming Group, a wholly owned division of the Kingdom’s sovereign wealth fund, says it will spend $13 billion to acquire “a leading game publisher” and will invest a further $37.8 billion in the industry.
Mohammed bin Salman, the Saudi Crown Prince said, “Savvy Games Group is one part of our ambitious strategy aiming to make Saudi Arabia the ultimate global hub for the games and esports sector by 2030.
“We are harnessing the untapped potential across the esports and games sector to diversify our economy, drive innovation in the sector and further scale the entertainment and esports competition offerings across the Kingdom.’
While much of the stock market is bogged down in a bear market, many experts believe deals in the video game industry are likely to remain red hot.
And with so much activity, and so many billions of dollars now available for acquisitions, it begs the question…
Is it wise to invest in the video game industry right now?
Especially in US video game companies?
Discover a US based video game company, with patents in in-game commerce, HERE
Or, read more about Tencent and Savvy, HERE