Tencent just announced its largest deal in Japan
The company has acquired a 6.86% stake in Kadokawa, the parent company of From Software, a video game developer. Kadokawa is a giant media conglomerate with a $400 billion+ market capitalization.
The deal was announced on Friday, October 29th. Tencent will buy 4.86 million shares and is expected to close later this month.
With gaming crackdowns in China, this deal gives Tencent a strong position in the growing -and far less regulated- Japanese gaming market. Kodakawa, on the other hand, will now receive market penetration in China.
M&A in the gaming industry have already reached all-time highs in 2021 with just 3 full quarters of reporting. As we go further into Q4, it is expected the industry will continue M&A activity and investment at a record pace.
While 2021 will mark the biggest year ever for the industry, 2022 could dwarf the numbers for deals, valuations, and investor return.
Deals are occurring with firms of all sizes, from startups to near-trillion-dollar companies. Some of the biggest investor returns could been found in smaller gaming companies and startups, as their valuations reach records.
And the key may lay in smaller companies and startups who hold game-tech patents.
As the biggest players in the industry scramble to gain market-share, companies who hold patents may become incredibly attractive in the M&A landscape as the big-boys look to expand.
Read more about the Tencent/Kadokawa deal, HERE
Or learn more about a patent holding gaming startup, HERE