Even with tighter domestic regulations and struggling global stock markets, Asia’s largest video game conglomerates, NetEase, Sony and Tencent continue to acquire and invest in smaller gaming companies.

Tencent and Sony just jointly invested $259.5 million for a 30% interest in FromSoftware, while NetEase acquired award-winning French video game studio, Quantic Dream, for a yet to be disclosed sum.

But these newly announced acquisitions and investments may be just the tip of what many expect to be 2022’s $150 billion deal iceberg…

Where Asian gaming companies could be highly focused on the acquisition of US and European based companies.

Because these three Asian giants have faced new regulatory issues at home, most notably in China, they’ve begun directing their growth-by-acquisition initiatives on studios based overseas (North America and Europe in particular).

Tom Wijman of Newzoo told CNBC, “Tencent and NetEase have built up their gaming business primarily in their home turf China. Now that their home market is becoming increasingly regulated and difficult to operate in, these two companies will accelerate their global expansion strategy.

Wijman continued, …if the regulation from the Chinese government continues to pressure NetEase and Tencent in their home markets, I think they too will be eager to look into M&A. Their global expansion strategies have only just gotten started.”

Sony, on the other hand is not experiencing the same regulatory issues in its home country, Japan.

Of Sony, Wijman said, “Their goal is to have enough content to incentivize players to buy their proprietary hardware, pay a monthly fee for the subscription service operated by PlayStation and purchase the occasional digital game through the PlayStation Store, for which Sony receives approximately a 30% cut.

“Snapping up studios is the most failsafe way to ensure exclusive content for their ecosystem; especially in reaction to the acquisition spree of Microsoft, one of Sony’s main competitors in the gaming space.”

Last week, Sony said it will push hard into a new venture for the company, mobile games, with a new, in-house unit dedicated solely to mobile development. Its August 29 acquisition of European-based Savage Game Studios may become a key part of this new direction.

Since mobile games makes up over 50% of the total gaming market revenues, it makes sense for not only Sony, but all the Asian video game giants to invest in, or acquire additional mobile game assets.

And with the ever-tougher regulations being put on Chinese gamers and game companies, many, if not most of these investments and acquisitions could be of North American and European companies.

For investors in these American and European gaming companies, this could be great news. While the Asian giants continue to fight for overseas assets, early owners in those assets could be on the receiving end of a high-premium buyout.

Even in this bear market, the video game industry remains one of the bright spots and a potentially fantastic sector to invest in. With all the gaming giants jockeying for position, and growing by acquisition, owning stocks in companies on the receiving end of a buyout could be incredibly lucrative.

Read on HERE to discover potential buyout targets…

Or read more about the Big-3 Asian video Game companies, HERE

Source: https://www.cnbc.com/2022/09/06/sony-tencent-netease-continue-deal-hunt-to-expand-new-formats-markets.html