Tencent Buys Stake In Life Is Strange's Creators

photo from Life is Strange
Image: Square Enix

Tencent continued its massive expansion in the gaming world today after acquiring a minority stake in French developer Dontnod, maker of Life is Strange, Vampyr, and Tell Me Why.

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The Chinese conglomerate has been busy since the start of 2021, recently buying a majority stake in Klei Entertainment, which makes the indie survival game Don’t Starve.

This expansion will be unsurprising to those paying attention to Tencent and its relationship with the gaming industry. Already a powerhouse in China, Tencent has spent the last few years moving into the North American and European markets. It’s a logical move for a company that has all but claimed dominance on its home turf, not only surpassing its Chinese competition but also growing to one of the largest gaming companies in the world.

Tencent has tried its hand at making its own games to appeal to North American and European gamers, with mixed results. It released a remake of its own IP, Honor of Kings, one of the highest-grossing and most downloaded games globally despite its Chinese exclusivity. That remake, called Arena of Valor internationally, was a dud. But In 2019, it developed Call of Duty: Mobile, which saw success fitting for an already established franchise.

Tencent also partnered with Nintendo in 2019, which helped usher in the sale of Nintendo’s Switch to the massive Chinese market and gave Tencent the ability to make a Pokemon game of its own, Pokemon Unite, as well as a useful ally for Tencent. Japan and China’s gaming cultures are unique, but Nintendo still serves as a model of an Asia-based video game company that kills it overseas.

But what Tencent lacks in making its own hit games, it makes up for by investing in the makers of others. Tencent already owns Riot Games and has a 40 percent share in Epic Games. It also has smaller stakes in a number of other gaming companies, including Activision Blizzard, Ubisoft, Paradox Interactive, and gaming-adjacent platform Discord. That’s a significant foothold in gaming for any company, and Tencent doesn’t seem inclined to slow down anytime soon.

These money moves have brought Tencent its share of critics, most publicly after a Hearthstone competitor was banned after voicing support for the Hong Kong protests. Some pointed to Chinese stakeholder Tencent as the reason behind the punishment (Blizzard denied its relationships in China were a factor and lessened the punishment following backlash). Banning playing and taking away their winnings is never going to go over well for a company. Still, it’s also worth pointing out that people have been reprimanded in competition for lesser reasons.

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Today’s share of Dontnod is pretty minor in the scheme of Tencent’s sprawl, but it’s proof the company has no intention of slowing down anytime soon.

DISCUSSION

dylanoconorkinja
DylanOConorKinja

At this point (at least in the Western market), Tencent feels less like a company that develops videogames and more like some sort of mutual fund or investment firm that specializes in buying up just short of board-control amounts of video game companies’ stock. I mean, this should concern me - and does, kind of! - because I quite like Dontnod, but it just doesn’t feel like Tencent has much interest in the creative direction of the studios they’re buying into. (Unless the games are somehow critical of China. Then it’s probably an issue. But even then, that feels more like a ‘we want to be able to sell the game on our home turf’ than ‘we secretly exist to prop up the CCP’s global image’.)