Tencent turned 2020 into a record investment year with 29 gaming-related deals (so far!). 20 of these deals are China-based companies and 9 are international studios. Contrary to public perception, this amount of activity is actually new for Tencent. Since 2005, Tencent has on average invested in less than 10 gaming-related companies annually. Before we get into the analysis regarding such a strategy shift, here’s the investment breakdown for the year:
| Genre | Date | Company Name | Investment Sum | Country |
| PC / Console | Jan | Platinum Games | undisclosed | Japan |
| PC / Console | Jan | Funcom | USD148m Acquisition | Norway |
| Platform | Feb | Bilibili | Increased holdings to 18% | China |
| PC / Console | Feb | Yager Development | Undisclosed | Germany |
| All Platforms | Feb | Roblox | Series G | U.S |
| All Platforms | May | Marvelous | 20% Share for (HKD500m) | Japan |
| Mobile | Jun | 凡帕斯 | Acquired 31.25% for RMB450k | China |
| Mobile | Jul | Voodoo | USD568m | France |
| All Platforms | Jul | Century Huatong (Shengqu’s Parent Company) | Increased stake to 5% at RMB200m | China |
| Live Streaming | Aug | Huya | USD810m | China |
| All Platforms | Aug | Leyou Tech | USD1.4b acquisition | Hong Kong, China |
| Mobile | Sept | 云畅游戏 Yunchang Game | Acquired 15% share | China |
| Cloud | Sept | 动视云科技 51ias | Acquired 21.75% for RMB40m | China |
| PC / Console | Oct | 10 Chambers | Majority Stake | Sweden |
| Esports | Oct | VSPN | Series B | China |
| Mobile | Oct | 元趣娱乐 Connecting Happiness | 10.71% stake at RMB120k | China |
| Mobile / PC | Oct | 纳任信息 | 20% stake at RMB1.6m | China |
| Mobile | Oct | 暖域科技 | 20% stake | China |
| PC / Console | Nov | Lockwood Publishing | USD25m investment | UK |
| Web | Nov | 无端科技 Wizard Games | Undisclosed | China |
| Mobile | Nov | 七号笔迹 | 30% stake for RMB2.55m | China |
| All Platforms | Nov | 网元圣堂 Wangyuan | 20% stake for RMB2.88m | China |
| Mobile / PC | Nov | 水果堂 Fruits Game | 27.8% stake for RMB105k | China |
| All Platforms | Dec | 润梦网络科技 | 19.25% stake for RMB850k | China |
| Mobile | Dec | 阿佩吉网络 | 10% stake for RMB136k | China |
| Mobile | Dec | 影之月信息科技 | 14.5% stake for RMB1.05m | China |
| PC / Console | Dec | 钛核互动 Tai Games | 39% stake for RMB333k | China |
| Mobile | Dec | 炎央文化 | 15% stake for RMB780k | China |
Tencent’s international PC/Console strategy is fairly straightforward — take an existing PC IP with global appeal, broaden the company’s insights, and often turn it into a mobile game for broad distribution. This is a proven route for Tencent following the playbook of PUBG, League of Legends, and Counter Strike. We could likely see DayZ Mobile, The Cycle Mobile, and more in the coming years.
Interestingly, Tencent’s accelerating investment activity primarily revolves around increasing the number of early stage deals. In the past, most of Tencent’s deals were executed very methodically and focused on industry leaders (like Supercell, Riot Games, and Epic Games). However, 2020’s deals are more focused on early stage companies, plus niche genres, and were seemingly executed with greater speed. What changed?
One explanation floating around Chinese media points to Genshin Impact. Genshin Impact by Mihoyo not only burst onto the scene and immediately became a global top grossing game, but Mihoyo also completely circumvented Tencent’s ecosystem in China. 90% of ad spend went to Bilibili and Bytedance’s platforms, and players can’t even download the game on Tencent’s Myapp store. The meteoric rise of smaller, non-Tencent backed studios focusing on niche genres such as Mihoyo (Genshin Impact), Hypergryph (Arknights), and Papergames (Mr Love: Queen’s Choice) reveals that Tencent underestimated part of how the industry would evolve. Papergames (established less than 7 years) and Hypergryph (established less than 2 years) already command a net profit of RMB 1 billion each, with valuations of tens of billions RMB. Mihoyo’s valuation is now estimated to be more than RMB30 billion ($4.6 billion).
Of course, Tencent is doing just fine, and its gaming business still made meaningful progress this year despite being slower to certain trends. It can’t control everything. That said, Tencent now recognizes a new paradigm shift where player growth could come from anywhere, and the company is quickly adapting to ensure future growth from new sources decreasingly passes them by.
