Tencent Spends USD23 Million on 9% Stake in British Video Game Developer
Qian Tongxin
DATE:  Jul 31 2017
/ SOURCE:  Yicai
Tencent Spends USD23 Million on 9% Stake in British Video Game Developer Tencent Spends USD23 Million on 9% Stake in British Video Game Developer

(Yicai Global) July 31 -- In its latest move in the global video gaming industry, Chinese internet giant Tencent Holdings Ltd. [HKG:0700] has become the second-largest shareholder in British game developer Frontier Developments Plc [LSE:FDEV], which is listed on the London Stock Exchange's Alternative Investment Market.

Tencent will buy Frontier's newly issued common shares for GBP17.7 million (USD23.2 million) to take a nine percent stake in the company, the developer said on July 29. The only shareholder with a larger stake is David Braben, the British firm's chief executive.

Frontier is best known for its Rollercoaster Tycoon series. In February, it penned a licensing deal with a Hollywood studio to develop a game based on a blockbuster movie but hasn't disclosed which one. The firm will release further details later this year.

"We believe that gamers in China will become increasingly interested in game genres such as space exploration, theme park management and other segments well-suited to Frontier's strengths," said James Mitchell, Tencent's chief strategy officer.

The Chinese corporate has been looking worldwide to get its hands on new intellectual property for its entertainment empire and adapt it into movies or cartoons. It has bought into leading European and American game developers and fostered strong ties with the world's largest game publishers and distributors.

Tencent is the distributor for Heroes of Might and Magic, a video game that Ubisoft Entertainment SA [EPA:UBI] displayed at this year's China Digital Entertainment Expo and Conference, also known as ChinaJoy. The France-based publisher is looking forward to developing more games, including mobiles games adapted from classic intellectual property rights, in collaboration with Tencent, Yves Guillemot, chief executive, told Yicai Global at the exhibition.

"Tencent may not be interested in buying stakes in major developers," a market insider close to both firms said. "Cooperation with them will be primarily limited to product and business development. Tencent is more interested in small companies with strong research and development capabilities. There will be more acquisitions targeting companies roughly the same size as Supercell or Frontier."

Tencent paid USD8.6 billion to buy Supercell, which developed mobile gaming hit Clash of Clans, in June 2016.

By 2018, China's mobile gaming market is estimated to grow to USD10 billion. "We believe that video games, movies and other video business have enormous opportunities through intellectual property," said Liu Zhiping, Tencent's president. "Going forward, Tencent needs to think about how to exploit valuable intellectual property beyond its intrinsic value."

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Keywords:   TENCENT,Frontier,Britain,M&A,Mobile Games,Intellectual Property