In its most recent financial results, Tencent announced that the gaming time of users under the age of 18 has decreased by 92% compared to the same period last year.
Game revenue in China in the third quarter fell 7% year-on-year to $1.7 billion, accounting for 22% of total revenue. By comparison, the international gaming segment accounted for 9%, although this number has increased in recent quarters. Another problem Tencent faces at home is the ongoing disruption to game licensing approvals.
No game can officially launch in China without a license. Tencent has been “frozen” twice for nine months during the restructuring of the government regulator. It was lifted earlier this year but Tencent had to wait more than a year for the new release to be approved.
With all this in mind, it’s understandable why Tencent is looking to strengthen its global gaming business as the Chinese market is getting tougher. Main competitor NetEase is in a similar situation, which has opened new studios in the West and even Japan to increase the number of games released for other markets.
Prior to running Tencent’s global game business, the company’s head of overseas game publishing focused on game distribution activities in potential regions such as Asia, parts of Europe. .
“Currently, we aim to have more expertise, open the possibility of issuance to foreign markets,” concluded the director. “We want to build our game publishing system not only in the Chinese domestic market but also around the world. That helps developers effectively engage users.”
Tencent currently owns more than 20 development studios worldwide with professional game production and publishing capabilities with strong support from talented staff. Tencent is still investing in an M&A strategy that gives it a presence in the video game space. In early 2022, it completed the $1.27 billion acquisition of Sumo Group, which was soon followed by the acquisition of Turtle Rock, the former studio of Improbable. Other recent deals include its subsidiary Inflexion Games and Polish company Fulqrum Games (formerly 1C Entertainment).
It also has a small stake in Elden Ring developer – From Software, Mordhau Triternion, Rime Tequila Works, Spec Ops: The Line studio, Gruby Entertainment, Digital Confectioners, and increased investment in Assassin’s Creed – Ubisoft through a minority stake. in Guillemot Brothers Limited.