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Chinese firm Tencent is attempting to exit many of its investments in Japanese game companies, and it's willing to take a loss in the process, according to a new Bloomberg report.
Due to the current downturn in the video games industry and its need to catch up in the AI space, the outfit is evaluating its investments and "assessing which still hold promise to be high performers". The report names Marvelous as one of the studios it's looking to withdraw investment from, of which it owns 20%. It publishes the Story of Seasons and Rune Factory titles.
While the other teams it's looking to cut ties with aren't mentioned, it's said that Tencent is "preparing to sell stakes back to the original management team, even if it means incurring a loss".
Tencent also owns a minority stake in Kadokawa Corporation, along with Elden Ring team FromSoftware and PlatinumGames. These investments are said to be unaffected by the company's intended withdrawal from the games industry in Japan.
In a statement responding to the claims, Tencent told Bloomberg: "Video games are core to Tencent’s business. We remain fully committed to working with our investees and maintaining our strong presence in the Japanese game market over the long term."
We'll have to see what happens in the coming months and year to see what developers Tencent drops — if any.
Of course, Tencent has entered into a joint venture with Ubisoft and now has some level of control over the Assassin's Creed, Far Cry, and Rainbow Six franchises. It also tried to rip off Sony's own Horizon series, but failed to get its project through legal battles after PlayStation turned down the idea.
[source bloomberg.com]
Comments 25
When dodgy Tencent wants to abandon game development, you know the industry is in dire straits for the next decade.
The market crash is real and it’s entirely deserved! Hopefully the market rebuilds in a more consumer friendly manner.
@Mio_Nakashima They invested in a niche company that doesn't make bank and can't be stuffed with MT i think its fine. Marvelous is really small nothing like a big company which they can destroy with MT and liveservice.
@Mio_Nakashima but in reality it was over inflated from Covid and it’s just continuing to correct itself…
But we were told Asian companies were immune and it was only Western companies affected... smh.
@Boxmonkey Honest question... what do you think is going to change that is more consumer friendly?
IMO the problem is the industry over-inflated during COVID and is just regressing to the mean. In addition too many games are being released for us to support them all, meaning too many failures. Tie that together with cost of living crisis, which also applies to businesses - it costs them more to make games AND people have less money to spend - and that has led to less investment. None of that has anything to do with consumer friendliness however.
Honestly interested in seeing how you think.
That’s the problem with these large companies. They have the money to invest in higher yield areas, like AI. Microsoft are the same.
So, basically it will stop investing in small japanese studios to invest in AI companies and maybe, just maybe, some dev studios back in China?
I don't see how this will "crash the industry", looks like your normal investment shift after a cycle
When I say consumer friendly I mean creating games that are 100% compete from the point of purchase. I honestly believe games selling skins, cosmetics and such have ruined the gaming experience for most people. Don’t get me wrong you can play games like assassin creed without any need to buy extras but the game ui and build is designed to get you to spend more on things that used to come as part of the game.
DLC’s are fine if done properly (most aren’t) season passes are atrocious. Gambling mechanics need removing from gaming entirely. Stop the obsession with making huge open worlds (that 90% of people don’t fully explore) especially if you just have copy and paste quests and challenges.
I somewhat agree that the market is correcting rather than crashing after the covid pump but things are actually starting to look like a crash below pre Covid levels (time will tell)
The quicker the market realises that gaming is mostly a younger male pastime and starts to cater to that audience the better. I feel the industry decided it wanted to change its audience but actually ended up alienating quite a chuck of the audience they already had.
@Boxmonkey and yet many of the most played games are the ones that have all these things. I agree the older generation doesn’t like them (I don’t, never will buy a skin) but that’s contrary to what you say about needing to cater to a younger audience. The younger audience seems to like skins.
@Boxmonkey
Just... no.
Tencent, like every major company (Microsoft, Sony, Embracer, EA, etc.), vastly overextended itself. They wanted to have their fingers in everything.
They own Riot Games and Sumo Group and hold majority shares in companies like Techland, while still investing in very large publishers like Ubisoft, Epic, and Krafton, as well as prominent studios like FromSoftware, Remedy, Bloober Team, and Don't Nod. Don't Nod recently stated that they won't exist come fall if they don't secure further investment, which suggests Tencent may have pulled out.
A lot of these companies are just money pits and most likely haven't seen any major return on investment — but that never seemed to bother Tencent. They always acted like silent watchers from the shadows, allowing their companies to continue business as normal.
Again people are correct to point out that the biggest games today are full of micro transactions for skins and such. The industry changed in this direction because the suits in charge spent a huge amount of money researching ways to monetise the industry in the most addictive, corrosive way possible. Just because these games are played by the younger masses doesn’t mean that aren’t horribly predatory systems that should be removed. It’s done massive long term damage to the industry.
More of this please!
Ouch, after taking a loss they are now known as Eightcent.
@Boxmonkey but it's been proven that almost as many young women play games as young men. An example investigation but not the only one here
https://www.pewresearch.org/internet/2024/05/09/teens-and-video-games-today/
The manor difference is women don't identify as 'gamers' as generally the online gaming world is absolutely abhorrent to them. Try and play any of the most popular multiplayer games with in game chat on with a female in your party and you'd soon see why. The idea that gaming is for boys only only exists because of people who believe it trying to perpetuate it
If you class mobile phone games like candy crush yes lots of young women play video games.
@Markatron84 I don't think you're right. Don't follow the media propaganda trying to pretend things are different. None has done a proper statistics to show the gender distribution in true gamers, not playing 2hrs per week of candy crush and stuff like that...
Does anyone else just completely tune out when they read a corporate statement?
Game development at the highest end can be more expensive than ever but at the lowest end it is easier and cheaper than ever (ditto for distribution) so we are seeing more games than ever before many from people who aren’t full time developers (which has no bearing on the quality of their work but does impact risk calculations).
The unlovely truth is commercial art whether it be books, movies music or videogames has always been a chaotic, controversial thing and while some make a lot of money most artists and investors lose money.
Big investors used to high, steady returns on investment tend to be drawn in by big numbers after high profile successes (‘Let’s make our own Matrix or Overwatch’) and are sometimes willing to spend a lot of money to make a lot of money but when disappointment happens they tend to withdraw and move on to the next fashionable thing. So it goes.
@CheesyOatcake Think you nailed it with “ void of imagination not opportunity”. The sheer number and diversity of games available is astounding. From the most polished AAA games, F2P and independent offerings is the best it’s ever been. Some people have no idea where we’ve come from.
@Boxmonkey That is a very familiar argument ‘Kids are into the wrong thing and it is bad for them so they need to be protected from it and guided back to the true paths the stuff their parents are comfortable with’ is an argument fans of videogames in the 80’s and early 90’s (and rap music and heavy metal and anime and a bunch of other stuff I am Iforgetting) heard back then.
All new commercial art is inevitably regarded as evil and dangerous and a thing someone (either the industry through self censorship or failing that the government) needs to control.
Of course over time what once was dangerous becomes mainstream and new ‘dangers’ arise. That doesn’t mean one should be indifferent to what kids are exposed because there is rough stuff out there but kids being into stuff their parents don’t understand is pretty much par for the course.
@Boxmonkey It’s the same industry it’s ever been. I’m not sure optional cosmetic skins are really that bad. I think we’re in a better place generally. Games used to be far worse value and weren’t much cheaper decades ago. The real predatory transactions were Ghost n’ Goblins arcade machines and the number of quarters they chewed through.
@aethermath doesn't help that all the aquisitions by the likes of Tencent, MS, Sony ect probably made things worse as there's slowly becoming less competition.
EA and Ubisoft close to destroying themselves (although Ubisoft's management deserve it).
The shortages in hardware and the need for "better graphics" all the time probably don't help the sector either.
The cost of creating new engines alone must be astronomical in these times.
@Boxmonkey Videogames market grew 9% last year. It is far from "crash".
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