After rumors surfaced that Sony was contemplating buying Hong Kong gaming firm Leyou Technologies, the main target is now shifting to Tencent. In a note to investors, Leyou confirmed that it’s in talks with Tencent about an acquisition. The two firms agreed to phrases on a three-month unique window for talks about Tencent taking Leyou non-public. This successfully ices out every other agency from acquisition talks — and that features Sony and its PlayStation model.
Leyou is an interesting as a result of it has plenty of proficient game-development studios. Most notably it owns Dirty Bomb developer Splash Damage and 97% of Warframe studio Digital Extremes. Splash Damage can also be presently working with Microsoft on Gears Tactics and Google Stadia on an unannounced challenge. And it’s that functionality to construct fashionable service video games for PC that makes Leyou so engaging.
“Tencent continues its global expansion efforts with acquisitions of studios that augment the company’s exposure in PC, mobile, and console development for China and for global markets,” Nike Partners analyst Daniel Ahmad writes in a be aware offered to GamesBeat. “Leyou owns a number of studios that have expertise in global online free-to-play game development for console and PC, an area that Tencent is actively exploring as it expands overseas.”
Tencent is big in international cell gaming. It’s the corporate that tailored PlayerUnknown’s Battlegrounds for smartphones. But it desires to make sure it has the same presence on PC. Leyou can unlock that.
Leyou’s studios may additionally profit from a Tecent partnership
But the trade of expertise is a two-way avenue. While Leyou’s groups can deliver deep insights into best-practices for live-service PC video games, Tencent may capitalize on Warframe and different properties on cell.
“Tencent’s mobile expertise can also help studios under Leyou bring their titles to smartphones,” writes Ahmad. “Warframe is Leyou’s largest title, accounting for $175 million, or 80%, of revenue generated in 2019. The game is licensed by Changyou in China and is also available on [Tencent’s Steam-like] WeGame locally.”
With 60 million registered gamers, Warframe has already proved its functionality to herald gamers. Digital Extremes continues to show the sport’s longevity after rising in every concurrent 12 months since 2013. Mobile may probably add to these numbers in a big manner.
Finally, a Leyou acquisition would give Tencent publicity to some vital properties.
“Leyou has numerous titles in development, including games based on popular IP such as Lord of the Rings and Transformers,” writes Ahmad. “That can help diversify revenues in the future.”