China’s Tencent Makes $8B Mobile Game Move

China gaming giant buys maker of Clash of Clans to expand market share and geographic footprint.
Matthew HellerJune 21, 2016

Chinese gaming giant Tencent Holdings is raising its global profile, acquiring most of mobile game developer Supercell for about $8.6 billion.

Finland’s Supercell makes some of the world’s highest-grossing games including Clash of Clans. It posted sales of 2.1 billion euros ($2.38 billion) last year. Tencent said Tuesday it will acquire about 84.3% of Supercell via a wholly-owned consortium, including all of SoftBank Group’s 72.2% stake.

As The Wall Street Journal reports, the deal is Tencent’s biggest-ever acquisition, “helping the Chinese company reinforce its position as the world’s largest videogame publisher and highlighting its ambitions to expand far beyond China’s borders.”

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Online games accounted for more than half of Tencent’s $15 billion revenue last year. With the Supercell acquisition, Tencent will have an estimated 13% of the global $99 billion game business in 2016, according to market researcher Newzoo.

“This is certainly a good deal for Tencent,” Newzoo CEO Peter Warman told VentureBeat. “It solves a huge strategic problem and provides immediate additional revenue potential.”

“Tencent will now finally make serious mobile revenues outside of its home turf,” he added.

Supercell was founded in 2010 in Helsinki and has focused on creating games for the growing number of tablet computers worldwide. Softbank, a Japanese telecom giant, initially acquired 51% of the company in 2013.

“China is home to more gamers than any other country,” Supercell CEO Ilka Paananen said in an online post. “Tencent’s platforms reach around a billion users (yes, a billion!). And, they have around 300 million unique users playing games on their platforms. What this means for us is that together with Tencent, we can bring our games to so many more players.”

According to Newzoo, revenue from mobile games is expected to rise 21% this year to about $37 billion, surpassing revenue from more traditional games played on consoles and personal computers. Tencent became a global player in PC games through its 2011 acquisition of League of Legends developer Riot Games.

The company’s WeChat service is China’s most popular messaging application with 762 million monthly active users.