Chinese gaming company aims to heavily invest in French developer

Tencent is looking to increase its investment into western markets, offering an unknown amount to Ubisoft to increase its stake, according to sources.

Tencent Holdings Ltd, a Chinese gaming and social media company has reportedly reached out to Ubisoft, the developer of popular titles such as Assassin’s Creed and Rainbow Six Siege, in an effort to increase its stake in the French company.

Tencent, most known for its popular mobile game “Honor of Kings,” has not divulged how much it intends to spend on Ubisoft, but according to people knowledgeable in the matter, the company is “determined to nail down the deal as Ubisoft is such an important strategic asset for Tencent.” The source claims that the price per share could reach near the historical price ceiling — which was 158 AUD per share in 2018.

The Chinese company has been making heavy strides in Western markets — in 2016, Tencent purchased a majority stake in Supercell, the developer of popular mobile games like Clash of Clans and Clash Royale. Tencent also has stakes in companies like Epic Games, famous for Fortnite, as well as Riot Games, famous for League of Legends.

The Ghost Recon series is one of Ubisoft’s biggest hits. Picture: Ubisoft

The reason for Tencent’s expansion? China’s crackdown on the video game market. In 2020, China froze approvals for video games for eight months in June of last year. Since April of this year, they have resumed approvals, but none of the approvals has included Tencent. Tencent reported a revenue loss of 1% in the first quarter in China, but also a revenue gain of 4% internationally.

Meanwhile, Ubisoft has been on the decline in recent years, with the company forecasting a lower operating profit for the 22-23 fiscal year. The company hopes to turn that around in the near future, with upcoming releases such as Skull and Bones and Avatar: Frontiers of Pandora. “We’re talking about a top-line growth that exceeds 20%,” Chief Executive Yves Guillemot said, speaking to analysts about the company’s outlook.

However, in recent years, Ubisoft has missed expectations, giving analysts pause. Guillemot continued, stating that they do not expect a need to merge with other companies: “We have everything we need to remain independent.” This comes only briefly have a string of game cancellations were announced by the company, and a statement of support for a game rumoured to be cancelled.

Original reporting by Reuters.

Written by Junior Miyai on behalf of GLHF.