The move allows Sumo to continue to grow and could help Tencent avoid unwanted attention from regulators.
Chinese media giant Tencent has acquired Sackboy Sumo Group PLC developer, Reuters reported, spending $ 1.27 billion on the remaining 91.25% of the Sheffield-based company not already owned by the Shenzhen-based tech company. The acquisition is the latest among dozens of recent acquisitions from Tencent in a bid to allow the company to expand into the Western market and circumvent antitrust laws in China.
However, it also helps continue Sumo’s expansion plans, including working with new studios such as the recently announced Timbre Games.
âThe three founders of Sumo, who work at the company, Paul Porter, Darren Mills and I are passionate about what we do and are fully committed to continuing in our roles,â Sumo CEO Carl Carvers said in a press release obtained by JeuxIndustrie.biz. âAlong with accelerating intellectual property work, Tencent has demonstrated its commitment to supporting the work of our customers and has stated its intention to ensure that we have the necessary investment to continue to focus on working with our main strategic partners on turnkey and development co-projects. “
Tencent Chief Strategy Officer James Mitchell said in the statement that the acquisition reaffirms the company’s commitment to supporting the most talented projects and delivering excellence to the games industry. He has been implementing this strategy since 2019 when he first invested in Sumo and until 2021.
“Tencent invested or acquired 62 games-related companies in the first half of 2021, which is double the amount for all of 2020 and 6 times that of 2019,” said Daniel Ahmad, senior analyst at Niko Partners. LinkedIn. âTencent has stepped up the pace of its investments and acquisitions over the past year as it seeks to strengthen its position and embark on new areas of growth for the company. “
Reuters said that from a revenue perspective, Tencent is the second largest video game company in the world, behind Sony. Ahmad said Tencent likely found Sumo’s work with major developers such as Microsoft and Sony highly desirable.
âThe deal would also help Sumo use Tencent’s expertise in developing and publishing games in China,â he said.
Recent events show that the company must look outside of itself and its currently owned businesses to continue this expansion as well. A week before the acquisition of Sumo, Nikkei Asia reported that China’s State Administration for Market Regulation declined Tencent’s offer merge the game streaming companies Huya and DouYou.
Chinese officials have cited antitrust laws and concerns over control over both upstream and downstream markets the merger would bring to Tencent, which already owns 40% of Huya and 30% of DouYou.
Nikkei Asia speculated that Tencent was trying to capitalize on the growing popularity and profitability of streaming in China, but the government’s action is not limited to streaming. Nikkei reported “growing concern” in the country with Tencent’s 40% control over the games industry there.
China’s anti-monopoly law allows the government to restrict mergers and international operations based on a number of factors, including profit turnover in China. The Market Regulatory Administration is already eyeing Tencent suspiciously, focusing on acquisitions such as the Sumo deal and Tencent’s purchase of Stockholm-based Stunlock Studios. announced the same day may be the safest route at the moment. These give Tencent chances to work directly in AAA game development, as Ahmad said, in addition to strong positions in other industries without attracting too much unwanted attention from the national government.
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