Tencent takes control of Chinese gaming studio behind Swords of Legends franchise in latest diversification move

Chinese social media and gaming giant Tencent Holdings has acquired a controlling stake in an established local video game studio, a move that fits with the company's revenue diversification strategy.

By assuming control of Beijing-based Wangyuan Shengtang, a 15-year-old video game developer and publisher known for its Swords of Legends series, Tencent will gain access to the premium franchise and diversify its revenue stream, said Zhang Shule, game sector analyst with consultancy CBJ Think Tank.

Tencent, through an investment vehicle Guangxi Tencent Venture Capital, last Friday acquired 100 per cent of Dongtai Yunpeng Culture Co, which owns 43 per cent of Wangyuan, according to business registry service Qichacha. Separately, the investment vehicle also increased its stake in Wangyuan from 23 per cent to 31 per cent.

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Together with the 20 per cent stake Tencent holds through Linzhi Tencent Technology Co, which first backed the gaming studio in late 2020, the Shenzhen-based video game powerhouse now owns more than 94 per cent of Wangyuan.

As the controlling stakeholder in the Beijing-based studio, Zhang said Tencent will gain intellectual property, development strength, as well as marketing and distribution channels that will "enrich Tencent's gaming empire".

Meng Xianming, 58, who founded Wangyuan in 2009, will retain his chief executive role under Tencent, which has promised to give free rein to the core games development teams at the company, according to a person close to Wangyuan, who requested anonymity as they were not authorised to speak to the media.

Tencent increased its stake in Wangyuan because it is one of China's best single-player game developers, with strengths in aesthetics, taste, and game storytelling, the person said. Its business model - selling games upfront - is different to Tencent's focus on online and mobile games, which are downloaded for free but monetised by in-game purchases.

Up until July 2021, Wangyuan had sold 6 million copies of the Swords of Legends franchise.

Tencent and Wangyuan did not immediately respond to a request for comment on Monday.

The Swords of Legends franchise, which blends Chinese mythology with martial arts elements, is one of the most well-known role-playing games in the country.

Separately, Tencent and Wangyuan have a partnership in Ash Echoes, a new title developed by a Wangyuan unit and co-published by both firms for domestic and overseas markets.

Tencent co-founder, chairman and chief executive Pony Ma Huateng recently told an annual staff gathering that the strategy of the firm's video gaming operation was to continue expanding overseas, which he described as the "best shot to build the company into an international business".

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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