- The world’s biggest game company isn’t Nintendo, and it isn’t Microsoft or Sony either – it’s a Chinese company named Tencent.
- Tencent is a Chinese conglomerate that has major holdings in tech, film, music, and gaming.
- Despite being a relatively unknown name among gamers, Tencent has major stakes in some of the world’s biggest games: “League of Legends,” “Fortnite,” and “Call of Duty,” among others.
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In the world of film, Disney is the reigning champ. That remains the case now, in 2019, years after memories of Mickey Mouse have faded from popular culture.
But in the world of video games, where Super Mario and Nintendo once held the crown, there’s a new king: The Chinese conglomerate Tencent. Ever heard of ‘em?
Whatever your answer, there’s a good chance you’ve played a game that Tencent either wholly owns or owns a stake in, from “Fortnite” to “League of Legends” to “Call of Duty.”
Here’s how Tencent quietly became the biggest video game company in the world:
What's the deal with Tencent?
Unlike Nintendo, Tencent isn't only a video game company. Instead, Tencent is a conglomerate run by one of China's wealthiest businessmen: Ma Huateng, better known as Pony Ma.
The company has its hands in a bunch of different industries, from tech to movies to video games. That new "Men in Black International" movie, for instance, was produced by Tencent Pictures - the same thing goes for upcoming films like "Top Gun: Maverick" and "Terminator: Dark Fate."
Tencent also operates the wildly popular app WeChat, and the instant messaging service QQ, which boast a combined user number of well over 1 billion people. And that's before we start talking about the company's investment in music services, or comic books, or e-commerce.
Tencent CEO Pony Ma is a billionaire, thanks to the company's many different revenue streams.
How is Tencent such a big player in video games?
Nintendo spent several decades building up game franchises and characters from nothing, elevating a tiny Italian plumber from a few blocky pixels to a household name.
Tencent is taking a decidedly different tactic: Investing in, and/or buying up, major game makers.
For instance, Tencent outright owns Riot Games - the Los Angeles-based studio responsible for two of the world's biggest games: "League of Legends" and "Teamfight Tactics."
Tencent also owns a substantial portion of Epic Games (specifically, a 40% stake) - the North Carolina-based company behind "Fortnite," the Epic Games Store, and the software suite that powers a huge portion of gaming (Unreal Engine). It also owns the majority of Supercell (84%), the Finnish mobile gaming powerhouse behind "Clash of Clans," "Clash Royale," and "Brawl Stars."
And that's just for starters: Tencent also has minority stakes in "Call of Duty" publisher Activision and "Assassin's Creed" publisher Ubisoft.
Simply put: Tencent's gaming portfolio is massive.
Oh, and Tencent also happens to be the main way for non-Chinese companies to enter the staggeringly large Chinese gaming market.
Activision, the publisher behind "Call of Duty," is an American company. When Activision wants to bring "Call of Duty" to China, Activision needs a Chinese partner - and that partner is Tencent. Even Nintendo is going through Tencent to get in to China's lucrative gaming market: Nintendo and Tencent are teaming up to release the Switch in China at an undisclosed point in the future.
Apply that same process to the rest of the world's biggest game companies, from EA to Sony and Ubisoft, and you get the same result: Tencent is the company through which the video game industry accesses China.
And that's absolutely massive.
Moreover, Tencent operates WeGame - the Chinese equivalent of Steam, the world's largest PC gaming storefront. There's one major difference between Steam and WeGame: Tencent's version of Steam has far more users.
And, to be clear, Tencent Games is just a division of the much larger Tencent.
When Nintendo made the unfortunate choice to release its Wii U console, consumers responded with a resounding silence: The console is Nintendo's worst-selling in history.
The company's stock took a years-long hit, and analysts wondered if Nintendo had finally lost its mojo (it hadn't). That's largely because Nintendo is solely focused on being a video game company.
Tencent Games, however, is just one comparatively small component of Tencent's far larger footprint. It can take riskier bets and make bigger investments than Nintendo, and its failures have far less direct of an impact on the overall business.