Marvelous have announced that they have entered a “Capital and Business Alliance” with Tencent, with the latter becoming the largest shareholder.
The news comes via Bloomberg, reporting that Tencent holdings has bought a 20% stake in Marvelous Inc. for ¥7 billion JPY ($65 million USD est.) Famitsu also reports that this makes Tencent the largest shareholder in the company.
Marvelous will sell 8.62 million shares at ¥576 each ($5.36 USD est.) Shareholders Amuse Capital and Nakayama Hayao will also sell shares at the same price, 2.83 million shares and 708,600 shares respectively.
Marvelous stated this investment will be used in existing and new intellectual properties (“at the global level” Translation: Google Translate) over the next three years.
The Japanese company stated what both parties hoped to achieved with their business alliance.
“Realization of the following by our company [Marvelous]
- Rich content and globalization of our existing IP
- Large-scale investment to create new IP
- Investment for new business development
- Acquisition and utilization of cutting-edge technology
Realization of the following by Image Flag Investment
- Creation and development of new IP that can be expanded globally
- Understanding the unique culture of Japan and developing business in the Chinese market”
Translation: Google Translate (altered Image Frame Investment to Image Flag Investment)
Hideki Yasuda, an analyst from the Ace Research Institute, theorized this would not only help Marvelous bring more titles to the west, but for Tencent to learn how to create game consoles.
“Tencent’s reason for the investment is probably to learn how to make console games from Japanese companies, one of the last frontiers for the Chinese tech company’s game business. The investment will help Marvelous ride through the period of global economic uncertainty, and release more of its domestically-popular titles to the Western market.”
This is not the first time Tencent had worked with Marvelous. Tencent worked with Marvelous to make a Story of Seasons game on mobile, “Makiba Monogatari.” Marvelous also stated that 5G and the impact of the coronavirus pandemic will bring change to the games industry.
Subsidiaries of Marvelous include XSEED Games, and Honey∞Parade Games- the studio opened by Senran Kagura producer Kenichiro Takaki.
Tencent has been reportedly trying to increase their influence outside of China- mainly into the western market- and aim to have at least half of their revenue come from outside of China within the near future. The call for industry veterans for “blockbuster” projects reflects their efforts in trying to break into the triple-A gaming scene.
Tencent’s expansion into western markets seems to be partially motivated by a decline in domestic growth, due in part to strict regulations on video games by Chinese authorities [1, 2, 3]. In 2018 Tencent lost an estimated $20 billion USD in market value, after the Chinese Ministry of Education recommended fewer game approvals.
Though its goal of fifty percent revenue from non-Chinese sources is only halfway there, with Tencent reporting only 23% of its online revenue was from outside of the country.
As of January, 2020 Tencent had 100% ownership of Riot Games, 80% of Grinding Gear Games, 40% in Epic Games, 29% in Funcom, 5% in Activision Blizzard, 5% in Ubisoft, 5% in Paradox Interactive, a “major investment” in PlatinumGames, and others.
OtherSide Entertainment also recently announced that Tencent “will be taking the [System Shock] franchise forward.”