Digital Sky purchase puts Tencent top of buyers' gameboard

PUBLISHED : Tuesday, 03 May, 2011, 12:00am
UPDATED : Tuesday, 03 May, 2011, 12:00am


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Tencent Holdings topped a survey of strategic acquisitions and funding made in the global video gaming industry last year, with its US$300 million investment in Russia's leading internet games provider.

This represented the biggest transaction among the industry's total US$1.89 billion in acquisition and funding events last year, up 130 per cent from US$819 million in 2009, according to media researcher IHS Screen Digest.

Shenzhen-based Tencent's hefty investment in April last year gave it a 10.26 per cent equity interest in Digital Sky Technologies, which has since been renamed Mail.Ru Group.

The Russian company, which also operates two of the largest online social networking sites in eastern Europe, has strategic investments in Facebook and social network game developer Zynga. It has a portfolio of 34 multi-player online games and more than 30 games for social-networking sites.

Tencent, the mainland's biggest internet company, with a market capitalisation of HK$407.81 billion as of last Friday, expected its interest in Mail.Ru Group would help open 'new business opportunities in the Russian-speaking internet markets', Tencent president Martin Lau Chi-ping said.

IHS Screen Digest said the other big transaction in the video gaming industry last year was made by Japan's SoftBank Corp, which invested US$147 million in Zynga, which is the largest game operator on Facebook.

Another notable deal was made by Nasdaq-listed Shanda Games. The Shanghai-based company paid US$80 million to acquire United States-based game publisher Mochi Media, the world's largest browser-based game network operator, in January last year.

Mochi Media supplies advertising-supported games built on Adobe's Flash Player software that are played on thousands of websites.

There were an estimated 123 funding rounds and 87 acquisitions occurring in the industry last year, compared with a total of 154 transactions in 2009, according to IHS Screen Digest.

'Two key trends fuelled the robust pace of funding and gaming acquisitions last year,' said Steve Bailey, a games analyst at IHS Screen Digest.

'First, it was driven by burgeoning activity in the fast-evolving sphere of online gaming. Second, movement in funding and acquisitions ramped up between Western markets and entities in Asia.'