This article originally appeared on ABACUS Tencent is the world’s largest gaming company by revenue, but it’s mostly known as the developer or owner of competitive multiplayer games like Arena of Valor, PUBG Mobile and League of Legends. Now it could be about to buy its way into the market for massively multiplayer online role-playing games (MMORPGs). The 27-year-old Norwegian gaming company Funcom recently revealed that Tencent is offering US$148 million in cash to fully acquire the studio. The offer comes less than four months after Tencent became the largest shareholder of the company with a 29% stake. Tencent, China’s social and entertainment giant Funcom is best known for its Conan the Barbarian games. And before developing open-world survival games like Conan Exiles, Funcom was known as a specialist in the MMORPG genre. Titles like Age of Conan, Anarchy Online and The Secret World have earned Funcom a loyal following among MMORPG fans. Strategically, this makes Funcom a good target for Tencent. In spite of the Shenzhen-based company’s dominance in China’s gaming market, it hasn’t found much success by making its own RPGs or MMORPGs. And China is a very lucrative market for MMORPGs, with the country being home to millions of fans of games like World of Warcraft , Justice Online and JX3 HD Remake . NetEase, Tencent’s biggest gaming competitor, owns Justice Online and runs World of Warcraft in China. Kingsoft’s Seasun Games owns all the JX games. Meet NetEase, China’s second-largest game publisher The other side of the Funcom acquisition is that it’s the latest move in Tencent’s rapid global expansion. The company has already said it hopes to eventually have half of its users overseas . Funcom would give Tencent a strong foothold in RPGs in the West. Tencent might also be looking to buy access to some well-known franchises. While Conan the Barbarian is currently Funcom’s most well-known franchise, the Norweigian company is also working on a new open-world survival game based on Frank Herbert’s classic sci-fi novel Dune . Ironically, though, Conan Exiles -- Funcom’s marquee MMORPG -- previously sparked ire among Chinese gamers . In its early days, the game had poor support for gamers in mainland China. It was never officially available in the country, so network performance was poor and language localization was incomplete. Some gamers eagerly awaiting the game purchased it anyway before proceeding to review-bomb it on Steam. But at least early anticipation for the game shows an appetite in China for a Funcom MMORPG. If Tencent becomes Funcom's parent company, it’s likely to want to publish Funcom’s titles in its home market. Things look good for the acquisition going through. Funcom’s board has already recommended the offer . When Tencent previously took a stake in the company Funcom CEO Rui Casais said , “Tencent has a reputation for being a responsible long-term investor, and for its renowned operational capabilities in online games.” Some Western gamers have been concerned about the Chinese tech company’s recent investment spree in gaming over fears of possible censorship (the company is known for censoring games in China to appease regulators). Tencent has already invested in 22 foreign gaming companies, according to consulting firm Niko Partners. This includes an investment in the iconic action game developer Platinum Games earlier this month . But Tencent is only the controlling shareholder of six of those companies. Fortunately for gamers, Tecent’s track record suggests it’s fairly hands-off with the companies it invests in. “I wouldn't expect consumers to see much change from Tencent investment into Funcom, but with outright acquisition, you can't rule it out,” said Charlie Moseley, founder of Chengdu Gaming Federation. “Then again, Supercell has changed little and is [in] a similar situation [as a] Scandinavian mobile developer controlled by Tencent.” Some predict that Tencent’s acquisition could help the cash-strapped studio develop its next generation of games. But Jintiao Zheng, co-founder of media outlet Gamer Boom, said Funcom will ultimately have to solve its own problems, even if Tencent gets onboard. “Funcom has seen better days. It’s actually very hard for Tencent to help Funcom take off again. This is determined by its business model and product model. Monetization has always been a problem for Funcom,” Zheng said. Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.
