Tencent invests in UK games company Milky Tea in latest overseas move

Investment comes as WeChat owner prepares to roll out its smash-hit mobile game Honour of Kings, that has over 200 million users at home, in the US and Western Europe markets

PUBLISHED : Wednesday, 02 August, 2017, 7:52pm
UPDATED : Thursday, 03 August, 2017, 11:47am

Tencent Holdings, the Chinese internet company best known for messaging app WeChat, has invested in the Liverpool-based independent game development and animation production studio, Milky Tea, the game company said on Tuesday.

It said with their new partnership in place, it plans to further expand its team in the English city, scale up the development of HyperBrawl Tournament – one of the firm’s brand new games – as well as develop new PC and console intellectual property over the coming years.

“The scale of it really hasn’t hit home yet, but we are all really proud to be part of the Tencent family and we couldn’t ask for better partners,” said Jonathan Holmes, Milky Tea’s founder and managing director.

Tencent confirmed its investment in Milky Tea, but declined to provide details on the amount.

The Chinese gaming giant’s latest deal comes on the back of its £17.7 million (US$23.2 million) investment for a 9 per cent stake in UK video game developer Frontier Developments last week. Frontier is listed on the Alternative Investment Market (AIM), a sub-market of the London Stock Exchange.

“The [Milky Tea] investment demonstrates our commitment to continuously bringing compelling and innovative games to the market through identifying and supporting small-scale developers who have the potential of developing high-quality games,” a Tencent spokesperson said in an e-mailed statement.

Tencent is currently the world’s largest gaming company with gaming operating revenue amounting to US$10.2 billion in 2016, according to data by gaming research firm Newzoo. The company is also one of the most acquisitive.

It invested US$500 million for a 28 per cent stake in South Korea’s CJ Games in 2014, before acquiring full control of League of Legends US game company Riot Games in 2015. It also has a significant minority stake in Epic Games, which developed games such as Unreal, Gears of War and Infinity Blade.

And last year, it splashed US$8.6 billion to buy Finnish gaming company Supercell, known for its popular Clash of Clans and Clash Royale mobile games.

“Tencent’s investments into these foreign gaming companies is because it wants to expand globally. It can utilise these companies’ channels to better promote its own games overseas, such as Honour of Kings,” said IDC China analyst Johnny Zhou.

Tencent has been preparing to roll out the smash-hit mobile game Honour of Kings, which boasts over 200 million users at home, in the US and Western Europe. While being dominant in its home market, the company has yet to demonstrate an ability to draw foreign players.

“Through investments and acquisitions, Tencent can also better understand the needs of gamers in overseas markets, and bring popular games and game technology back to the Chinese market,” Zhou added.

Zhou also said that Tencent has always been focused on a global strategy, and is taking the opportunity to expand into the mobile gaming market overseas, which is still a largely untapped market.