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Video gaming

China’s Tencent joins Japanese developer of Final Fantasy to produce original games for global market

PUBLISHED : Friday, 31 August, 2018, 1:14pm
UPDATED : Friday, 31 August, 2018, 1:14pm

Internet giant Tencent Holdings has forged a strategic alliance with Japanese game company Square Enix to develop original games as the Chinese company continues its overseas expansion amid a regulatory crackdown at home.

The two companies will jointly develop so-called AAA titles, games with the highest budgets and marketing resources, based on original intellectual property, Tokyo-based Square Enix said on Thursday. The alliance will include the establishment of a new joint venture between the partners as well as cross licensing of existing intellectual properties.

“We have strong expectations for this strategic alliance with Square Enix Group,” Steven Ma, senior vice-president of Tencent, said in a statement. “The alliance will enable us to couple our broad range of internet service capabilities to Square Enix Group's superb creativity, and provide our customers with unprecedented content experiences on a global basis.”

Tencent did not immediately respond to a request for further comment.

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Square Enix is the developer of Final Fantasy, which has sold over 141 million copies internationally, as well as other popular titles including Dragon Quest and Tomb Raider. The alliance represents Tencent’s latest move into the international game industry. The Chinese company also holds a 40 per cent stake in the US studio Epic Games, and announced earlier this year plans to launch the hit game Fortnite in China.

However Tencent, which operates the world's biggest video games business by revenue, is facing intensifying regulatory challenges at home. On Thursday China’s Ministry of Education said it plans to limit the number of new games released and restrict the amount of time children and teenagers spend playing to help prevent and control myopia among minors.

Tencent’s Hong Kong-listed shares fell up to 5 per cent on Friday morning following the ministry statement, while its rival NetEase fell 7.2 per cent in US trading on Thursday.

Last year Tencent added controls to limit how much time young people spend on its games, including limited play time for those under 12. A day later, a commentary in state media People’s Daily compared the popular game Honour of Kings to “poison”.

The Ministry of Education statement was the latest blow to the Chinese game industry, which has already been subject to a suspension of the game approval process since March.

The suspension came after the State Administration of Radio and Television was established in March to replace what was formerly known as the State Administration of Radio, Film, and Television, as part of a broader government overhaul to strengthen the Communist Party’s control over cultural policy.

The government’s ongoing crackdown on online content created a setback for Tencent earlier this month when a blockbuster title Monster Hunter: World was pulled from its WeGame platform less than a week after its launch. Its content “did not completely comply with the regulatory requirements”, Tencent president Martin Lau said in conference call with analysts at the time.