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Bitter gaming war between ByteDance and Tencent a windfall for independent Chinese studios

  • ByteDance’s acquisition of Moonton in March increased the studio’s value sevenfold from a few months earlier and came after it cancelled a deal with Tencent
  • Tencent has already invested more in gaming studios this year than in all of 2020 amid a bidding war with ByteDance

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Moonton co-founder Justin Yuan, centre, at the company’s Epicon 2019 conference. ByteDance acquired Moonton for US$4 billion in an effort to bolster its gaming offerings in Southeast Asia and compete with Tencent. Photo: Mobile Legends Japan/Twitter
Josh Ye
By the time Chinese video game maker Moonton Holdings was acquired by ByteDance in March, the Shanghai-based developer had seen its valuation septuple to US$4 billion, from US$551 million four months prior, but it had less to do with the merits of the games it produces than being dragged into the ongoing rivalry between the TikTok owner and Tencent Holdings.
Moonton is the latest example of an independent Chinese gaming studio whose valuation has skyrocketed on the back of a bitter bidding war between two of China’s biggest internet companies. Beijing-based ByteDance has been aggressively moving into gaming in a bid to further monetise its vast user base, horning in on a market long dominated by Shenzhen-based Tencent, which operates the world’s largest video game business by revenue.

In another high-profile acquisition last week, ByteDance acquired game studio C4 Games, the developer of Red Alert Online. Meanwhile, Tencent has already invested more in gaming studios this year than it did in all of 2020.

However, the battle for Moonton, the developer of team-battle game Mobile Legends: Bang Bang, came at a steep price, which two sources familiar with the deal said was worth US$4 billion. Accepting ByteDance’s offer also meant breaking one with Tencent that Moonton had signed just days before, according to the sources, who asked not to be identified.

“That was a big middle finger [to Tencent],” one source said. “There are a lot of egos and dynamics involved.” He added that ByteDance offered “a lot of its own shares to Moonton”, which ultimately swayed the deal in its favour.

Moonton’s Mobile Legends: Bang Bang is one of the biggest mobile games in Southeast Asia. ByteDance’s acquisition of Moonton gives the Chinese tech giant an important foothold in the region where Tencent seeks to expand. Photo: Handout
Moonton’s Mobile Legends: Bang Bang is one of the biggest mobile games in Southeast Asia. ByteDance’s acquisition of Moonton gives the Chinese tech giant an important foothold in the region where Tencent seeks to expand. Photo: Handout

Gaming has become a top priority for ByteDance. It has proven to be an effective way of monetising social media users from other apps – a strategy used by Tencent – and a steady stream of gaming revenue works as insurance against TikTok someday falling out of fashion.

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