ByteDance confirms talks with Tencent, other potential buyers over sale of video game operations
- Local media reported that ByteDance was lowering the valuation of its gaming studios to try and make a deal after spending more than US$14 million developing titles
- Despite its huge success with short video app TikTok and its Chinese version Douyin, ByteDance has failed to achieve returns from its gaming investments
TikTok owner ByteDance has confirmed that it is in talks with multiple potential buyers for its video game operations, including Tencent Holdings, the world’s biggest gaming company by revenue.
The confirmation from a ByteDance representative on Tuesday came after local media outlet LatePost reported that the company's gaming unit Nuverse was in negotiations with Tencent regarding the disposal of its operations. According to the report, ByteDance was lowering the valuation of its video gaming studios to try and make a deal after spending more than 100 million yuan (US$14 million) developing various titles.
The representative said that the company has not reached an agreement with Tencent.
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ByteDance also started lay-offs at its games unit, which employs nearly 2,000 people, although the exact number of affected employees was not clear. Some workers who want to remain at ByteDance could be allowed to transfer to other teams, the Post reported.
A ByteDance representative said at the time that it decided to “restructure its gaming business” and “make adjustments to focus on long-term strategic growth areas”.
Despite its huge success with short video app TikTok and its Chinese version Douyin, ByteDance has failed to achieve returns from its video gaming investments. The company spent around 30 billion yuan on video game acquisitions and investments involving more than 20 studios between 2019 and 2022, according to local media outlet DingjiaoOne.
“While the company made US$54 billion in the first half of 2023, less than 1 per cent of that came from their video games business,” said Lisa Hanson, chief executive of gaming industry consultancy Niko Partners.
ByteDance founder Zhang Yiming, who stepped down as chairman and CEO in 2021, was never a video gaming enthusiast before dipping his toe in the market.
Zhang had grown impatient with the slow development, complaining in 2022 about the lack of progress at the gaming division during a video call with executives, saying that its Moonton studio had not grown despite doubling its headcount, tech media outlet The Information reported in December. Reuters reported a month earlier that ByteDance was in talks to sell Moonton.
