Tencent acquires a minority stake in Life is Strange developer Dontnod
Dontnod, creators of games like Life is Strange, Tell Me Why, and Vampyr, announced today that Chinese tech giant Tencent has acquired a minority stake in the company valued at €30 million. The funds, Dontnod says, will help the indie developer create more games for a worldwide audience across all platforms. At the same time, this investment also includes a new "business cooperation agreement" that CEO Oskar Guilbert says will help Dontnod take "advantage of the various growth drivers in the video game industry, in particular in China and on mobile platforms, in cooperation with an industry leader."
The key thing, obviously, is China. Its gaming industry is the biggest in the world but is extremely challenging for non-Chinese developers to tap into. Due to heavy government regulations, it's not possible to publish a game in China without partnering with a Chinese company to handle the distribution and operation of said game. That's exactly why games like World of Warcraft in China are free-to-play while the global version has a subscription, or games like Counter-Strike have versions that are exclusive to Chinese players.
This deal will, presumably, mean Dontnod will begin selling its games through proper Chinese gaming platforms like Tencent's WeGame rather than relying on Steam and Apple's app store. Though Steam is available in China, it exists in a precarious, legally grey area and, though used by 30 million Chinese gamers, is far from the biggest gaming platform. Partnering with Tencent will allow Dontnod to access a much wider audience.
With the investment, Tencent also has the option to propose the appointment of a representative on Dontnod's board of directors. But with only a minority stake in the company, Tencent won't have the ability to make executive decisions.
This new investment follows almost immediately on the heels of Tencent's acquisition of a majority stake of indie developer Klei Entertainment. Tencent, which is one of China's largest tech companies—comparable to Facebook or Apple—is also the world's biggest gaming company. It owns Riot Games, makers of League of Legends, as well as minority stakes in a variety of major gaming companies including Activision Blizzard, Ubisoft, Epic Games, and more.
Tencent has aggressively ramped up its investments in and acquisitions of gaming companies in recent years. In 2020, it invested in 31 gaming companies (though most were smaller Chinese businesses).
Here's a list of all the major gaming companies that Tencent has invested in.