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Tencent, known best for its Chinese messaging app WeChat, is looking to acquire Rovio, the mobile gaming company behind the Angry Birds franchise, according to The Information.
While an agreement is yet to be reached, the deal would cement Tencent’s dominance in the mobile gaming market.
Over the past year, Tencent has made multiple acquisitions and investments in international mobile gaming businesses, equating to roughly $19 billion in spending, according to Bloomberg. For example, the company acquired Los Angeles-based gaming company Riot Games, best known for its smash hit League of Legends. Tencent also bought a majority share in Clash of Clans maker Supercell.
The deal presents significant opportunities for both companies:
- It increases Tencent’s hold over the global gaming market. Rovio’s mobile gaming success and subsequent franchise expansion could help Tencent maintain this dominance over the coming years, as global mobile revenue continues to increase. Over the next four years, global mobile gaming revenue is projected to grow at an annualized rate of 14%, reaching $65 billion, according to NewZoo. Moreover, mobile games is the most lucrative segment of Tencent’s revenue, accounting for roughly 46% of the company’s Q1 2017 revenue.
- Rovio could leverage Tencent’s clout in China to bolster its reach in the world’s largest mobile gaming market. China is a notoriously difficult market for international companies to compete in without the assistance of a local business. By using WeChat’s dominant position as a web portal and gaming platform, Rovio could expand its business in China. This worked for Riot Games, which distributed its popular League of Legends game via Tencent’s social media and messaging platforms, The Information notes.
Mobile activities, such as gaming, are consolidating under parent companies as they seek a hand in every aspect of the mobile market. This is particularly evident on messaging apps, which are rapidly expanding their purview of digital properties that keep users engaged on their platforms. For instance, Facebook Messenger introduced Instant Games and Apple’s iMessage added iMessage apps.
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