How Tencent from China took over gaming. It owns almost every gaming industry in the world

Once upon a time, the Chinese gaming industry was associated only with something not of the highest quality. However, over time the situation changed. For example, Genshin Impact, one of the most popular games of 2024, was created precisely by research from the Middle Kingdom.

And among Chinese game makers there is a real shark. Or king, whatever you want to call him. This is a company that today, one way or another, is tested by almost all top game studios. Thanks to this company you play games. Although you don’t even suspect that these are the people behind this or that project.

I’m sure not every gamer has heard of Tencent at least once. Today we will figure out what kind of company this is and why it operates in almost the entire gaming industry.

Tencent started with plagiarism

On the left he founded Tencent, on his right stood Amazon, with his back to the hall of Xi Jinping himself.

The history of the Chinese big business giant dates back to 1998 when Ma Huateng, known as Pony Ma, started the company. We will not describe in detail the childhood and youth of the future tycoon, but one important fact is worth noting.

In 1996, Huateng visited the United States, where he became acquainted with a new messaging tool – ICQ. This idea impressed him so much that in 1998, he and his four comrades ended up at Tencent Inc.

Within the walls of a small company, during the opening and initial development of which they, among other things, took money from their parents, the OICQ (Open ICQ) program was developed – a direct and arrogant clone of the famous messenger.

Ma “Pony Ma” Huateng and the mascot of the QQ messenger.

However, the OICC had more ambitious plans than its predecessor. The goal was to create a messenger that could be used directly through a pager, and then sell the development to a large cellular operator. However, no one showed interest in the project.

Tencent Inc. provides independent service, and there are not enough funds to maintain servers. ICQ developers persistently changed the name, which created additional difficulties.

In 1999, OICQ (later renamed QQ, “cute” in Chinese) had more than 100 thousand registered users, but Pony Ma’s team continued to operate without outside help. However, by the end of the year the situation changed. Tencent began to receive the first investments from large Chinese companies, which lasted until 2001.

Pony Ma was saved from bankruptcy by the South African holding Naspers, which bought 47% of Tencent shares (with a maximum allowable share of 50%) for 32 million. Having become the majority shareholder, Naspers still owns more than 30% of the corporation’s shares.

QQ’s expansion outside of China put Tencent in competition with Microsoft and its MSN instant messenger; it needed to earn more and faster than the Americans. Then Pony Ma, the head of the company, came up with (or rather, borrowed from the Korean social network Cyworld) an idea that in the dark times brought incredible profits – microtransactions inside QQ.

Interesting fact: these coins were also used for payments in the so-called “gray” market in the Chinese market. They were used to pay for goods that could not be purchased officially, and even for some services. In 2009, the issue of QQ Coins was banned.

Using the local currency, QQ Coins, users were able to customize their avatar and interface. These coins could be obtained for yuan. It was QQ Coins that became significant income for Tencent. Meanwhile, the idea of ​​Pony Ma reached a national scale. Almost all media services in China have switched to the freemium model – free software with paid functions.

And in 2003, Pony Ma and his team decided to take an urgent, but very risky step, which brought a lot of money.

First steps into the gaming industry and dramatic globalization

The Legend of Mir II is one of the first major MMORPGs released by Tencent.

In 2003, Pony Ma, the founder of Tencent, was introduced to Valve’s Steam service. He was so impressed that he soon launched his own service called QQ Games.

At first, QQ Games only offered simple mini-games and chess, but even this was enough to quickly gain popularity.

At the same time, Martin Lowe, a former Goldman Sachs banker, joined Tencent. He had a good understanding of how the Chinese gaming industry works and how the community around it operates.

In the early 2000s, 70% of Internet users in China were under 30 years of age. At that time, consoles were prohibited for purchase, and not everyone could give themselves a personal computer. All this contributed to the growing popularity of computer clubs, the culture of which China adopted to South Korea. The main genre in these clubs was massively multiplayer online role-playing games (MMORPG), which also came from Korea.

Keen Chinese gamers practically inhabit computer clubs.

It was Martin Low who suggested that Pony Ma start publishing Korean MMOs in China, for which the Tencent Games brand was created. They planned to make money from microtransactions by selling currency through QQ, which by 2005 had already become a side network with an internal economy.

Over the years, many games have been published, but one of the most famous projects was the online shooter Crossfire, which was a Counter-Strike clone from the Korean studio Smilegate. In 2013, this game was recognized as the most profitable in the world, earning $957 million. Everything that could be bought for a donation in this game was bought with QQ Coins, and Tencent took the percentage from each transaction.

They will buy Ubisoft. What else did Tencent buy?

League of Legends can be called the real pride of Tencent.

In 2011, the company entered the international market by investing in Western gaming brands. The first major investment was the actual acquisition of Riot Games, trading their Valorant and League of Legends games. Tencent later won shares in Epic Games and Activision Blizzard. The company slowly but surely moved through the Western gaming industry.

Tencent’s success is due to two key factors: a low audience of Chinese gamers and the attention of Western companies that make money from them. Pony Ma, the head of the company, was able to effectively meet this need, effectively creating a bridge between gamers around the world. He introduced a previously unseen Western product to the Chinese market, which brought corresponding profits to the manufacturer.

PUBG Mobile set a revenue record, earning $9 billion with its launch.

At the same time, Tencent, at the expense of other people’s intellectual property, is greatly developing its own functionality of mobile free games – part of the pocket answers to the franchises you know, developed by Tencent Games. For example, PUBG, which once blew up the Steam charts, moved to the mobile segment (where it began to fetch even more money than the desktop version) thanks to Tencent.

It was also Tencent that developed and published the extremely popular Call of Duty: Mobile in China.

But if everyone were limited to games. At the end of 2019, Tencent became a strategic partner of Nintendo, providing promotion and distribution of Nintendo Switch in China. Before this, not a single console of the company was sold there at the official level. Their collaboration continues to this day, and Nintendo is very pleased.

To conclude this section, I would like to propose that the open gaming market falls into two categories: companies that are wholly owned by Tencent, and us, in which Tencent has a market share. As a result, we will get the following picture.

Gaming companies that are 100% owned by Tencent:

✓ Funcom (Norway). Famous games: Conan Exiles, Samurai Shodown and others.
✓ Riot Games (USA) – developer of League of Legends, Teamfight Tactics, LOL: Wild Rift, Legends of Runeterra and Valorant.
✓ Sumo Group (UK) – famous developers of Sackboy: A Big Adventure and Hood: Outlaws & Legends.
✓ Sharkmob (Sweden) – game Vampire: The Masquerade – Bloodhunt.
✓ Turtle Rock Studios (USA) – Evolve, Back 4 Blood.

Gaming companies in which Tencent has a stake:

✓ Supercell (Finland) – games Clash of Clans, Clash Royale, Brawl Stars and others. Tencent’s share is 84%.
✓ Grinding Gear Games (New Zealand) – Path of Exile game. Tencent’s share is 80%.
✓ Epic Games (USA) – Unreal series, Gears of War series, Bulletstorm, Fortnite. Tencent’s share is 40%.
✓ Larian Studios (Belgium) – Divinity series, Baldurs Gate 3. Tencent share – 30%.
✓ Dontnod Entertainment (France) – games “Remember Me, Life is Strange”, “Vampire”, “Tell Me Why”. Tencent’s share is 22.6%.
✓ Bloober Team (Poland) – games Layers of Fear, Observer, Blair Witch, The Medium. Tencent’s share is 22%.
✓Ubisoft (France) – Far Cry, Assassin’s Creed, The Division series. Tencent’s share is 49.9%.

In fact they are even larger

A whole ecosystem inside one messenger. This was something we never dreamed of in Telegram. But this is exactly what VK should be approaching now.

In this material, my main tabletop stood with the presence of the Chinese giant exclusively in the gaming industry and looked at the birth of the company in promise. I deliberately deleted from the conversation everything that was not related to games, otherwise the text would have been simply too long. But I will still mention something finally.

It is difficult to overestimate the scale of modern Tencent and its influence on the situation in China. The Pony Ma company has practically monopolized the IT sector of this small and closed country with its products.

The main film supplier in China.

Thanks to Tencent, China has a successful analogue of almost every Western service – from YouTube to Amazon Books. Tencent Pictures finances films like Top Gun Maverick (which is why the Taiwanese flag disappeared from Tom Cruise’s jacket) and Wonder Woman, and currently distributes almost all Western films.

WeChat, developed in 2011, is the second most popular instant messaging app in the world. It offers an entire ecosystem that includes a huge number of mechanics – from a gaming platform to smart home control.

Black Rock is the main investment company in the West; its money is everywhere, including in the gaming industry. It is thanks to the strategy of this company in modern media that there are so many socio-political events because it brings money.

Thanks to the huge and almost inexhaustible foreign market of China and super-profits from its gaming division, the company is confidently standing on its feet and is not afraid of the current crisis. Tencent’s research in the gaming market will only grow, which in the conditions of the Western gaming industry, certain topics and ideas (the “agenda” itself, to put it simply) may become the basis for a step towards refusing to invest in those funds that require their use.

I am voicing this thought to you. Have a good day!