Chinese Internet giant paying $11.5b for Finland's Supercell, maker of Clash Of Clans
HONG KONG • Clash Of Clans could just be the type of tent-pole entertainment that helps Asia's biggest Internet company build a Marvel-like universe of movies, comic books, online videos and T-shirts.
Tencent Holdings is spending US$8.6 billion (S$11.5 billion) to gain control of Supercell - the Finnish maker of mobile games including Hay Day, Clash Royale and Boom Beach - from SoftBank Group. To see how that portfolio may fit into Tencent's emerging entertainment empire, look at how the Chinese company leveraged World Of Warcraft and League Of Legends into global powerhouses.
League Of Legends' 67 million monthly users helped Tencent earn US$9 billion in game revenue last year, and the Tencent-backed movie Warcraft has been setting box-office records in China since this month's release. Acquiring Supercell reinforces Tencent's entertainment aspirations against Alibaba Group and Baidu, and comes after Tencent bought the rights to 300-plus Japanese anime franchises in a push to become a worldwide multimedia brand like Marvel, DC and Disney.
"Tencent has taken on a strategy to convert good IPs into movies and anime," said Mr Mark Tanner, founder of China Skinny, a Shanghai-based research and marketing agency. "It's creating a world of superhero characters for entertainment."
Supercell occupied the top spot on researcher App Annie's rankings of publishers for two years running. Clash Of Clans was named an "essential" app by Apple. Yet the game has not been among the 10 top-grossing apps in China and Japan's iOS Store since 2015, which is where Tencent's clout can help.
The company's QQ and WeChat instant messaging apps have more than a billion users combined, and it could use those apps to promote Supercell games, Mr Tanner said. That distribution system helped Tencent's mobile game revenue increase 16 per cent to 8.2 billion yuan (S$1.7 billion) in the quarter ending March 31, compared with the previous three months. China's mobile gaming market is expected to reach 68.8 billion yuan by 2018.
"We do see there's an opportunity for IPs of games and movies and video to cross and splice with each other, in the right way," said Tencent's president Martin Lau on Tuesday.
Mr Junde Yu, managing director of the Asia-Pacific region for App Annie, said in an e-mail: "More investment means Supercell can be more creative with possible expansions into other entertainment verticals."
There is also the competition with Walt Disney's Marvel franchises, which take superheroes Spider-Man, Captain America and Iron Man from classic comic books and transfer them to smartphone games, console games and movies that earn billions of dollars. The most popular ones include the Avengers series.
A competing slate of Batman and Superman movies and games, based on the DC Comics characters, is being made by Warner Bros.
Nintendo, creator of the iconic Super Mario and Zelda characters, is making another push into the film business as console sales sag.
Tencent's multimedia ambitions do not apply to all of Supercell's games, and the intellectual property will still be owned by Supercell, Mr Lau said. "We need to be very careful in thinking through what makes sense and what doesn't make sense," he added.
Yet there is room to start small - like streaming competitions between players.
"Supercell could catapult Tencent into becoming owner of one of the most successful mobile game developers in the world," said analyst Yu Jianpeng at ICBC International Research. "Supercell is great at content creation and an expert when it comes to global expansion, there's so much Tencent could learn."
A version of this article appeared in the print edition of The Straits Times on June 23, 2016, with the headline 'Tencent's Marvel-like aspirations take flight'. Print Edition | Subscribe
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