Chinese tech giant Tencent increased its stake in Berlin-based studio Yager and became a majority shareholder of the company. Founded in 1999, Yager has come a long way before receiving its first minority investment from Tencent in February 2020.
Let’s walk through some historic context: The studio’s first game was a combat flight simulator, Yager, which was released in 2003/2004 for Xbox/PC.
The game didn’t sell incredibly well and received quite average reviews from both gamers and the press. However, the company received acknowledgment in 2012 when Spec-Ops The Line, a third-person shooter it developed (published by 2K) became a cult hit.
Its next game Dreadnought, released in 2017, once again accommodated its niche players but failed to attract a wider audience. However, this was Yager’s first free-to-play game, which proved that the company could work with a different model of distribution. Soon after the release, the company announced The Cycle — a new multiplayer FPS with PVP, PVE, and battle royale elements.
In 2019, the company released The Cycle in early access on the Epic Games Store (EGS). When Tencent invested in February 2020, some of the proceeds from the investment went to support the development of The Cycle, but the game remains in early access on EGS today.
Given its recent investment, we suspect that Tencent is satisfied with The Cycle and its development process.
With the majority stake, the German developer gets access to Tencent’s vast development and publishing resources, which could ultimately boost The Cycle’s production and distribution. Moreover, Tencent’s multi-platform expertise will help Yager release the game cross-platform and to a global audience.
The Yager strategic investment falls in line with Tencent’s established M&A strategy and helps strengthen the position of the Chinese company in the European market. In this case, Tencent can leverage Yager’s expertise in PC & Console games development.
Tencent is well-known for its diverse strategy of acquiring various-sized companies, as well as making a plethora of big and small corporate investments.
Interestingly, Tencent’s recent focus has seemingly been on PC & Console developers, plus gaming ecosystem projects (Ubitus, Huya, Bilibili, VSPN).
In 2020, Tencent made a total of 28 transactions (including those of its subsidiaries). 15 of the targets were gaming companies outside China with 10 of them being from Europe. This year, Tencent has already struck 50 deals, 11 of which are non-Chinese companies (and 8 out of those 11 hailing from Europe).
We’re tracking Tencent’s continuous interest in the Western gaming market, and 2021 is on its way to becoming one of the most active investment years for the company.
