China-based Tencent Holdings Ltd., currently the largest internet company in Asia and one of the largest in the world, is on the verge of completing a deal to buy a majority stake of Supercell, the Finnish gaming company that created the extremely popular “freemium” mobile MMO strategy game “Clash of Clans”.
The transaction to buy control of Supercell from Japanese media and telecommunications group SoftBank would put the mobile game maker at a whopping value of $9 billion once concluded, and would also signal Tencent’s triumphant entry into the global gaming industry and perhaps, domination. It would be the latest big acquisition for Tencent according to Reuters, after subsidizing Riot Games of “League of Legends” fame and gaining holdings in Activision Blizzard Inc.
Wall Street Journal adds that only last year, Supercell was valued at $5.25 billion. Its extreme rise in value has been seen as proof positive of the fast growth of mobile games as a major industry. Industry data tracker SuperData Research concluded that in 2015, revenue from tablet and smartphone games clocked at $30.2 billion in comparison to PC gaming’s $33 billion and console gaming’s $6.05 billion.
A major contributor to this exponential growth is mobile gaming’s unique quirks: they are generally free to download and developers can introduce virtual currency to players in order to make in-app purchases to buy powerful “elite” equipment or abilities. These phenomenal growths come about despite the reality that the massive number of individual mobile games available lead to some of them lasting very briefly before discontinuing. Any game app that manages to stand the test of time with persistent regular players can then stand to make a lot of money. For instance, “Candy Crush” creator King Digital Entertainment PLC became so successful off their killer app that Activision Blizzard Inc. ended up acquiring them for a hefty $5.9 billion in 2015.
Supercell, founded in 2010 by six veteran game developers in Helsinki, only ever released nine game titles total in the US and Europe with only four still active to the present day, “Clash of Clans” among them. Yet they were enough to grow the small outfit’s value that Japan’s SoftBank and now China’s Tencent have taken notice.
Speaking of Tencent, the internet service giant has a market value of $211 billion on its own, and operates China’s most popular messaging services. Along with e-companies Alibaba and Baidu, they form a veritable empire of online businesses. For its talks with SoftBank over acquiring SuperCell, Tencent has called together several financial firms to join them as co-investors over their possible new subsidiary.
The final stages of the transaction are expected to be completed by next week. Supercell has
declined to comment on the deal, and neither its parent company nor Tencent could not be contacted for further information.
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