Tencent Buys Game Studio Behind Hit Nintendo Switch Titles

Tencent Holdings Ltd. has quietly acquired a Japanese creative studio with several Nintendo Switch hit games to its name as part of a talent acquisition spree in the home of anime and manga, people familiar with the deal said.

The Shenzhen-based entertainment giant has taken about a 90% stake in Wake Up Interactive Ltd. for more than 5 billion yen ($44 million), the people said, asking not to be identified because the transaction is not yet public. Wake Up owns Tokyo-based Soleil Ltd., which developed Nintendo Switch hit Ninjala and helped create Travis Strikes Again: No More Heroes. Taking over almost the entire company is unusual for Tencent in Japan, which has so far made smaller investments and mainly aimed to secure international publishing rights for future games.

The Wake Up purchase, which came in September, is one of several deals that Tencent struck with privately-held game makers in Japan this year. Soleil is known for its track record of producing high-quality action games for consoles, PCs and smartphones, which was part of the motivation for Tencent’s approach to its parent company.

Representatives of Tencent and Wake Up did not immediately respond to requests for comment.

Find out how once-illegal drugs like marijuana and psychedelics are becoming big business with The Tencent and compatriot NetEase Inc. have actively recruited fresh talent in Japan over the past two years, looking to acquire valuable intellectual property in anime and video games as well as decrease their revenue dependence on the domestic China market. This year has made that project all the more urgent as the Beijing government tightened restrictions on playing time and slowed approvals for publishing new games as part of a broader crackdown on its tech giants.
Kadokawa Corp. said last month that Tencent plans to pay about 30 billion yen to take a 6.86% stake in the famous publishing company. Grasshopper Manufacture Inc., the Japanese game maker led by creator Goichi Suda, is now a part of NetEase.

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In addition to a handful of publicly-announced deals, the two Chinese game titans have also either acquired or taken a stake in numerous smaller Japan-based game developers, betting on their potential to produce a smash-hit title and securing a favorable position to then bargain for its global distribution. Their focus has been on small studios and talented individuals who may be contemplating leaving a bigger company to set up their own creative operation. In most cases, the deals are kept secret from the public.

“Tencent sees no advantage in announcing a deal as it doesn’t want to alert the competition and give them insight into its strategy,” Tokyo-based game consultant Serkan Toto said