Recent changes to legislation regarding video games in China has prompted Tencent to seek investments in the European and North American gaming market as part of its partnership with Nintendo.
Tencent is the largest gaming company in the world and it has numerous subsidiaries that deal with products in all kinds of industries. The financial success of Tencent is due to the company's presence in China, where it owns numerous web-based subscription services. Tencent owns stakes in various video game developers and publishers outside of China, including companies like Epic Games, Paradox Interactive, Ubisoft, and Activision Blizzard.
The Chinese government has recently passed anti-addiction laws in regards to minors and video games, which restricts the number of hours that people under the age of 18 can play games and how much money they can spend on in-app purchases. It seems these legal matters have inspired Tencent to focus its efforts in a different market, as The Wall Street Journal is reporting that the company will start to focus more on the European and US markets in collaboration with Nintendo.
A Tencent official told The Wall Street Journal that the company wants to expand into regions outside of China and will use the knowledge from its partnership with Nintendo to create games that will appeal to other markets. Nintendo and Tencent are currently working together in an attempt to market the Nintendo Switch to the Chinese market.
The current trade war that is happening between the USA and China has caused a lot of uncertainty for many different industries. The threat of tariffs imposed upon electrical goods that are produced in China, coupled with the recent changes to legislation regarding gaming have people concerned, especially as a new console generation is due to begin at the end of 2020. Tencent has slowly been buying up pieces of the video game industry and it could begin a more aggressive tactic of ownership if its hold in China is threatened by these new laws.
Source: The Wall Street Journal