Tencent, the holding company that has shares in major publishers and developers like PlatinumGames, Activision Blizzard, and Ubisoft, is looking to snap up Electronic Arts in its expansion into North America.
Before we get ahead of ourselves, Tencent itself has not acknowledged the veracity of this claim, but the report from TMT Finance asserts that its sources have revealed the Chinese company's forthcoming plans. It's setting aside billions of dollars to buy another company outright, and the speculative candidates for this acquisition are very illuminating. Insiders report that it could be one of three possibilities. One says that there may be a "hostile takeover" of Take-Two Interactive, the American parent company of Rockstar Games and 2K.
To pull this off, Tencent would require some serious staying power because Take-Two generated $2.6 billion in revenue over the course of the last fiscal year, which was a considerable increase from the previous fiscal year total of $1.8 billion. The games that allowed the company to grow so significantly were Red Dead Redemption 2, Red Dead Online, Grand Theft Auto Online, Grand Theft Auto V, NBA 2K19, and NBA 2K18. "Take-Two has the strongest development pipeline in its history, including sequels from our biggest franchises as well as exciting new IP," said CEO Strauss Zelnick. "In addition, we are actively investing in emerging opportunities ... We are exceedingly well positioned to generate significant growth and margin expansion over the long-term."
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As aforementioned, this would be a tall order for Tencent to successfully snag Take-Two Interactive while the company is performing very well without its involvement. On the other hand, EA is the second-largest gaming company in the west by revenue and market capitalisation, ahead of Take-Two Interactive, according to data from mid-2020. However, looking at its fourth quarter fiscal documents, its revenue was down by 15% and its net income had fallen by 80% year-on-year. Across the last fiscal year, net cash from operating activities totalled $1.797 billion, and titles like FIFA 20, Madden NFL 20, The Sims 4, and Apex Legends served to buoy the company.
Again, Tencent would definitely need billions to win over the higher ups at EA, but it could offer something else to sweeten the deal. Its expertise in live service titles like Arena of Valor, League of Legends, Fortnite, and PlayerUnknown's Battlegrounds could assist the trajectory of Apex Legends into the future. Tencent could also bring EA titles to brand new audiences, as it did with Stardew Valley, Rocket League, and Minecraft through its digital platform WeGame. It's equally likely that Tencent doesn't have its eye on EA, and is instead targeting a studio somewhere else. We at GAMINGbible don't have a crystal ball, but once we hear more about this possible deal, you'll be the first to know.
Featured Image Credit: EA