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    Home » In-depth » Tencent wants to be the next Marvel

    Tencent wants to be the next Marvel

    By Agency Staff22 June 2016
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    Naspers holds 34% of China's Tencent
    Naspers holds 34% of China’s Tencent

    Clash of Clans could be the type of tent-pole entertainment that helps Asia’s biggest Internet company build a Marvel-like universe of movies, comic books, online videos and t-shirts.

    Tencent Holdings, in which South Africa’s Naspers has a 34% stake, is spending US$8,6bn to gain control of Supercell — the Finnish maker of mobile games including Hay Day, Clash Royale and Boom Beach — from SoftBank Group.

    To see how that portfolio may fit into Tencent’s emerging entertainment empire, look at how the Chinese company leveraged World of Warcraft and League of Legends into global powerhouses.

    League of Legend’s 67m monthly users helped Tencent earn $9bn in game revenue last year, and the Tencent-backed movie “Warcraft” is setting box-office records in China since this month’s release.

    Acquiring Supercell reinforces Tencent’s entertainment aspirations against Alibaba and Baidu, and comes after Tencent bought the rights to 300-plus Japanese anime franchises in a push to become a worldwide multimedia brand like Marvel, DC and Disney.

    “Tencent has taken on a strategy to convert good IPs into movies and anime,” said Mark Tanner, founder of China Skinny, a Shanghai-based research and marketing agency. “It’s creating a world of superhero characters for entertainment.”

    Supercell makes the popular game Clash of Clans
    Supercell makes the popular game Clash of Clans

    Supercell occupied the top spot on researcher App Annie’s rankings of publishers for two years running. Clash of Clans was named an “essential” app by Apple and was promoted during the 2015 Super Bowl in a commercial featuring Academy Award-nominee Liam Neeson. Yet the game hasn’t been among the 10 top-grossing apps in China and Japan’s iOS Store since 2015, which is where Tencent’s clout can help.

    Kardashian, Warcraft

    The company’s QQ and WeChat instant messaging apps have more than a billion users combined, and it could use those apps to promote Supercell games, Tanner said.

    That distribution system helped Tencent’s mobile-game revenue increase by 16% to 8,2bn yuan ($1,3bn) in the quarter ending 31 March, compared to the previous three months. China’s mobile gaming market is expected to reach 68,8bn yuan by 2018.

    “We do see there’s an opportunity for IPs of games and movies and video to cross and splice with each other, in the right way,” Martin Lau, Tencent’s president, said during a conference call Tuesday.

    The mascot of Tencent's QQ instant-messaging service. QQ and WeChat together have more than a billion users
    The mascot of Tencent’s QQ instant-messaging service. QQ and WeChat together have more than a billion users

    Shenzhen-based Tencent is no stranger to overseas acquisitions. It invested in Glu Mobile, producer of the Kim Kardashian and Katy Perry smartphone games, and owns a stake in Activision Blizzard, whose most famous franchises include Call of Duty and World of Warcraft.

    Avengers, Birds

    The latter game inspired a movie directed by David Bowie’s son, Duncan Jones, and its receipts topped that of the latest Star Wars installment during initial weeks of release. Warcraft may generate as much as 2bn yuan at the Chinese box office, according to Nomura Holdings Inc.

    Another recent game adaptation, The Angry Birds Movie, debuted at number one in the US box office last month. The movie, made by Sony, has earned about $328m worldwide — including $74m in China for its biggest overseas total, according to Box Office Mojo. It came after more than a dozen Angry Birds games were developed by Finland-based Rovio Entertainment.

    Supercell could catapult Tencent to becoming owner of one of the most successful mobile-game developers in the world

    “More investment means Supercell can be more creative with possible expansions into other entertainment verticals,” Junde Yu, MD of the Asia-Pacific region for App Annie, said in an e-mail. “Could a Clash movie be on the horizon?”

    There’s also the competition with The Walt Disney Co’s Marvel franchises, which take superheroes Spider-Man, Captain America and Iron Man from classic comic books and transfer them to smartphone games, console games and movies that earns billions of dollars. The most popular ones include the Avengers series.

    Mario Movie

    A competing slate of Batman and Superman movies and games, based on the DC Comics characters, is being made by Warner Bros.

    Nintendo, creator of the iconic Super Mario and Zelda characters, is making another push into the film business as console sales sag. The Japanese game maker said in May it’s in talks with multiple partners and plans to take the lead on production, rather than licensing out content. A live-action Super Mario Bros starring Bob Hoskins flopped upon its 1993 release.

    Tencent isn’t the only company to sense potential in hot gaming properties. Activision Blizzard bought King Digital Entertainment for $5,9bn last year and Microsoft acquired Minecraft developer Mojang for $2,5bn in 2014.

    Supercell is great at content creation and an expert when it comes to global expansion, there’s so much Tencent could learn

    Tencent’s multimedia ambitions don’t apply to all of Supercell’s games, and the intellectual property still will be owned by Supercell, Lau said. “We need to be very careful in thinking through what makes sense and what doesn’t make sense,” Lau said.

    Yet there is room to start small — like streaming competitions between players. In 2011, Tencent bought a majority stake in League of Legends’ owner Riot Games and then scooped up the remaining shares last year. The League Championship Series has become the biggest competitive game globally, with viewership totaling 334m last year, according to the company’s website.

    “Supercell could catapult Tencent to becoming owner of one of the most successful mobile-game developers in the world,” said Yu Jianpeng, a Hong Kong-based analyst at ICBC International Research. “Supercell is great at content creation and an expert when it comes to global expansion, there’s so much Tencent could learn.”  — (c) 2016 Bloomberg LP

    • Reporting with assistance from Yuji Nakamura


    Clash of Clans Marvel Microsoft Naspers QQ SoftBank Tencent WeChat
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