Within the arena of the gaming industry, Tencent has continued to establish itself as a prominent player whose influence can be seen worldwide. This status is, in no small part, due to Tencent owning Riot Games, which is recognized globally as the creator of the popular online game “League of Legends”. Tencent’s influence is not limited to Riot Games, as they also hold stakes in several other renowned gaming firms, including Epic Games.
However, Tencent’s stature within the gaming industry doesn’t exempt them from controversy. As of recently, they are now being challenged with complications due to supposed connections to the Chinese military. As reported, the U.S. Defense Department has named and blacklisted Tencent, among several other companies, alleging them as military-affiliated entities based in China. These allegations, if accepted, could lead to massive consequences.
Despite these allegations, Tencent, along with the other implicated companies, have the right to contest the classification. The implications of the claim are far-reaching and could deeply affect Tencent’s operations. Companies that are considered linked with the Chinese military risk being removed or delisted from U.S. stock exchanges, potentially leading to global market exclusions.
Following the announcement, Tencent experienced a significant impact. The company witnessed its share prices decline by 7.3%, down to $49.31, during after-hours trading. If Tencent fails in its appeal process and consequently gets delisted, it could incur mammoth financial losses. Currently, the potential effect on Riot Games remains undisclosed, considering Tencent’s ownership position.
In a recent event, Tencent’s appointment of two individuals on Epic’s board of directors had drawn attention from the US government. The Justice Department highlighted that the Clayton Act is purposely designed to inhibit board members from one company serving on a rival company’s board. This development led to the resignation of Riot Games’ Ben Feder and David Wallerstein from Epic’s board. Consequently, Tencent forfeited its privilege to appoint any more members at Epic.
Beyond Riot and Epic Games, Tencent has investments in other significant players in the gaming industry. The company possesses a 16% share in From Software, the notable developer behind “Elden Ring”. Moreover, Tencent is reportedly working on a mobile version of “Elden Ring”.
Tencent also has a minor ownership stake in the acclaimed “Assassin’s Creed” publisher, Ubisoft. Further reports suggest Tencent is looking to augment its interests in Ubisoft. Talks between both parties are ongoing, and as of now, the companies have yet to come to an agreement regarding the future of the publisher.
As it stands, the controversy over Tencent’s military connections is already creating ripples across the gaming world. How it develops will undeniably have profound implications not only for Tencent but also for the entities and markets they are associated with. The unfolding circumstances could profoundly reshape the gaming industry landscape.
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