How much Tencent owns Krafton?
Chinese tech giant Tencent owns a 13.5% stake in Korean gaming firm Krafton as of March 2022. This makes it the second largest shareholder behind Krafton‘s founder. Tencent first invested in the company in 2017 and has since partnered to publish hit games like PUBG Mobile globally.
Tencent and Krafton‘s strategic alliance has been enormously successful, but also faces challenges due to rising geopolitical tensions. This article provides an in-depth look at the intricate relationship between these two gaming powerhouses.
Overview of Tencent and Krafton
To understand this ownership stake in context, it helps to first briefly profile both companies involved:
Tencent is one of the largest technology firms in China and among the biggest gaming companies worldwide. It has a market cap of nearly $300 billion and owns massively popular games like League of Legends and Clash of Clans. Beyond gaming, Tencent also operates China‘s largest social networks and offers a suite of fintech and cloud services.
Krafton is a South Korean gaming firm best known as the creator of PlayerUnknown‘s Battlegrounds (PUBG). It has a market cap around $37 billion after going public in 2021. Krafton owns several game studios and is focused on developing innovative multiplayer titles. PUBG remains its crown jewel franchise with over 100 million monthly active users.
History of Tencent‘s Investment in Krafton
Tencent first acquired an 11.5% stake in Krafton (then known as Bluehole) in 2017 by investing an undisclosed sum. This gave Tencent a foothold in the rising battle royale genre, which PUBG pioneered earlier that year.
Krafton likely welcomed the investment to gain access to Tencent‘s expertise in mobile gaming as it looked to extend PUBG‘s reach. When PUBG Mobile released in 2018, Tencent‘s gaming division handled developing and publishing the smash hit title in China and other international markets.
Over the years, Tencent has gradually increased its ownership in Krafton to the current 13.5% stake through an investment vehicle called Image Frame Investment. Based on Krafton‘s valuation, Tencent‘s interest is worth around $5 billion as of early 2022.
Release of PUBG Mobile and Beyond
Collaborating with Tencent to adapt PUBG for mobile proved tremendously successful. PUBG Mobile has amassed over 1 billion downloads worldwide and grossed [over $7 billion] as of 2022 (https://sensortower.com/blog/pubg-mobile-seven-billion-revenue).
Tencent‘s involvement was key to tapping into the mobile platform and China‘s gaming market – now the world‘s largest. However, India banned PUBG Mobile in 2020 over data privacy concerns about Tencent‘s Chinese origins. Krafton has since relaunched the game in India without Tencent as Battlegrounds Mobile India.
Beyond PUBG, Tencent also distributes other Krafton titles such as TERA in China and co-develops games like Bless Unleashed. Additionally, Tencent publishes its own PUBG Mobile variants focused on China and casual gamers – PUBG Mobile China and PUBG Mobile Lite.
| Game | Owner | Publisher | Downloads | Revenue |
|---|---|---|---|---|
| PUBG Mobile | Krafton | Tencent | 1 billion+ | $7 billion+ |
| PUBG Mobile China | Tencent | Tencent | 100 million+ | $1.5 billion+ |
| PUBG Mobile Lite | Tencent | Tencent | 100 million+ | $900 million+ |
Outlook for the Tencent-Krafton Relationship
Tencent‘s ties to Krafton remain strong given their shared success in the lucrative battle royale genre. However, geopolitical tensions have complicated the relationship. India‘s ban of PUBG Mobile underscores how nationalism can disrupt Tencent‘s gaming investments.
Analysts also forecast slowing growth for battle royale titles as the market matures. To stay competitive, both companies may look to diversify their gaming portfolios through new IP acquisitions and genre expansions. This could create rivalry, with each firm vying for the next big hit.
In my view, Tencent and Krafton will aim to maintain strategic alignment despite these headwinds. Their development strengths are quite complementary, with Tencent focused on casual mobile experiences while Krafton drives AAA innovation. Continued collaboration will help them better compete against Western gaming giants like Epic Games. But balancing ownership interests across franchises like PUBG will require delicate management.
Conclusion
In summary, Tencent owns a sizable 13.5% minority stake in Krafton valued around $5 billion. Their publishing partnership on PUBG Mobile has been enormously lucrative for both companies. However, tensions stemming from Tencent‘s Chinese ownership introduce political risks that may complicate the relationship going forward. Navigating these dynamics while adapting to an evolving gaming market will be key as Tencent and Krafton chart the next chapter of their strategic alliance.