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Tencent Purchases British Video Game Developer Sumo in a $1.27 Billion Deal

26 July 2021Wilson Wongso

Not even the pandemic can slow down this tech giant.

The Chinese tech giant, Tencent, continues its business pursuit by purchasing the Britain-based video game developer, Sumo. The deal covers a total whopping cost of $1.27 billion as the gaming market continues to rise amidst the ongoing pandemic.

With various nations in the world taking social measures to reduce mass gatherings in an effort of controlling the pandemic, many have resorted to gaming as they spend their time waiting for the pandemic to end. As reported by Strategy Analytics, the global gaming market is projected to reach a milestone of $250 billion in the first half of the decade. It is thus expected to increase by $100 billion after only five years in the running.

Given the positive outlook of gaming, it should be of no surprise that Tencent remains faithful in the gaming industry for the time being. In fact, the acquisition of Sumo is largely expected not only given the rapid growth of the gaming industry, but also the fact that one of Tencent’s subsidiary companies, Mount Emei Investment, already owns 8.7% of Sumo. The deal was announced on 19 July 2021.

In a report by Forbes regarding this deal, Executive Director at Strategy Analytics, Neil Mawston, said, “Sumo gives Tencent a world-class games developer with global scale outside China at a low price.” Mawston added that Sumo is already renowned in the United Kingdom as being one of Europe’s best game developers, who’s already had prior experience working with the likes of Sony and Sega.

Further, in the official acquisition announcement, Non-executive Chairman of Sumo, Ian Livingstone, commented, “The Board of Sumo firmly believes the business will benefit from Tencent’s broad videogaming ecosystem, proven industry expertise and its strategic resources, which will help secure and further the aspirations and long-term success of Sumo.”

Likewise, Sumo’s Chief Executive Officer agrees that “Tencent has demonstrated its commitment to backing our client work and has stated its intention to ensure that we have the necessary investment to continue focusing on work with our key strategic partners on turn-key and co-development projects.”

In recent years during the ongoing pandemic, there has been an increasing trend of multiple companies deciding to acquire subsidiary companies that have formerly merged with them — just like Tencent.

Though it remains unclear whether the gaming industry will continue to rocket after the pandemic, most believe that gamers will remain gamers and that even if there’s a dip in the market with the reopening of societies, the industry should relatively maintain its overall growth over the coming years. With the introduction of 5G internet connection and gradual advancement in technological infrastructure, gaming should remain popular amongst youths across the globe.

Featured Image by Sumo Digital.

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