ByteDance takes on Tencent with major gaming studio acquisition

ByteDance has been boosting its gaming arm Nuverse through a hiring spree and in March acquired gaming studio Moonton.

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GUANGZHOU, China — ByteDance has acquired major mobile gaming studio Moonton, highlighting its ambitions in the video game industry and pitting it against Chinese giant Tencent.

Known as the owner of TikTok or Douyin in China, ByteDance is looking to diversify beyond advertising and take a slice of the $86 billion mobile gaming market as well as expand its footprint internationally.

ByteDance’s gaming arm Nuverse, founded in 2019, was behind the acquisition.

“Moonton is the perfect partner to help expand our gaming strategy in international markets,” ByteDance said in a statement.

Reuters reported that the deal valued Moonton at $4 billion, citing two unnamed sources. ByteDance declined to comment on the value of the deal.

“This is a mega deal in the global gaming industry, not only within China. So the M&A craze in the gaming sector continues, and I believe ByteDance is still on the lookout for other studios,” Serkan Toto, CEO of consultancy Kantan Games, told CNBC.

“Be prepared for a long war between Tencent and ByteDance for acquiring game content.”

ByteDance’s international push

TikTok leverage

ByteDance operates short video app Douyin in China and TikTok in international markets. Last year, ByteDance said Douyin had 600 million daily active users and that TikTok had 700 million monthly active users.

The company could use the social media platform to promote games and attract users.

“With Bytedance at the helm, the two firms (Moonton and ByteDance) could leverage TikTok / Douyin to promote Mobile Legends in markets such as China and the US where Tencent’s Honor of Kings and Riots’ League of Legends: Wild Rift are the dominant mobile MOBA titles,” Niko Partners said.

But ByteDance may not be able to rely on acquisitions alone to be successful in gaming.

“The biggest challenge for Bytedance will be to create a self-developed hit that it can operate over the long term. Hence why it is signing publishing deals to publish games based on popular IP and acquiring game development firms with a proven record of success,” Niko Partners added.

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