Tuesday 6 December 2016

China's Clash of Clans giants could rival Marvel with €7.6bn buy

Luly Yilun Chen

Published 23/06/2016 | 02:30

The hit game Clash of Clans could be coming to the big screen.
The hit game Clash of Clans could be coming to the big screen.

Clash of Clans could become a smash hit movie that helps Asia's biggest internet company build a Marvel-like universe of movies, comic books, online videos and T-shirts.

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Tencent Holdings is spending $8.6bn (€7.6bn) to gain control of Supercell Oy - 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 67 million 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 Group Holding 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 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 an ad featuring 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.

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 16pc to $1.3bn in the quarter ending March 31, compared with the previous three months. China's mobile gaming market expected to reach $10bn 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.

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. The latter game inspired a movie directed by David Bowie's son, Duncan Jones, and its receipts topped that of the latest 'Star Wars' during initial weeks of release.

Another recent game adaptation, 'The Angry Birds Movie', went straight to No 1 in the US box office last month. The movie, made by Sony, has earned about $328m worldwide, according to Box Office Mojo. It came after more than a dozen Angry Birds games were developed by Finland-based Rovio Entertainment Oy.

"More investment means Supercell can be more creative with possible expansions into other entertainment verticals," Junde Yu, managing director of the Asia-Pacific region for App Annie, said. "Could a Clash movie be on the horizon?"

There's also the competition with Disney's Marvel franchises, which take superheroes Spider-Man, Captain America and Iron Man from classic comics and transfer them to phone games, console games and movies that earns billions of dollars.

"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 Ltd. "Supercell is great at content creation and an expert when it comes to global expansion, there's so much Tencent could learn." (Bloomberg)

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