China’s Tencent Buys Minority Stake In Epic Games

Big news in the globalization game, as Epic Games, makers of Gears of War (among many other things) announced today that they intend to sell a minority stake in the company to Chinese investment firm Tencent Holdings. You know what that means, right? Time to ratchet up the panic machine everybody! CHINA IS COMING FOR OUR VIDEOGAMESSS!!!111!!

Ahem.

This news comes shortly after Epic hired most of the former employees of 38 Studios and would suggest they intend to aim big in the future. Tencent is most well known in the west for purchasing Riot Games, but in China it’s basically the definition of Megacorp. Revenues for 2010 were 19 Billion+, made mostly from the company’s various social media properties, like the instant messenger Tencent QQ and their web portal, QQ.com.

Note that a minority stake can mean anything from 1% to 49%; Epic felt the need to state specifically that they “will continue to operate independently,” which seems to indicate that Tencent will have a bigger than small share of the company. How much? Terms of the deal have not been disclosed, but it is expected to close within a month, pending approval from various government regulators. One that happens, disclosure laws kick in, at which point we’ll all know whether or not Epic remains functionally independent, or as a matter of simple courtesy. We’ll definitely be keeping our eyes on this one.

Here’s the full press release:

tencent MAKES STRATEGIC INVESTMENT in epic games

Hong Kong, June 19, 2012 – Tencent Holdings Limited (“Tencent” or the “Company”, SEHK 00700), a leading provider of Internet and mobile and telecommunications value-added services in China, announces today it has agreed to acquire a minority stake in US-based Epic Games, Inc. (“Epic”), which develops the world’s leading 3D game engine technology and award-winning PC, console and mobile game titles.

Following the strategic investment, Epic will continue to operate independently and seek to further expand its game franchises across multiple platforms. The deal is expected to close within one month, subject to customary closing conditions. Terms of the investment were not disclosed.

With more than 20 years in the game industry, Epic has a proven track record of creating cutting-edge games and game engine technology for major platforms. Epic’s products and services include the Unreal Engine, the market-leading 3D game engine technology used by many game development studios globally, including Tencent; the billion-dollar “Gears of War” franchise for Xbox 360; the multimillion-selling “Unreal” and “Unreal Tournament” games for PC and consoles; and “Infinity Blade,” one of the top-grossing game series for iOS.

“We’ve developed a huge amount of respect for the Epic team for many years now, as dedicated players of Epic’s games and as licensees of Epic’s Unreal Engine technology. Epic’s deep commitment to quality across all of its games and technologies inspires us. They’ve been raising expectations in gaming for two decades now and they’re just getting started,” said David Wallerstein, Senior Executive Vice President of Tencent. “We have a lot that we can learn from each other, and we look forward to supporting the Epic team as they embark on their next phase of gaming innovation across both emerging and familiar platforms.”

“Tencent’s investment will empower Epic to help us do even more of what we do best, which is making great games and game technology. Their expertise in the global online gaming market is second-to-none, and the opportunity to work with them to bring richer experiences to players all over the world is irresistible,” said Epic Games President Dr. Michael Capps. “Epic is excited to be full steam ahead on all of its current plans for this generation of games and the next, with the support of a fantastic partner that believes in our strategy and shares our dream.”

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