Tencent buys Miniclip and Sega invests in Space Ape

[Music] [Applause] [Music] Hello and welcome to pocket gamer.biz's weekly news digest. This is for the week ending the 20th of February 2015. Hello, I'm John Jordan. So, uh this week we we kind of continue kind of from last week's financial kind of kind of week of news. Um it was a bit different though cuz um last week's kind of financial news were people were kind of floated companies talking about their their their um sales over the last kind of 3 months as they all legally have to do. So we didn't really have very much of that this week. We're kind of in a in a bit of a kind of lull. So pretty much all the western companies have have announced their figures and we're waiting for the Chinese companies in the main now to announce their figures. There's quite a lot of those. So there'll be that coming in the next couple of weeks. But in the meantime, we've kind of seen, I guess, what we could see is a kind of trend coming off of the companies that have been announcing very good financial figures. So, the companies that have been generating a lot of cash have now been choosing to do things with that cash.

So, we've seen um what people have been expecting to actually to be quite a big trend for 2015 is is mergers and acquisitions or or M&A as they say in the trade. Um so, kind of every every deal like this has its own kind of nuances. Um but you can see some some trends as well. So the first kind of deal and quite surprising deal that happened um was that a a company called Playtech. They're actually are a listed company in the UK um but they make uh software solutions for the uh gaming i.e. the gambling um uh sector. So they kind of make software that makes the kind of games that people can gamble on. So I mean not really something we cover particularly on pocket gamerbiz very much. Um but the interesting thing was they bought um yo-yo games. Um, and Yoyo Games are a Dundee based company and they're best known for their um, 2D game creation software called Game Maker. Now, Game Maker has been going around for a long time. Originally kind of created um, to help people make educational games. It's it's kind of had a few ch kind of changes along the way.

And with Yo Games, it kind of they kind of came on board with it um, probably about kind of over five years ago. Um, and they've kind of really commercialized the product. So they they bought the uh founder um uh who who kind of created the software in in in the uh original place. He kind of came on board as a product guy, but they kind of um commercialized it and and pretty successfully. So they they kind of started rolling it out to platforms originally just to like a PC Windows um uh product and then then it went on to different kind of kind of Linux, Mac stuff and then it went on to iOS and Android and Windows phone and then it went on to consoles and um and so pretty much I mean it was still in some ways a very basic package. It wasn't like Unity. You were pretty much doing 2D kind of um sort of like tile based things almost. But the interesting thing I guess from the from the gaming point of view, gambling point of view is that Playch obviously sees that as quite valuable to their market because they're in the gambling industry, you're not making very complicated interactive entertainment. You're making kind of addictive in a different kind of form entertainment. You want to make those games kind of quickly. Um and they paid

kind of 16 $16.4 $4 million um which is quite a considerable sum of money um for for that software. I guess the interesting thing now for all the people who been using Game Maker and obviously over the the years it's been available quite a lot of people have been using it and on commercial products um that are released on mobile games. Um we don't really know kind of what's going to happen in terms of support ongoing on an ongoing basis because clearly a gambling company don't necessarily really care if some small teams are making mobile games based on it. But we we will wait and see what happens on that one. Um I guess a bit more substantial in terms of games companies um were were the were the other deals. So um Sega um a kind of interesting company obviously we all know them all from from things like the Dreamcast console and then then as a publisher in Japan but there's many different parts of the business um as often happens with lots of different Japanese companies. Um and one part of the business Sega Networks is doing phenomenally well. Sega Networks is Sega's free-to-play digital kind of side. So kind of handling all their kind of um games as a service type type mobile games whereas Sega itself handles the kind of paid Sonic type games. Um

and Sega kind of I guess you could call them kind of Sega corporate I suppose and they've been having a big reorganization the kind of obviously the whole console paid game kind of kind of sector is still in a bit of kind of a upheaval. So they've been reorganizing and and and moving their office from San Francisco to somewhere else and blah blah blah. Lots of kind of changes happen there. Whereas the Sega Networks is kind of like currently the the most profitable and the most fast growing part of Sega and and they've kind of because of that been given kind of some some large s to kind of go out and start kind of acquiring companies. So they're based in Japan. Um most of the revenue has come from Japan. Their turnover probably from from mobile stuff will be about $200 million annually this year growing very fast. But they've invested they bought a company called Demi in Boston. Um they're best known for uh Marvel Puzzle Quest as a as a mobile game um that's been bought outright. Then also Sega Network has invested in two other companies. So one is a a kind of a startup some wellknown people in it um in in San Francisco called um

Reignited Artists. We don't really know kind of what those guys are working on yet. Um but there's been investment in there. And another kind of I guess the best the best known company of the three they've invested in is Space Ape Games in London. So Space Ape pretty well known. They've had uh a kind of a Clash of Clans type game called Samurai Siege that's been very successful for them. It's come out about 18 months ago. Um and they're just in the process of launching their second game or it's in soft launch at the moment called Rival Kingdoms. Now, it's interesting. What is interesting about the deal is Space A raised um $7 million at the end of 2014. So, they don't really need the money. Um they've got the money they need to kind of launch Rival Kingdoms and do all the user acquisition that they want. And they've actually staffed up. So, they're now 75 people. where they've got a third game just starting development. So, they didn't really need the money. But for them, what they found is for Samurai Siege, Japan was a massive market for them. It's actually the second biggest market outside the US. Um, even though to launch in the in Japan, they just kind of localized culturalized with a kind of themselves or or kind of with a with a with a partner, but not they

didn't have a publishing partner in Japan, and that's really what everyone says you need. They've managed to be quite successful without that, but this time around with Sega Networks, who are very kind of clearly big Japanese uh company. So, they're looking to to go even bigger in in Japan with Rival Kingdom, which should be out uh we're kind of hoping in a couple of months. You know, never can tell with soft launch games, but that's what we're expecting. So, that's kind of a good deal, I think, for the um for Space Ape who who are kind of definitely a company on the up and and for kind of Sega Networks. They seem to have kind of invested um pretty well kind of gaining access to that company. It's not a strategic it's a strategic investment. It's not a majority investment. So, so they don't kind of own the company, but it's just um kind of interesting to see how that one goes. Now, one this kind of last deal we're going to talk about this week is is is a kind of a bigger strategic deal in in the sense that the company um Tencent. So Tencent are one of the biggest internet companies in the world. Um massively dominant in many areas of the Chinese internet. Um and one of those areas is games. So Tencent has been a massive PC um kind of platform publisher in in China for for

many years now. Was a bit slow to go into mobile, but it's been in mobile for like kind of two three years and certainly in smartphone stuff for for about two years. and very quickly has gained dominance in the markets. kind of difficult to know exactly how how big it is within that market, but it's probably getting on for or kind of 40 50% of the of the of the Chinese mobile games market now is run by Tencent. partly because it has WeChat um which is its kind of social network um which you can integrate with and that gives it lots of virality but also it has a kind of app distribution stores as well and so it publishes or distributes or gets the chance to cherrypick basically the best um kind of mobile games in China from the third party developers that it publishes and obviously goes up and down depending on week on week but normally about 50% of the top 10 top grossing games in China are being published or distributed by 10 cent so um it's turnover from mobile games is getting on for $2 billion a year So obviously a massive massive company and actually probably you would argue it is the biggest games company in the world across across mobile and PC. So lots of money. Um SE has done lots of

investments in the past in 2014 invested kind of some crazy money into some Korean companies. Um so for this deal it's it's had taken um the the money hasn't been um announced. Whether it will ever come out, we don't know. But what the the quote marks is it has invested a a significant majority um stake in Mini Clip. So Mini Clip is pretty well known. It's been around for over 10 years now. Basically started off as a flash game portal. Um they're kind of based in London, headquartered in Switzerland for I guess tax reasons, I suppose, but um most development happens in London and they pretty successful just creating kind of a different sort of freeto-play game, but freetoplay flash games. built a massive audience there and then over the last kind of four to five years has moved into mobile starting off with its big franchises going into paid games. So 99 cent games it did and now it's moved into freeto play and it's really big game at the moment is um 8ball pool which is like a multiplayer pool game um big community type thing. Um, and it's interesting talking to the Mini Clip guys. Um, they they kind of um see kind of really good

parallels with Tencent because Tencent kind of started off as a web company and it's been looking, you know, how can it take its kind of web knowledge into mobile done that successfully. Mini Clip has done that successfully as well. So, they kind of feel like they there's lots of kind of um shared learnings that they have. That's kind of the term we use, learnings. So, and even though they're a Chinese company, a very big Chinese company, and um sometimes it can be difficult for Western companies to work with Chinese companies. They don't always have the same corporate kind of culture, but um Mini Clipper seem pretty happy that um working with with 10 cent is going to be a good deal for them. But kind of quite what will happen, it's hard to tell because um kind of as companies tend to say in this situation, Mini Clipper just we didn't really need the money. Obviously, they've been paid, I would imagine, a fairly substantial amount of money. Um but um they said we don't need the money. You know, we're very profitable. we don't need to kind of speed up our growth kind of anymore. Um clearly for them to look into the Chinese market that will be an interesting thing. But I I kind of ironically I suppose they've already signed a deal with a company called um I Dream Sky to publish um eightball uh eightball pool into China. I guess

ironically ironically um the biggest investor in I Dream Sky which is a NASDAQ floating company is actually Tencent anyway. So I guess Tencent has to bite the cherry on that one. But that's kind of a I guess it's kind of interesting to see and it's have someone who's kind of been to China a bit and seen the power of some of these Chinese companies particularly 10-centent. It just is kind of very slowly kind of buying up lots of strategic assets in the west. So it already has um big stakes in Activision and Epic Games and the League of Legends developer Riot Games as well. So you kind of see slowly slowly Tencent is kind of uh taking over the world. So uh we'll see if they've taken over Pocket Games by next week. Uh see you then. [Applause]