Tencent buys game studio behind hit Nintendo Switch titles: sources

[TOKYO] Tencent Holdings has quietly acquired a Japanese creative studio with several Nintendo Switch hit games to its name as part of a talent acquisition spree in the home of anime and manga, people familiar with the deal said.

The Shenzhen-based entertainment giant has taken about a 90 per cent stake in Wake Up Interactive for more than 5 billion yen (S$59.3 million), the people said, asking not to be identified because the transaction is not yet public.

Wake Up owns Tokyo-based Soleil, which helped develop Nintendo Switch hits Ninjala and Travis Strikes Again: No More Heroes. Taking over almost the entire company is unusual for Tencent in Japan, which has so far made smaller investments and mainly aimed to secure international publishing rights for future games.

The Wake Up purchase, which came in September, is one of several deals that Tencent struck with privately-held game makers in Japan this year. Soleil is known for its track record of helping produce high-quality action games for consoles, PCs and smartphones, which was part of the motivation for Tencent's approach to its parent company. Ninjala is owned by GungHo Online Entertainment, which led development, and Travis Strikes Again is a product of Grasshopper Manufacture.

Representatives of Tencent and Wake Up did not immediately respond to requests for comment.

Tencent and compatriot NetEase have actively recruited fresh talent in Japan over the past 2 years, looking to acquire valuable intellectual property in anime and video games as well as decrease their revenue dependence on the domestic China market.

This year has made that project all the more urgent as the Beijing government tightened restrictions on playing time and slowed approvals for publishing new games as part of a broader crackdown on its tech giants.

Kadokawa Corp said last month that Tencent plans to pay about 30 billion yen to take a 6.86 per cent stake in the famous publishing company. Grasshopper Manufacture, led by creator Goichi Suda, is now a part of NetEase.

In addition to a handful of publicly-announced deals, the 2 Chinese game titans have also either acquired or taken a stake in numerous smaller Japan-based game developers, betting on their potential to produce a smash-hit title and securing a favourable position to then bargain for its global distribution.

Their focus has been on small studios and talented individuals who may be contemplating leaving a bigger company to set up their own creative operation. In most cases, the deals are kept secret from the public.

"Tencent sees no advantage in announcing a deal as it doesn't want to alert the competition and give them insight into its strategy," Tokyo-based game consultant Serkan Toto said.

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