Tencent nears deal for smartphone maker in major metaverse push

[BEIJING] Tencent Holdings Ltd is nearing a deal to acquire Chinese gaming handset maker Black Shark, a move that could help the tech behemoth further its ambitions for the metaverse, sources said.

Tencent has begun talks to buy Black Shark, a niche maker of gaming phones and accessories, said the sources, who asked not to be identified as the information hasn't been made public.

The smaller firm, whose investors include Xiaomi Corp, will pivot to making virtual-reality headsets for its new parent after the deal, one source said. Representatives for Tencent, Black Shark and Xiaomi didn't immediately respond to requests for comment. The potential acquisition was previously reported by local trade publication 36Kr.

Alongside global giants like Facebook owner Meta Platforms Inc, China's largest tech firm is a contender in the race to develop the metaverse, conceived as a virtual environment where people can interact with the Internet and others. In a recent earnings call, Tencent President Martin Lau called the metaverse "a real opportunity", though he cautioned that the concept may take longer than expected to bring into reality.

Developing specialised hardware is one of the key pillars to realising the metaverse. Meta was one of the earliest movers, buying VR headset maker Oculus in 2014, while top Chinese rival ByteDance Ltd last year purchased Pico, a domestic VR headset maker.

Black Shark, a little-known startup that calls its users members of the "Rebellion", sells its stylised phones and a plethora of accessories such as controllers in China, Europe and India. Last year, Tencent collaborated with Black Shark on a gaming phone that optimises effects for the former's flagship title Peacekeeper Elite.

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