TCEHY Tencent Holdings Ltd (PK)

By Raffaele Huang

China's two biggest videogame developers continued to increase their investment in foreign game studios, as they stepped up expansion in overseas markets to counter slowing growth at home.

Tencent Holdings Ltd., the world's largest videogame company, has taken a 16.25% stake in Tokyo-based FromSoftware Inc., the developer of the popular action role-playing game Elden Ring, the parent company of the Japanese studio said Wednesday.

NetEase Inc. has acquired Paris-based Quantic Dream SA, the studio behind adventure games Heavy Rain and Detroit: Become Human, the Chinese company said Wednesday. It is NetEase's first game studio in Europe.

Chinese videogame companies are moving rapidly into the U.S. and other overseas markets as regulations tighten and domestic user growth stalls. They have doubled down on acquiring and joining foreign studios to develop games catering to global players.

Tencent this year has invested in at least seven game studios in markets such as Canada, Spain and New Zealand, and also plans to raise its stake in French game giant Ubisoft Entertainment SA. NetEase has opened two studios in the U.S. in recent months.

Tencent has partnered with FromSoftware's parent Kadokawa Corp. in publishing business through a joint venture in China since 2016. The two giants also extended their alliance into the animation business last year.

Sony Group Corp. has also taken a 14.09% stake in FromSoftware, Kadokawa said. The Japanese studio raised a combined $262.3 million from Tencent and Sony, it said.

NetEase bought a minority stake in Quantic Dream in 2019. The French studio is working on the upcoming game Star Wars Eclipse.

Write to Raffaele Huang at raffaele.huang@wsj.com

(END) Dow Jones Newswires

August 31, 2022 09:01 ET (13:01 GMT)

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