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THE INVESTOR
August 22, 2018
Big Reunion

Mobile & Internet

Why Tencent is obsessed with ‘PlayerUnknown's Battlegrounds’

  • PUBLISHED :April 30, 2018 - 15:03
  • UPDATED :April 30, 2018 - 18:35
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[THE INVESTOR] China’s internet giant Tencent is investing more than 600 billion won (US$562.60 million) in Bluehole Studio, developer of the immensely popular shooting game “PlayerUnknown’s Battlegrounds,” according to industry sources on April 30.

The amount marks the largest-ever investment by the Chinese firm in Korea, and with this Tencent is expected to have secured at least a 10 percent stake to become the second-largest shareholder after Bluehole founder Chang Byung-gyu who holds a 20.4 percent stake. Venture capital firms -- including Altos Ventures, IMM Investment and PremierPartners -- are known to own a combined 15 percent stake.




Tencent already tasted sweet success from Bluehole with its initial 1.5 percent stake, which it bought for 70 billion won in 2017. Since the successful debut of the “Battlegrounds” game in May last year, Bluehole’s unlisted shares have hit 600,000 won in the over-the-counter market, which compares to 30,000 won a year ago.

The firm’s estimated market cap has also soared to 5 trillion won from 200 billion won over the past year. The figure is the fourth-largest after Nexon with 16 trillion won, Netmarble Games with 12 trillion won and NCsoft with 9 trillion won.

Industry sources say the Chinese firm has been looking to beef up its stake in Bluehole for a while now. “Since last year, Tencent has been contacting venture capitals that had stakes in Bluehole,” said an industry source told The Investor on the condition of anonymity.

And it wasn’t just Tencent; several big investors including Microsoft and Sequioa Capital competed for the pre-IPO deal right up to the last minute. Japan’s SoftBank also reportedly joined the bidding war. 

The source said Tencent probably appealed more to Bluehole due to its extensive global distribution network. The company, for instance, has already secured distribution rights of the “Battlegrounds” in China. It also jointly developed the mobile version of the game to be launched in more than 100 countries.

How Tencent pushed for the mobile version reflects its enthusiasm for the firm, according to another source close to the matter.

“This project was actually led by Tencent, which used its own funds and engineers at the beginning. Later on, it contacted Bluehole to discuss the official launch,” he said.

Bluehole was a small game developer established in 2007. Its big hits include the role-playing game “Tera” and the gaming platform “Steam.” In 2014, the firm made the first step toward a breakthrough by acquiring a dozen smaller firms, including Zino Games, now PUBG, which developed the “Battlegrounds” game later.

At the time, the firm had no cash to pay 30 billion won for the Zino deal. Founder Chang had to put money from his own pocket.

Since then, the firm has been pouring its effort into building up “Battlegrounds.” It hired Brendan Greene, creator of the battle royale genre that blends survival, exploration and scavenging elements of a survival game, from the beginning of the game development.

Unlike other free games that constantly encourage gamers to purchase fancier items, the “Battlegrounds” is offered as a paid service priced at 32,000 won. Despite the pricey package, gamers do not need to spend money for upgrades, which means a “fairer” game for all players.

Thanks to quality gameplay and clever marketing, its market share at local PC cafes -- a barometer of an online game’s success here -- has reached almost 40 percent recently, outpacing Riot Games’ “League of Legends” with 23 percent and Blizzard’s “Overwatch” with 7 percent.

One investor concern is Bluehole’s extreme dependence on a single mega hit game. The firm plans to seek more merger and acquisition deals with the newly-securely cash in addition to ramping up marketing efforts globally.

By Lee Ji-yoon (jylee@heraldcorp.com)

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