Tencent takes minority stake in French mobile games maker Voodoo
Chinese internet group is looking to step up its pace of investments in Europe
Tencent has taken a stake in French mobile games company Voodoo, as the Chinese internet group looks to step up its pace of investments in Europe.
The minority investment gives Voodoo an enterprise value of $1.4bn, making it the first “unicorn” company in the fast-growing “hyper casual” gaming market. The deal follows Zynga’s $168m acquisition of another hyper-casual outfit, Rollic Games, this month.
Voodoo’s portfolio of games such as Helix Jump, Crowd City and Paper.io — which look simple and quick to play but are often very difficult to complete — has attracted more than 1bn players around the world, including many in China.
The Paris-based company hopes to use its new alliance with Tencent to move into casual games, taking it into more direct competition with the likes of King’s Candy Crush Saga and Playrix’s Gardenscapes.
“What we like about Tencent is they have so much experience in more complex games with more depth,” said Alexandre Yazdi, Voodoo’s chief executive. “We really believe that we can add a fresh wave of new casual products that come from our hyper-casual innovations.”
Tencent’s stake in Voodoo will sit alongside several other gaming investments outside China, including Epic Games, the maker of Fortnite, Clash of Clans developer Supercell and Riot Games, which created League of Legends.
“Yet again, Tencent prove to me that they are probably the most skilled investor in the gaming space globally,” said Per Roman, co-founder and managing partner of GP Bullhound, a tech adviser. “They pay up for quality, which is more rare in Europe than in Silicon Valley.”
Chinese tech companies are finding themselves increasingly constrained in their dealmaking in the US by political tensions between the two countries.
This month, the Trump administration unexpectedly targeted Tencent’s hit social media app WeChat, giving US companies 45 days to stop doing business with the app. Tencent has argued the action will not apply to WeChat in mainland China, where the bulk of its 1.2bn users are.
“For any Chinese company now, it is very attractive to buy outside China,” said Mr Roman. “Right now the US is challenging. That creates a positive net effect for Europe.”
Tencent is in the process of completing its purchase of Norwegian game developer Funcom, valued at $160m. In February, it put money into Yager Development, the Berlin-based studio behind Spec Ops: The Line.
Earlier this year, Tencent led a $45m funding round for Lydia, a French mobile payments company. Its investment in Universal Music Group, with the Chinese group leading a consortium that paid $3.3bn for a 10 per cent stake, closed in March.
Voodoo’s Mr Yazdi said that the company planned to expand further in Asia Pacific, as well as adding multiplayer features to more of its games.
“Android [app] stores in [Asia Pacific] are very fragmented, so it’s very important to have a strong partner to distribute our games,” he said.
Voodoo was co-founded in 2013 by Mr Yazdi, who will remain its largest shareholder following the deal, and Laurent Ritter.
Revenues, which are driven primarily by in-game advertising, grew by 10 per cent in 2019 compared with the year before to €360m. With just 250 staff behind a portfolio of games that have been downloaded more than 3.7bn times to date, Voodoo is profitable. It expects continued growth this year, as mobile gaming has boomed during coronavirus lockdowns, and it plans to hire dozens more staff at its 11 offices, as well as opening its first location in China.
Detailed terms of the Voodoo deal, including the total amount Tencent invested, were not disclosed.