Chinese gaming and internet giant Tencent has announced an important deal with Singapore-based Sea to publish and distribute its online games in South East Asia.
Sea is 34% owned by Tencent already distributes some of its popular titles – including Arena of Valor and League of Legends – and its digital entertainment arm called Garena now has first refusal to sell Tencent’s mobile and PC games in Indonesia, Taiwan, Thailand, the Philippines, Malaysia and Singapore for the next five years.
This is a useful move for Tencent because it has suffered from the Chinese government’s crackdown on online gaming as part of a drive to tackle shortsightedness in children as well as “gaming addiction”. The current freeze is expected to be in place until next year. Tencent shares have cratered by 40% accordingly since the highs it reached earlier this year.
The government hasn’t approved any new games licences since March, creating a logjam of 7,000 games, so getting a new distribution channel like this will come as welcome relief and help to mitigate Tencent’s current situation.
Tencent shares are currently trading at HKD281.60, down from their 52 week high of HKD476.60.