NetEase, a billion-dollar Chinese technology company and video game publisher, has acquired French video game studio Quantic Dream. Terms of the deal were not disclosed.
The deal means NetEase now has its first studio in Europe and comes just months after the Hangzhou-based company launched its first center in the USlocated in Austin, Texas.
Founded in 1997, NetEase has become one of the world’s Top 10 gaming companies by revenue, ahead of Nintendo and Electronic Arts, but behind arch-rival Tencent, which is in first place. Quantic Dream, meanwhile, launched from France the same year NetEase did in China, though it chose a more modest path to growth with about 200 employees today and has remained entirely private with minimal outside funding.
It’s worth noting, however, that NetEase — which trades on the NASDAQ with a current market capitalization of more than $57 billion — made an undisclosed minority investment at Quantic Dream in 2019. So today’s announcement that the company has gone all-in and bought the company outright perhaps shouldn’t come as much of a surprise, especially at a time when NetEase seems to be on a mission to expand overseas.
NetEase also invested $100 million in American video game company Bungie back in 2018though Sony took Bungie off the menu when it swooped in to acquire the company in a $3.6 billion deal that closed last month.
Consolidation
Elsewhere, there’s been a recent wave of consolidation in the gaming space. This week only, Sony announced that it buys Savage Game Studios while Take Two recently completed its $12.7 billion acquisition of Zynga. And Microsoft’s $69 billion bid for Activision Blizzard it is is currently facing regulatory scrutiny.
So NetEase’s entry into Europe largely fits into a wider trend where gaming companies of all sizes are targeting larger firms looking for a bigger share of A $200 billion video game market.
Although Quantic Dream has only made about five games since its inception, it announced last year that it had been commissioned by Lucasfilm to develop a new game Named star wars eclipse, something that may have prompted Netease to go all-in on Quantic Dream. On top of that, rumors have surfaced recently that Quantic Dream is struggling to hire for the game, which is due out some time in the next few years, so having a well-funded parent company could change Quantic Dreams’ fortunes on that front. In a blog post today, Quantic Dream wrote:
To continue our development and presence in the world, but also to fund other studios and become an international publisher, more investment is needed to continue to build our technology and infrastructure, to deliver increasingly impressive next-gen games , to expand our team and develop several projects at the same time.
As a result of the deal, NetEase said Quantic Dream will continue to operate as an independent entity outside of France.