Tencent to buy British video game studio Sumo for $1.27 billion

In a busy year for gaming mergers, another deal has just been announced. Tencent is to fully acquire Sumo Group, the UK developer behind LittleBigPlanet 3 and Crackdown 3. The Chinese web giant is offering 513 pence per share for the studio, in which it already owns an 8.75 percent stake, valuing it at $1.26 billion (£990 million).

The acquisition brings another major developer into the Tencent fold. Already the world’s biggest gaming company, Tencent owns League of Legends studio Riot Games, and has a financial stake in several publishers including Epic Games, Activision Blizzard, Ubisoft, Bluehole, Paradox Interactive, Supercell, Grinding Gear Games and Yager, along with chat platform Discord. In February, the company acquired a minority position in DayZ developer Bohemia Interactive.

But, Tencent’s dominance has triggered regulatory pushback at home and abroad. Earlier this month, Chinese authorities blocked its plan to merge its two game livestreaming sites, Douyu and Huya. Tencent is also negiotiating an agreement with a US national security panel that would allow it to retain its stakes in US companies Riot Games and Epic Games, according to multiple reports.

The Sumo acquisition hands Tencent a mix of AAA and indie content. Alongside LittleBigPlanet 3 and spinoff Sackboy, both published by Sony, Sumo was also behind Hitman 2. It also owns UK-based indie developer The Chinese Room (Everybody’s Gone to the Rapture) and Red Kite Games, best known for ports of games like Two Point Hospital. In February, the studio purchased Poland’s PixelAnt Games for £250,000.

“The business will benefit from Tencent’s broad videogaming ecosystem, proven industry expertise and its strategic resources, which will help secure and further the aspirations and long-term success of Sumo,” Ian Livingstone, non-executive chairman of Sumo, said in a statement.

Between Microsoft’s acquisition of ZeniMax and EA’s deal for Codemasters, 2021 is already turning out to be a blockbuster year for video game consolidation. Other hot deals include Epic Games acquisition of Fall Guys studio Mediatonic, Sony’s purchase of Returnal developer Housmarque and Facebook’s takeover of BigBox VR through its Oculus arm.

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