Tencent gains majority stake in Path of Exile’s Grinding Gear Games

    
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Please be a spell, then.
Path of Exiles has a new boss this week.

Grinding Gear Games announced that Chinese mega-publisher Tencent has purchased a majority stake in the studio. While this undoubtedly will raise concerns in Path of Exile’s community about the direction and control of the game, GGG spun the announcement as good news.

“We will remain an independent company and there won’t be any big changes to how we operate,” Grinding Gear said. “We want to reassure the community that this will not affect the development and operations of Path of Exile […] Tencent’s agenda is clear: to give us the resources to make Path of Exile as good as it can be.”

The studio reiterated that Tencent isn’t going to try to change the game, force pay-to-win aspects on it, or give the Chinese version priority. It also said that it will continue its rollout of four major releases per year and is developing the next expansions as well as version 4.0, which is coming sometime in 2020.

Source: Reddit. Cheers, Cyclone Jack, yoh_sl, and Tanek.

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Sally Bowls

FYI: today’s example of why it is sometimes helpful to be [partially] owned by the fifth largest company in the world.

Fortnite gets $100 million from Epic for esports push

Fortnite gets $100 million from Epic for esports push … “To put this in some perspective, in 2017, the top 10 games combined gave out $91.2 million in prize money,”

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Sorenthaz

Inb4 it blows up in Epic’s face.

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Armsbend

Too late. Fortnite really is a lol killer.

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Sorenthaz

Good, I won’t be sad if LoL dies at this point, ’cause Riot Game has had plenty of time to get a second game out to actually deserve the ‘s’ in their company name. And it’s clear that they’re pretty much just pandering to China at this point to try and keep the game looking strong.

But $100m is a truckton of money to just casually throw into esports prize pools. That’s stupidly ambitious and is purposely aimed at grabbing attention. I don’t see how it can be a net positive for Epic unless it attracts enough attention from big name sponsors and such.

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Armsbend

I’m with you $100M is crazy. Unless they are trying to Overwatch League – but better.

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Sorenthaz

They’re just doing it because they want to be the biggest and keep up that image. Also Tencent $$$.

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Armsbend

Well what it will do is get other pros from other games and attract them to Fortnite. Asians always follow the money for example. Many of the larger pro streamers have already dropped Overwatch for the higher number of viewers.

It sounds nuts but maybe it is a good long term investment – if you can cannibalize competitors.

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Yuri Geinish

Whatever happens, it’s on GGG’s head. In order for somebody to buy, someone must be willing to sell.

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Sally Bowls

Disclaimers:
a) I wish PoE and about everyone well; certainly, their employees
b) TenCent is huge, successful and has a history to date of being a benevolent, hands-off owner for gaming companies (E.g. Riot, Epic, …)
c) So at first glance, this seems like very good news. I expect it to be a positive change.

However,

1) But I am always struck by the “ there won’t be any big changes to how we operate,” Grinding Gear said.” See above, I expect that is true. However, once TenCent owns them, it only matters what TenCent says/does. GG predictions/hopes about the future aren’t that relevant. Not every marriage ends up turning out the way it was represented in the betrothal.

In particular, companies are not people. A new CEO/management at TenCent (or the Chinese government) can change things. A lot!
E.g.:

https://www.bloomberg.com/news/articles/2018-05-20/new-sony-ceo-to-detail-shift-away-from-gadgets-in-mid-term-plan

It’s a tectonic shift for a company built on manufacturing prowess. Sony popularized transistor radios, gave the world portable music with the Walkman and its TVs were considered top-of-the-line for decades. With the rise of Chinese manufacturing, making and selling gadgets has become a business with razor-thin profit margins.


2) Re: “give the Chinese version priority” that can occur not from an explicit directive from management (old or new.) But if management says you need $X profit, I could see this pushing them to China. Game companies develop in China and/or mobile for the same reason Willie Sutton robbed banks: “because that’s where the money is.”

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David Harrison

In three years from now, will they make an announcement that they were not actually purchased by this company, and that all the documents up to that point were merely a misunderstanding?

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Sorenthaz

Nah, Tencent is essentially a Chinese monopoly that buys out a ton of companies to make itself one of the biggest worldwide entities.

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Jeremy Barnes

It was a joke about some recent news.

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Ashfyn Ninegold

Sad day. Independent no longer. Player supported no longer. Knowing that it had to happen still doesn’t make it any better.

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Armsbend

To Tencent’s credit they largely do leave the games alone. But (a big but) It is my opinion that they value the data collection for the host country more than they care about the revenue from the video games. Or they at the least have the same value. I think this is why Tencent has a large diversity among it’s portfolio – rather than concentrating on any semblance of a niche.

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Dug From The Earth

Some pretty obvious things here:

1. PoE was already rolling out content (often sizable) for the game as a pretty quick pace. Especially compared to other games (another decent sized update is weeks away from release now even). This isnt something a struggling company manages to do.

2. GGG has been planning a China release of PoE for some time (they even have Diablo mastermind, David Brevik as a consultant for that release).

3. Tencent is a huge Chinese corporate entity.

Knowing those 3 things, its easy to deduce that the only reason for this is that the multinational holdings conglomerate, Tencent, saw earning opportunities in the Chinese release of the game. There is nothing really additionally beneficial that PoE fans will see from this. However, there is the potential that, in the long run, this could hurt the game if Tencent decides to start calling the shots. (despite any claims stating they wont do this – companies can change their mind )

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kgptzac

Companies not only can, but will, change their mind. Just wait till revenue starts to dip and surely Tencent (or insert name of companies, ie EA) will start calling shots to implement cash grabs in detriment to the players and the franchise.

Veldan
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Veldan

This is why it’s important for people to keep supporting GGG. As long as they do, there’s no need for cash grabs.

Veldan
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Veldan

I’m pretty sure it’s already launched in China

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Armsbend

The video game industry is the same as the app industry right now. Get large enough to get noticed by Tencent, Activision, EA or MS – get bought. You retire on a beach somewhere after you say, “things will remain the same”.

It is the dream. No one seems to want to BE those large companies any longer.

At the same time – it is the ultimate acknowledgement that yes, you in fact won the game.

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Dug From The Earth

Its not just the game/app industry. Its ALL industries.

If there is a “Giant” in your industry, then it follows the same pattern. Look how many small companies hope to get bought by google, or amazon.

Its simply reached a point where the giants are SO big that there really isnt a chance for anyone else to grow that large. “If you cant beat em, join em” is pretty much the global slogan.

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Armsbend

In most cases yes. But certainly not all. Nvidia and Tesla for example.

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Dug From The Earth

I think both those are great examples of things that got through the gate at the last minute, before it was shut.

Nvidia is pretty much the founder of video cards (by at least popularity). They are the “google” of the video card world… so in a sense, they are a giant in that industry, they didnt have another giant to catch up to or conquer.

As for Tesla… having Elon Musk along for the ride sorta meant that they were playing on a different playing field than most normal companies looking to make it big. So yes, its an example of how you can still become a giant, but you sorta need to have an unfair advantage still to do so.

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Armsbend

Well any visionary companies has a leader that is a cut above. Musk isn’t special in the sense of being special. For Tesla – the car industry was said to be shut decades ago. Plenty failed to break in – Tucker for the classic example. But Tesla surving at all isn’t a foregone conclusion anyway.

For Nvidia they were going against, and still are, absolute giant Intel. That isn’t exactly an open door. I don’t know this for a fact but I can easily make the assumption Nvidia has had many amply opportunities to cash out. Instead – they are taking the cards into places no one thought possible. And now Intel is sweating it.

I wish more companies would desire to become that in which they are attempting to find a niche in – instead of just taking the money. I suppose it’s always a rare thing but I’d really like to see a new EA or Activision.

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Dug From The Earth

I agree about tesla…Musk had money, and clout. Anyone else with the same things could have stepped into the same shoes. Most companies starting out dont have someone like though. In a sense.. Musk was Tesla’s “Tencent”, or at least part of it. If you dont come to the mountain, sometimes the mountain comes to you.

however… nvidia was never really going against intel. I mean… to say they were is based on what? They both were making computer chips?

Nvidia was focused on making a GPU… in fact they coined the term “GPU”. Intel was always primarily focused on CPUs. There was never really any competition.

Nvidia was trying to push a whole new way of doing things, which is the way most new companies start to gain in size. IE: Netflix… they didnt fear blockbuster would crush them, they just feared their new way of doing things wouldnt catch on. It did thankfully, and blockbuster was left in the dust)

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Armsbend

I’m not a chip expert but before Nvidia there were graphics. So I am assuming on PCs the graphics end was just run through the CPU yes?

My assumption is that Intel always knew what Nvidia was doing and could have almost instantly ramped up production to meet their rising demand – and presumably crushed them. Instead I think they saw Nvidia as kind of a partner in expanding PC functionality. Now that they are seeing uses beyond gaming graphics they are getting themselves involved in GPUs. I do know that for a fact.

I could be wrong though about Nvidia’s entry. like I said, my knowledge of the differences and history of CPU vs GPU is extremely limited. I only know what I read as a fan and investor – not an engineer or insider of any sort.

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Dug From The Earth

CPU’s powered graphics back in the day. But the limitation was that they werent very good at it. Nnvidia had the mindset of perfecting the concept (it existed already) of a secondary chip designed to handle just video processing, especially 3d rendering.

It was an area that Intel wasnt interested in competing with because it would have meant having to drastically revamp the architecture of their chips, which ultimately would have made them less effective for running a computer as a whole.

Nvidia basically entered into a market where they had no competition (until AMD/ATI stepped in). The only real struggle was getting consumers and developers (both hardware and software) to adopt the concept of utilizing a separate processing unit for video. Thankfully for Nvidia, the concept has been around since the early 80s, so it wasnt entirely foreign.

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Sally Bowls

So the first IBM PC graphics cards were made by IBM in ’81, soon followed by all the clones. (Including Quadram in Norcross, GA) ATI and VideoLogic was founded in ’85, NVidia ’93. Intel had GPUs in 1998. My snobiness is that initially, and really to this day, people use integrated graphics is to save money, not performance.

https://appleinsider.com/articles/15/01/23/how-amd-and-nvidia-lost-the-mobile-gpu-chip-business-to-apple-with-help-from-samsung-and-google-

The interesting thing is all the other uses for the graphics chips: cars, AI, cryptocrap as well as desktop pc graphics cards. Has nVidia said anything about the relative market size?

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Armsbend

I know they are gaining by a clip of roughly 10% per quarter compared to their competitors – which you can imagine will make them quite small after just a few short years. With much better margins as well. AMD has amassed a good deal of debt that hasn’t really culminated in much. But they are still considered a player in these new spaces.

Thanks for the history on GPUs. I enjoyed it and learned something :)

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Sally Bowls

The Entire Economy Is MoviePass Now. Enjoy It While You Can.

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Koshelkin

I can’t shake the feeling that Tencent will control most of the video game market one day. A fucking kraken.

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Armsbend

You meant data collection market right?

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Koshelkin

No. Not really.

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zuldar

The studio reiterated that Tencent isn’t going to try to change the game

Is there some sort of contractual agreement that forbids them from making changes? I imagine Tencent is expecting to get a return on their investment, not hard to see them pressuring GGG into expanding their micro-transactions.

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Dug From The Earth

Nope… but consumers find a temporary security in companies saying things they want to hear, even if they dont have to hold true to them.

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DargorV .

So they finally sold out eh…