ByteDance strengthened its gaming arm Nuverse with a hiring frenzy and took over the gaming studio Moonton in March.

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GUANGZHOU, China – ByteDance has acquired major mobile gaming studio Moonton to highlight its ambitions in the video game industry and compete against Chinese giant Tencent.

Known as the owner of TikTok or Douyin in China, ByteDance is committed to diversifying beyond advertising, capturing part of the $ 86 billion mobile game market, and expanding its presence internationally.

ByteDance gaming arm Nuverse, founded in 2019, was behind the acquisition.

“Moonton is the perfect partner to expand our gaming strategy into international markets,” ByteDance said in a statement.

Reuters reported that the deal valued Moonton at $ 4 billion and cited two unnamed sources. ByteDance declined to comment on the value of the business.

“This is a mega-deal in the global gaming industry, not just in China. So the M&A craze in the gaming sector continues, and I think ByteDance is still looking for other studios,” he said Serkan Toto, CEO of the consulting firm Kantan Games. said CNBC.

“Prepare for a long war between Tencent and ByteDance to acquire game content.”

ByteDance’s international boost

Tencent is the global leader in mobile gaming and is behind some of the top titles. This has been achieved in recent years through acquisitions and strategic investments in smaller companies and through the development of our own titles. This has enabled Tencent to have an extensive portfolio of games that continue to make money for the company.

Tencent was also able to expand internationally, an achievement that ByteDance is also hoping for.

Moonton is famous for “Mobile Legends”, a so-called multiplayer online battle arena game (MOBA) in which teams battle each other in large virtual arenas. Popular titles in this category are Tencent’s Honor of Kings and League of Legends, which were developed by Riot Games.

Mobile Legends is popular in Southeast Asia. And ByteDance partnered with game company Gravity last year to bring Ragnarok X: Next Generation to the region.

“Bytedance has been taking a global approach to its video game business from day one,” wrote gaming analyst firm Niko Partners in a message to customers.

TikTok leverage

ByteDance operates the short video app Douyin in China and TikTok in international markets. Last year, ByteDance said that Douyin had 600 million active users per day and that TikTok had 700 million active users per month.

The company could use the social media platform to promote games and attract users.

“With Bytedance at the helm, the two firms (Moonton and ByteDance) could use TikTok / Douyin to promote Mobile Legends in markets like China and the US, where Tencent’s Honor of Kings and Riots’ League of Legends: Wild Rift are dominant Cell phones are MOBA titles, “said Niko Partners.

However, ByteDance may not rely on acquisitions alone to play successfully.

“The biggest challenge for Bytedance will be to create a self-developed hit that can work over the long term. Therefore, the company signs release agreements to publish games based on the popular intellectual property and acquires game development companies with a proven record of success.” .