Tencent Pouring Resources Into Big Budget Console Games

China’s Tencent Holdings is pouring resources into big-budget console games as it looks to expand abroad and cater to changing consumer tastes at home.

The Chinese tech giant on Friday unveiled Last Sentinel, a game that is regarded as the mobile gaming giant’s most ambitious foray into the console market.

The Shenzhen-based firm showed a trailer of the action role-playing game at The Game Awards in Los Angeles.

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The title is being developed by about 200 people at Tencent’s Lightspeed LA game studio, a key US studio at the heart of Tencent’s global expansion plans.

Tencent has not revealed a launch date for Last Sentinel, which will let players fight robots in a dystopian Japan.

In 2020, Tencent brought in Steve Martin, a well-known industry veteran who has worked on some of the world’s most successful console games such as Grand Theft Auto and Red Dead Redemption, to help bolster its presence in console games.

Tencent has been mostly known for developing popular mobile games such as PUBG Mobile, and Chinese players have traditionally spent more on mobile games, which are typically cheaper to produce.

But with Tencent looking to boost its presence abroad and adapt to Chinese consumers’ changing tastes, it is spending more on console games.

Greater focus on game developers

While Last Sentinel will showcase Tencent’s in-house development prowess, the company has scooped up big stakes in many of the world’s leading game developers, including a 30% stake in Baldur’s Gate 3 maker Larian Studios.

In late 2022, sources revealed that Tencent had reset its acquisitions strategy to focus on buying majority stakes in foreign gaming companies – in a bid to offset slowing growth at home in China.

Tencent Holding invested in hundreds of promising businesses over the years, mainly in China. It typically acquired minority stakes and remained a passive investor.

But it is now aggressively seeking to own majority or controlling stakes in overseas targets, initially gaming assets in Europe.

The shift came as the world’s number-one gaming firm by revenue is counting on global markets for its future growth, which requires a strong portfolio of chart-topping games, the sources aid.

Chips ban impact

Meanwhile, Tencent said last month it is also looking to buy more domestically-made chips because of updated export bans by the United States pose a risk to its cloud services.

The internet firm acknowledged it had a large stockpile of artificial intelligence (AI) chips from US maker Nvidia to continue development of its “Hunyuan” AI model “for at least a couple more generations”.

But the US chip ban will affect “our ability to resell [use of] these AI chips through our cloud services,” President Martin Lau said in mid-November. Tencent, through its cloud services, sells computing power to clients.