Blue Ocean Strategy - Tencent Blue Ocean Search through Cross Border Investments

Tencent is a Chinese gaming company which is one of the biggest companies in the world. China controls 70% of the gaming market in China and it gained the dominance through offering new games to Chinese players and connected web services. As the Chinese market matures the company is forced to look out for Blue Ocean Strategy to keep up the growth and revenues. Tencent is also an investment company where in it made massive deals like acquisition of companies like Riot that owns the biggest game in the world titled League of Legends. With focus on providing Chinese players innovative games the company modelled its M&A strategy. The company has taken over the world of gaming by finding that innovative gameplay and bringing it back into China, and it wants to keep feeding that pipeline.

“We’re always thinking blue ocean and new opportunities,” said Randy Lee, North America Business Development at Tencent explained in a conversation on stage at the GamesBeat Summit in Mill Valley, California. “That goes back to our origins before we were even into games. There were a lot of companies who were in that space, and the whole ecosystem was massively multiplayer online role-playing games. We were the small fry. But what we did is we looked at the blue ocean, so we brought in [Counter-Strike-like shooter] Crossfire from Korea, we brought in MOBAs, we brought in sports games with the licensing like NBA 2K. These were the things that Chinese players never played, but in our mind, whether you’re in China or in the West — if you like the game, you’re going to play it. League proved that.” Lee went on to say that Tencent also doesn’t mind if its investments start slow. It prefers games that build over time after finding their core audience. It is also less interested in tools than in games.

Source: https://venturebeat.com/2018/10/23/unitys-cinecast-mode-lets-casters-and-game-spectators-change-camera-angles/

Due to limited revenue potential of bringing in the popular games into the Chinese markets, Tencent started to look at cross border investments as way to keep up revenue growth. Tencent Blue Ocean Strategy focuses on investing less capital (around US$3 million) over a greater number of younger gaming companies to accumulate a larger customer base and gain a stronger footing in overseas markets. Tencent is investing in sectors like video game broadcasting, financial services and online shopping and the acquisition strategy begins with a 10 percent to 20 percent stake in either early-stage startups or more mature outfits and sell them once they reach scale and profitability. Tencent is looking to use the cost value trade-off strategy for its future growth.