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Turns out Tencent holds 30.00% of Larian Studios (Divinity: Original Sin, Baldur's Gate III); was this ever reported?

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DarkDetective

DarkDetective

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Larian Studios, the developers of the Divinity series and Baldur's Gate III, is known as one of the biggest independent game development studios in Europe. It's not part of a bigger publishing structure or publicly traded company.

In the last couple of years, very hungry caterpillars like Tencent, Embracer, and Keywords have been gobbling up companies everywhere. While I was under the impression that Larian was still wholly owned by its founders and some early investors, a friend of mine and I did some research into the company and we found out that Tencent actually holds 30% of the shares of the company. As far as I knew or could find online, the acquisition of a minority stake in Larian Studios by Tencent was never publicised or reported on (but maybe I missed it?).



While we don't know exactly when the acquisition happened, there are signs it may have been around September 2018, when the company was restructured from a legal perspective and a holding company in Ireland was established (this correlation is just a guess of ours though). In the financial filings we found of that holding company for 2019, the following shareholders are listed: 62.04% by Swen Vincke (the founder and CEO), 30.00% by Tencent Cloud Europe BV (a Dutch letter box company wholly owned by Tencent), and 7.96% by Swen's wife.

So yeah, Tencent owns part of Larian Studios. I thought this was newsworthy. Sell my company to China if old.
 
May

May

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Oct 25, 2017
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Why does it matter, though? The games don't suddenly get worse
 
kurahador

kurahador

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Oct 28, 2017
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Tencent got their hands on everything these days and it doesn't seem that they interfere on game development. For independent developer, that's just free money.
 
OP
DarkDetective

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Khrn said:
Just to clarify: in your opinion, DarkDetective, is the fact that Tencent owns a part of it a bad thing?
No, the other guy I did research doesn't like Tencent and China much, but so far, I haven't heard about any negative experiences from industry people who sold a part of their company to Tencent.
 
Sho_Nuff82

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Feels kinda weird to conflate Tencent and China, would you refer to a company bought by MS as "sold to America" or sold to Sony/Nintendo as "sold to Japan"?
 
Helix

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Tencent is like that kid on Halloween that has their hands on all the chocolate.

analogy aside, they don't influence much on studio decisions and it's much needed funding for independent developers.
 

Nerokis

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Oct 25, 2017
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Pleasant surprise that this thread actually ended up being about Larian's ownership structure and not China, lol.

Interesting find, OP.

Edit: Ugh, just caught that last sentence. So close.
 
Incandescence

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Tencent seem to have Investments everywhere, is there any earnings reports I can read to see how much they get back from those?
 
Spork4000

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Sho_Nuff82 said:
Feels kinda weird to conflate Tencent and China, would you refer to a company bought by MS as "sold to America" or sold to Sony/Nintendo as "sold to Japan"?


A common bit of misinformation is that all Chinese companies are owned by the Chinese government. Though China tends to exert more regulatory control over their companies than the US does, it's really REALLY far from the extent that people assume.
 
cyrribrae

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I didn't realize it was majority owned by the founder (and his wife). Huh. Interesting.
 
OP
DarkDetective

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Incandescence said:
Tencent seem to have Investments everywhere, is there any earnings reports I can read to see how much they get back from those?
I've been trying to look into this, but the ownership structure is super difficult. Simply getting a complete list of holdings is already impossible.
When they have a 30% stake, like here, for example, they are represented in the board of directors, so they're part of the discussion on whether to let the company pay dividends to the mother company. However, Tencent invests in these companies because they want them to grow, so usually most if not all profit is invested back into the company.
 
Unaha-Closp

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I'm sure it was reported to the places that require these things to be reported. If not then the places that investigate the places that require these things to be reported will hopefully be investigating these places. Not sure they have to be reported to OP unless they themselves are a place that requires these things to be reported to.
 
Gnorman

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Tencent seem fairly hands off so if it gives Larian a little bit of security to keep doing what they're doing good for them.
 
Khrn

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DarkDetective said:
No, the other guy I did research doesn't like Tencent and China much, but so far, I haven't heard about any negative experiences from industry people who sold a part of their company to Tencent.
So the guy you did research with is sinophobic. Also, why would you say "sell to China"? Might want to edit your post if you didn't mean it as a bad thing because it does give the wrong message.
Sho_Nuff82 said:
Feels kinda weird to conflate Tencent and China, would you refer to a company bought by MS as "sold to America" or sold to Sony/Nintendo as "sold to Japan"?
Basically this.
 
OP
DarkDetective

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Unaha-Closp said:
I'm sure it was reported to the places that require these things to be reported. If not then the places that investigate the places that require these things to be reported will hopefully be investigating these places. Not sure they have to be reported to OP unless they themselves are a place that requires these things to be reported to.
With a lot of investments (from Tencent, but also other companies), there's a press release of some kind. Even if it's not mandatory to make such an investment public, it happens, and since it's 30% in a reasonably big company, I was wondering whether we ever got such an announcement. Obviously the government and such, who need to know, do know.
 
Unaha-Closp

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DarkDetective said:
With a lot of investments (from Tencent, but also other companies), there's a press release of some kind. Even if it's not mandatory to make such an investment public, it happens, and since it's 30% in a reasonably big company, I was wondering whether we ever got such an announcement. Obviously the government and such, who need to know, do know.
I feel ya, I was just pulling your leg. I would assume it had been reported somewhere industry-focused so yeah I appreciate your question, it is a little surprising it wasn't.
 
RvinP

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Why isn't the topic put forth in a positive way, that Swen Vincke holds 62% of the company!

The emphasis that Tencent holds 30%, seems like the OP is hinting that its a bad thing and almost suggests targetting.

Tencent actually holds some portion in a large number of companies which are into games, including the owners of Unreal Engine (which many game use).
 
Evolution of Metal

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Sho_Nuff82 said:
Feels kinda weird to conflate Tencent and China, would you refer to a company bought by MS as "sold to America" or sold to Sony/Nintendo as "sold to Japan"?

Nothing weird about it.

CCP has the powers that it can either pressure or directly order private companies to follow, anything from games reflecting more CCP values (propaganda) to, just this morning, moving all infrastructure to CCP servers:
www.wionews.com

Now, China asks private firms to migrate data to government-run cloud services

According to reports, China has ordered private firms to migrate from its cloud services into the government's infrastructure. Tech giants Alibaba and Tencent have reportedly been asked to ensure the data migration process by the assets supervision and administration commission. The assets...
www.wionews.com www.wionews.com

Larian investment is a profit-driven one, doubt it will change how Larian operates with the 30% share, but what Tencent owns with a controlling share is definitely a subject to CCP pressure and orders.
 
AHA-Lambda

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May said:
Why does it matter, though? The games don't suddenly get worse
This. There has been so much inane boogeyman stuff about Tencent for years now that has never amounted to anything
 
EagleClaw

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I believe you will be shocked when you find out how much Tencent owns in the complete gaming industry.
 
Hey Please

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At 62% ownership, it sounds like Larian's majority stake holder would have dictated terms and condition with regards to creative control and beyond to Tencent. Unless there is verifiable data to suggest otherwise, in the case of Larian, this comes off as fearmongering.
 
Evolution of Metal

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Hey Please said:
At 62% ownership, it sounds like Larian's majority stake holder would have dictated terms and condition with regards to creative control and beyond to Tencent. Unless there is verifiable data to suggest otherwise, in the case of Larian, this comes off as fearmongering.

Did you even read the full message?
 
Hey Please

Hey Please

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Evolution of Metal said:
Did you even read the full message?

If I am skimming it correctly, it talks about how private entities need to use cloud infrastructure put in place by the government for any new contract. Question is whether Larian is relying on Tencent for cloud data storage.
 

giapel

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Oct 28, 2017
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Question for the more business knowledgable Era. What’s the point on having minority stakes in a developer? Is it to facilitate an eventual takeover when/if there need arises? Can’t be purely for profits.
 
Gay Bowser

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giapel said:
Question for the more business knowledgable Era. What’s the point on having minority stakes in a developer? Is it to facilitate an eventual takeover when/if there need arises? Can’t be purely for profits.
…why not?

Tons of companies own minority stakes in other companies they have no interest in fully acquiring.
 
Fantastapotamus

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giapel said:
Question for the more business knowledgable Era. What’s the point on having minority stakes in a developer? Is it to facilitate an eventual takeover when/if there need arises? Can’t be purely for profits.
To elaborate a bit: Larian is currently seen as a bit of a rising star. So investing now in it can pay off big if they make the next Skyrim. Is that likely? No.
But they will still make a profit. If you invest in 500 companies, the likelihood of one of them making the next Skyrim rises, obviously.
And that's not even acknolwedging buying companies who already have their "Skyrim" (like Epic, Riot etc.)
It's a simple but effective strategy if you already have a shit-ton of money.
 
Hey Please

Hey Please

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Fantastapotamus said:
To elaborate a bit: Larian is currently seen as a bit of a rising star. So investing now in it can pay off big if they make the next Skyrim. Is that likely? No.
But they will still make a profit. If you invest in 500 companies, the likelihood of one of them making the next Skyrim rises, obviously.
And that's not even acknolwedging buying companies who already have their "Skyrim" (like Epic, Riot etc.)
It's a simple but effective strategy if you already have a shit-ton of money.

Given they are in charge of BG3, there is great chance of them making the best seller title in their portfolio.
 
Fantastapotamus

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Hey Please said:
Given they are in charge of BG3, there is great chance of them making the best seller title in their portfolio.
Exactly.
Even if Baldur's Gate 3 doesn't sell millions (which it probably will or already has) their next game might.
Plus, I doubt 30% of Larian was that expensive (for Tencent) so even if they never make any money back ever, Tencent would barely notice it.

It's a bit like the Blumhouse strategy just on a much, much larger scale.
Put 10 million each into 30 different movies, 20 of them will make 15 million, 7 will make 5 million but 3 will make 60 million.
 
dude

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I think at this point it'll be harder finding independant studios that are NOT partially owned by Tencent
 
Delusibeta

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giapel said:
Question for the more business knowledgable Era. What’s the point on having minority stakes in a developer? Is it to facilitate an eventual takeover when/if there need arises? Can’t be purely for profits.
Pretty much, yeah. Tencent gets 30% of any successful acquisition bid for Larian (which is likely way more than what Tencent paid), and in the event that Tencent themselves want to acquire Larian they only have to buy 70% of the company.
 
ghostcrew

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Thread has been locked while we review a number of reports. This may take an extended period of time. Should we decide to reopen this thread or give any other updates this post will be edited with the additional information. Thank you for your patience.
 
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