Major Chinese internet company Tencent has acquired a minority stake in Gears Of War and Unreal Engine creator Epic Games for an undisclosed sum.
The deal marks the first time an outside investment has been made in Epic, and Epic president Michael Capps noted that the company will be collaborating with Tencent to tap into the company's Chinese userbase.
It's notable that Tencent made up more than a third of all revenue in the Chinese online games market during the first quarter of the current fiscal year, through its various online platforms including the QQ.com web portal and QQ Game Open Platform.
The deal will close sometime in the next month, although the terms of the investment were not provided. Capps was also keen to stress that Epic will continue to operate independently, seeking further expansion of its current game franchises across multiple platforms.
This isn't the first time Tencent has acquired a stake in a Western video game developer. Last year it bought a majority stake in Riot Games, Los Angeles-based developer and publisher of League of Legends.
Epic has had a relationship with Tencent for years, with the Chinese company licensing Unreal Engine for its projects. Mike Capps, president of Epic, tells Gamasutra that both firms have a lot to learn from each other, and that his company is eager to tap into Tencent's expertise in China's online PC and mobile games market.
"They have fantastic inroads into attractive markets and platforms, and Epic has been carefully weighing its options for the next generation of games for quite some time," says Capps.
He adds, "Our engine powers browser-based games, mobile games, MMOs, and more. As more of Chinaís population is becoming connected to the internet, Tencentís business is growing in all of these areas."
As for whether Tencent and Epic have plans to bring the latter's popular game brands like Gears of War to China, Capps says, "We are looking at all potential growth areas."
Epic also owns a minority stake in Yingpei Games (formerly Epic Games China), which offers outsourcing services and recently began developing its own titles like Mercenary Ops. That developer controls its own operations, and has more than 300 employees across its offices in Shanghai and Suzhou.