Tencent Holdings, one of the leading internet companies in China -- which operates IM, social networking, and online games -- has acquired a majority stake in Riot Games, Los Angeles-based developer and publisher of League of Legends, it announced late on Friday.
The two companies had already planned to launch the Chinese version of Riot's popular multiplayer action RTS title League of Legends together this year -- now, the rapidly expanding Chinese Internet firm is expanding further in the West via this majority acquisition deal.
According to CEO Brandon Beck, who spoke to Gamasutra about the deal: "Technically it's an acquisition -- Tencent is acquiring a majority stake in the company.
He added, "It's unusual as acquisitions go, in the sense that there's an incredible amount of autonomy and independence that both companies are trying to create, which is critical to us."
Tencent already has U.S. offices in Culver City, CA; Beck stressed that his company, co-founded with Riot president Marc Merrill, is not becoming Tencent's U.S. operation.
"Riot is going to remain completely independent. There are no redundancies, no layoffs, no synergy fishing, no leadership change," Beck said. In fact, Riot Games is remaining its own publisher in North America and Europe. "Nothing is going to change other than they're dramatically increasing their holding in the company. They see this more as an investment in a partner."
Beck said that the close partnership the two companies had already forged working together on the upcoming Chinese launch of League of Legends is what made this a perfect fit. "We've gotten work with them in a lot of different capacities... [We have] a mutual respect, a shared philosophy."
"We've been working together for a long time -- over two years," he said. "Tencent and Riot share a view of the game industry. As important as technology and IP is, the most important thing in the industry are the people and the talent, particularly when you're trying to innovate and trailblaze. To keep people exited, motivated, hungry to succeed, and maximize creativity, you have to have a really independent and autonomous structure."
In Beck's view, this really changes nothing for the company's trajectory. "All it changes is that we now have access to the resources of Tencent ... [we can] more aggressively pursue our plans. We have 100 open positions at Riot, and we're really looking for talented developers. The goals are to continue to develop and expand on League of Legends, and then to embark on some exciting new projects."
Riot Games' DoTA-styled title is forged on a competitive core gaming pedigree, which aligns well with Tencent's audience, said Beck. The core game is free to play and download, and is supported by microtransactions. "Core gamers in every territory have an awful lot in common... there's almost a global gaming community, at the end of the day."
"As a company we're very focused on core gamers, people that identify themselves as gamers unabashedly. That's just where we are as a company. The whole company is centered around that -- really community driven too. It's important for us to have a relationship with our players and a dialogue and so on. That's' why you see us with incredibly active forums and active communications. We view games as living, breathing, ongoing experiences."
Merrill, who is also League of Legends' executive producer, commented that this acquisition will allow the developer to carry this philosophy forward into both League of Legends and its new projects.
"We really do feel like we're just getting started, and the success of League of Legends is a validation of our approach. And we think that Tencent really identifies with our community-focused strategy, and sees we want to grow and evolve in how we deliver games to our users," he said.
Riot currently operates League of Legends in North America and Europe; it will launch in China and other global territories during 2011. Describing the fan reception to the game as "really overwhelming," Beck said that currently "We have upwards of 1 million players play our game every single week, and they log upwards of 1 billion minutes of playtime every month."
[UPDATE: A report in AllThingsD claims that "Tencent, which had already invested in the game maker, will pay “just south” of $400 million to buy out other investors, primarily Benchmark Capital and FirstMark Capital, which along with angels had put approximately $18 million into the company."
The Wall Street Journal-affiliated site claims: "The company’s management team will receive some portion of that buyout themselves, but will also retain an equity stake; some will receive 'stay packages.' The total investment values the company at $472 million."]