Chinese tech firm ByteDance announced that it has struck an agreement with Shanghai-based Moonton Technology to purchase the studio. The move puts the company in increasing competition with gaming giant Tencent (OTC: TCEHY).
Founded by a former employee of Tencent, Moonton is responsible for the mobile game Mobile Legends: Bang Bang, a popular Multiplayer Online Battle Arena (MOBA) game in Southeast Asia. The game is functionally similar to Tencent owned Riot Games' wildly popular League of Legends and Valve's Dota 2, so much so that Riot Games and Tencent successfully sued Moonton in 2018 and received a settlement of $2.9 million.
Nonetheless, given that ByteDance has already penetrated the gaming market through its own in-house studio Nuverse, the acquisition of Moonton will only help ByteDance as it battles Tencent for market dominance.
"Through cross-team collaboration and drawing on lessons and insights from its own rapid growth, Moonton provides the strategic support needed to accelerate Nuverse's global gaming offerings," ByteDance said in a statement.
Not much is known about the deal's specifics, as neither Moonton nor ByteDance have released many details to the media. According to anonymous sources who revealed the deal to Reuters, the deal is valued at around $4 billion. Additionally, according to an internal memo, the company would still operate independently from ByteDance.
The acquisition could prove to be exceptionally lucrative, not only for the boon to ByteDance's gaming portfolio but also because of the company's potential to penetrate the esports market. Mobile Legends already boasts esports leagues throughout Asia; the Mobile Legends league in Indonesia reaching a peak viewership of 600,000, and the game's 2020 world championships being viewed by over 3 million users.
ByteDance's ownership of the smash-hit social media app TikTok also provides the firm with an avenue to promote tournaments and new releases, and could potential provide a means for integration with ByteDance's games, should the firm decide to explore a product similar to Facebook (NASDAQ: FB) Gaming.