Why is China's Tencent buys stake in France's Ubisoft?

CGTN Europe interviewed Lisa Cosmas Hanson, President and CEO of Niko Partners

Transcript

00:00Welcome back. French video game publisher Ubisoft has signed a billion dollar deal with

00:08Chinese tech giant Tencent to create a subsidiary to run some of its biggest titles. Ubisoft,

00:14best known for the Assassin's Creed franchise, saw its share price rise briefly on the news

00:19of the deal before dipping again. Lisa Cosmas-Hanson is president and CEO of Nikko Partners, a

00:25video games and e-sports research company. Great to see you again, Lisa. So, look, first

00:30of all, why did Ubisoft need Tencent to come to the rescue?

00:35Well, Ubisoft had a rough couple of years and the video game industry overall has had

00:42a rough couple of years. So we can't say it's isolated just to Ubisoft and we can't say

00:47that the only suitor that could solve the problem is Tencent. But in general, I think

00:53Tencent is in a very favorable financial position. They had recent announcement of

00:58earnings that they did very well. And Ubisoft has had experience with Tencent, has already

01:05had a partnership and relationship with them. And Tencent also is invested in the parent

01:12company or the, yeah, the parent company of Ubisoft. So I think that it is a natural fit

01:20to help Ubisoft overcome some of its financial struggles.

01:23But this new spinoff, which Tencent's taking the $1.2 billion stake in, holds all of Ubisoft's

01:29best bits, doesn't it? Its most valuable intellectual property.

01:33Yeah, I think those titles that it's going to be carved out, that are going to be carved

01:38out are really important to Ubisoft as a brand, will be really important to Tencent. And,

01:44for example, Rainbow Six will have, you know, I think we'll have a lot of success in China

01:49once the ISBN comes along, which is the license required to operate in China. Tencent will

01:55be a great partner for that there. I think it makes sense. This partnership makes sense.

02:00The carve out, I think, is actually really interesting and it still allows Ubisoft some

02:04control. The company doesn't have to go into some hostile takeover situation. It actually

02:09is pretty positive for both parties.

02:11You talk about this partnership, but let's not forget Tencent has very deep pockets.

02:15They eventually want to take control of the entire company. And if that happened, would

02:20there be opposition to that from the French state?

02:22Oh, well, I can't foresee what would happen geopolitically with any kind of endeavour

02:29of that nature. I do know that Tencent has invested in so many, hundreds of game companies

02:37over the years, and sometimes they are just this silent partner where they don't even

02:41have their brand associated with the investee. Sometimes they have, you know, a lot of collaboration.

02:49In the case of Riot, for example, they wholly own Riot, but Riot Games is still very much

02:55Riot Games. So, I think in this case, it's a carve out. It's part of Ubisoft. It's not

03:00the whole thing. There's already been some investment by Tencent in Ubisoft in the past.

03:06So, it's just sort of an extension of that and something that really helps buffer up

03:10Ubisoft in a time of need.

03:12Lisa Cosmas, Hanson, Niko partners, thank you very much.