Valued at $300m: Tencent buys UK studio :paves way for console game

Tencent has bought a 10 per cent stake in Uk-based Sumo Digital Studios from private equity firm Perwyn Bidco for $30m, valuing it for $300m, according to the Yorkshire Post. Tencent’s head of gaming, Ma Xiaoxuan, and Carl Cavers, chief executive of Sumo Group, said the two companies were “exploring opportunities for joint research and development”, shortly after Tencent had expressed a desire to build console games for users in the US and Europe. So what kind of company is Sumo Digital? Why can Tencent get favor?

Founded in 2003 by the founders of Carl Cavers, Paul Porter and Darren Mills, Sumo Digital has been based in Sheffield, England, and has been working on three major platforms, such as PC, Host and Hand Tour, for 16 years. Little Planet 3, Sonic Sprint, Forza Horizon, Hitman and Crackdown.

Valued at $300m: Tencent buys UK team or paves way for console game

According to GameLook, Sumo Digital was originally set up as an outsourcing company that developed in partnership with Sega. For example, OutRun 2, a racing game developed for the Xbox platform in 2004, has achieved very high reputation and sales (the game was launched in 2006 on the PC version).

Despite relatively low exposure in the industry, Sumo has developed a project that has been a big deal: in 2010, the company began to engage with Sega’s big IP Sonic series, such as Sonic and Sega All-Star Racing, Sonic Sprint 2: Blast and Team Sonic Racing. Hand tours as well as host platform launch.

Valued at $300m: Tencent buys UK team or paves way for console game

Sumo Digital’s 3A masterpieces include 2014’s Little Big Planet 3, The Extreme Racing Horizon (2/3/4), the Hitman series and “Breaking Dead 3,” and warner bros., which released “Real Fast 11” in 2019.

Valued at $300m: Tencent buys UK team or paves way for console game

Crackdown 3

Although the projects involved are well known in the industry, Sumo Digital has received little attention from the industry as a developer, and has often been criticized for not being able to disclose enough information in a timely manner, most notably the “Crackdown 3”. It took five years for the action shooter to finally meet the player since it was announced in 2014.

In response, the studio’s general manager, Paul Porter, said, “We’d love to share what we’re doing, but for the sake of cooperation, we can’t publish it, it’s important to keep it secret in the game industry, we’re charging for other people’s IP products, and these IP is the wealth of the licensors, so we have to give the highest respect,” said Paul Porter, the studio’s general manager. So different projects are developed in different offices.”

As an outsourcing studio, how to deal with relationships with different 3A publishers is also the art of the door, Sumo Digital has worked with companies such as Microsoft, Warner, Sega and Sony, so Porter and his team must be careful to avoid conflict, “working with different companies and Big Ip.” You can learn a lot of different things, they do things differently, from a research and development point of view, this is a good phenomenon.”

On the other hand, it’s easier to help Sumo attract talented people by doing 3A research and development, and it’s also possible to make people in multiple categories find what they’re good at.

Valued at $300m: Tencent buys UK team or paves way for console game

Forza Horizon 4 exceeds 10 million players

The company’s expansion was slow until 2016, when it opened its first offshore studio in Pune, India, in 2007, in the hope of getting high-tech talent at a lower price. Prior to the investment of private equity firm Perwyn Bidco (September 2016), Sumo Digital had only three studios and had an annual income of 24 million pounds.

“When Perwyn invested in Sumo Digital in September 2016, we were a private company with an annual income of around 24 million pounds and three studios in two countries,” said Carl Cavers, CEO of the company. Now that we are a public company, with the opening of a new studio in Warrington, western England, we have 10 studios and will have revenues of ?38 m by the end of 2018.”

Based on Tencent’s purchase price, Sumo Digital has been valued at more than $300 million.

Or pave the way for Tencent to play a console game

Although for many years to join the global game publisher revenue champion, but from the platform distribution, Tencent in the host platform is still a blank. Judging by Tencent’s recent move, the acquisition of sumo Digital means the Chinese game publisher is moving into console game development.

Valued at $300m: Tencent buys UK team or paves way for console game

Tencent also wants to expand its gaming business to the U.S. and Europe, where console games remain the most popular gaming platform for core players in the U.S. and Europe, according to the Wall Street Journal, a Tencent executive who declined to be named. Learn the essence of developing console games for U.S. and European players.”

“We are very pleased to be able to invest in Sumo Group, the leader of independent joint research and development studios, and we hope to support Sumo’s growth and explore opportunities to collaborate with the company to bring more interactive entertainment experiences to users around the world,” Tencent Vice President Ma Xiaoxuan and Tencent Game Head said in an interview after the merger announcement.

In this respect, Sumo Digital, which has worked on several 3A research and development, is an ideal partner.

In fact, Sumo Digital’s merger and acquisition expansion in recent years has been remarkable.

After being acquired by U.S. company Foundation 9 in 2007, the founding team became independent again in 2014 with NorthEdge support and quickly expanded the team to 336 people.

In 2016, the three founders bought back their shares for the second time, even after being acquired by Tencent, perwyn held more than 17 per cent of the company. Following the IPO in December 2017, Sumo also acquired CCP Newcastle Studios, The Chinese Room Studio and the Red Kite Games team, and in April 2019 established hand-travel studios in the town of Royal Leamington.

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