[Exclusive] Action Square to Receive Investment from Tencent, the World's No.1... Negotiations on 'Anvil' Rights

Action Square in Strategic Talks with Tencent for Partnership... Accelerating Global Expansion
Anvil Negotiates 'China Rights and Distribution' with Tencent and 'US Rights and Distribution' with Company A

[Asia Economy Reporter Lee Seon-ae] Tencent, the world's number one gaming company from China, is making an equity investment in Action Square, a subsidiary of South Korea's YJM Games. Tencent plans to act as a strategic partner for Action Square's global market expansion and jointly promote business growth. In particular, Tencent will hold the Chinese market distribution rights for Action Square's upcoming new console and PC platform shooting game "ANVIL," scheduled for release in the fourth quarter, and will handle its distribution.

According to investment banking (IB) and gaming industry sources on the 15th, Tencent is injecting funds into Action Square to acquire shares in Action Square Dev, Action Square's development subsidiary wholly owned by Action Square. The investment amount is reported to be around 20 billion KRW. By becoming a strategic partner holding distribution rights, Tencent aims to support Action Square's global market entry and business expansion. Previously, rumors circulated that besides Tencent, Chinese UCC platform company Bilibili was also interested in securing distribution rights for Action Square's new title and had been sending love calls such as equity investments. A YJM Games official stated, "All matters related to Bilibili are untrue," and regarding the equity investment with Tencent, said, "Nothing has been decided at the company level for capital investment attraction." Earlier, in November 2019, YJM Games completed a management rights acquisition by investing 12.5 billion KRW in Action Square.

Tencent is actively investing in domestic game companies, having grown beyond being the largest in China to the world's number one gaming company. It is a major shareholder in Netmarble, Kakao Games, and Krafton. Tencent also maintains close relationships by distributing flagship games of Nexon and NCSoft in the Chinese market. This year, Tencent made equity investments in Royal Crow, a subsidiary of Some Age, and Act Five, the developer of "Hot Blooded Strong Hero M," becoming the largest shareholder of both companies and acquiring their new titles. Tencent's expansion of investments in the domestic gaming industry aims to secure new game intellectual properties (IP) and development talent to solidify its dominance in the global market.

For Action Square, pursuing strategic collaboration with Tencent is advantageous. With Tencent's backing, it can easily enter China, the world's largest online gaming market. Moreover, Action Square plans to accelerate business expansion with the release of ANVIL. Currently, Action Square is intensively developing "Project Kingdom," a PC and mobile multiplatform action game utilizing the Netflix Originals IP "Kingdom." It is also preparing for the release of "Three Kingdoms Blade" in Taiwan, Hong Kong, Macau, and Southeast Asia, as well as North America and Europe within the year. Additionally, a new project using the "Blade" IP is being planned. Amid this business expansion, partnering with Tencent is expected to enable various strategic collaborations. An industry insider said, "Tencent is reportedly considering a long-term contract covering not only the Chinese distribution rights for ANVIL but also Action Square's follow-up title 'Project Kingdom.'"

Action Square plans to launch ANVIL worldwide on platforms including PC, console, and cloud, covering the US and Europe. Market potential has already been confirmed. In Steam play tests, overseas users accounted for over 90%, with 60% from China and 18% from the US. Accordingly, Action Square is currently discussing distribution rights with global publishers targeting PC, in addition to console publishers such as SKT and Microsoft. It is understood that discussions are ongoing with at least 10 companies.

The Chinese market distribution rights belong to Tencent, while the US market rights are under negotiation with Company A. A YJM Games official stated, "We are in talks with multiple overseas companies for publishing the new game, but it is still in the early stages and nothing has been concretely decided."

Meanwhile, the market expects that if Tencent and Action Square join forces, a "second PUBG (PlayerUnknown's Battlegrounds)" will be born. PUBG Mobile was jointly developed and released by Krafton and Tencent.