Last year, Tencent bought Leyou holding for $1.3 billion. Now it has turned into a support studio

The purchase of the Chinese holding Leyou Technologies for $1.3 billion was one of Tencent’s largest investments last year. He has IP assets such as Warframe and Gears Tactics. However, in recent months, key employees have left Leyou en masse. And because of several cancelled projects, the holding itself has turned into almost an ordinary support studio.Warframe

The situation inside Leyou Technologies was reported by the South China Morning Post.

The holding had plans to develop an MMORPG based on The Lord of the Rings (The Lord of the Rings). Amazon was ready to give the rights to Leyou, but could not agree on terms with Tencent and as a result canceled the game.

The

loss of one project is almost incapable of harming Tencent’s business. However, for Leyou, this deal was extremely important. According to consultant Serkan Toto, the Lord of the Rings game was supposed to help the holding gain a foothold in the world market and become recognizable outside of Kiat.

Tencent did not betray any significance to the cancellation of the game also because it was interested in one particular studio in the deal with Leyou. We are talking about Certain Affinity, 20% of which just belonged to the holding. The studio had extensive experience in creating games for consoles and PCs — it helped with the development of Left 4 Dead, Doom (2016), as well as the Call of Duty and Halo series.

Tencent wanted to involve Certain Affinity in the development of an AAA blockbuster to gain a foothold in the console market. However, it is not known what exactly resulted in their cooperation.

In

addition, the Chinese giant was counting on other Leyou brands — including the Warframe shooter from Digital Extremes studio. According to the South China Morning Post, Warframe’s revenue began to decline last year. Although back in 2019, shooter accounted for a quarter of all Leyou’s revenues — $57.5 million. Because of this and the canceled deal with Amazon, the holding has become a much less profitable investment than Tencent initially assumed.

As

a result, employees began to leave Leyou en masse. The team of 200 people who worked on Civilization Online was completely disbanded. Alex Xu, who has been CEO of the holding since 2017, also left the company in April. The South China Morning Post notes that Leyou has canceled several more titles, but which ones are not specified.

Against

the background of these events, some experts fear that Leyou may remain on the margins of the gaming industry. According to one of the former employees, the company had excellent chances to succeed in the field due to the presence of successful IP and experienced studios at its disposal. However, due to several cancelled projects and incorrect decisions, the holding turned into just another branch of Tencent with a vague future.