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Sony and Tencent make big investment in Elden Ring maker FromSoftware

Deal injects roughly $260 million into the studio

Landscape view of Elden Ring — a mounted knight looks out on ruins with a glowing, mystical tree growing up through the middle Image: FromSoftware/Bandai Namco Entertainment

Tencent Holdings and Sony have teamed up to acquire a nearly one-third stake in Elden Ring developer FromSoftware, the studio’s parent company announced on Wednesday.

The deal means a Tencent subsidiary owns 16.25% of FromSoftware’s shares, while Sony Interactive Entertainment owns 14.09%. The rest is owned by FromSoftware parent Kadokawa Corporation.

Shanghai-based Tencent is the world’s largest video game vendor, owing largely to its dominance within China’s vast market. It’s also well known for taking significant positions in — if not buying outright — big-name publishers and developers outside of China.

Tencent fully acquired League of Legends maker Riot Games at the end of 2015; Norwegian MMO house Funcom at the beginning of 2020, a roughly 40% stake in Epic Games in 2012; and it is the majority shareholder in gaming companies like Supercell (Clash of Clans), Fatshark (Warhammer: Vermintide 2), and Tequila Works (Deadlight, Rime). Tencent also bought 5 percent of Activision Blizzard in 2013 (freeing that company from Vivendi Universal), but those shares will be purchased by Microsoft in its $68.7 billion bid for the Call of Duty publisher.

Sony’s investment reflects its ongoing effort to acquire or strengthen ties to studios well known for making PlayStation games. (FromSoftware is also the creator of the Souls series of RPGs, starting with the PlayStation 3 exclusive Demon’s Souls in 2009, and made Bloodborne for Sony in 2015.) The company in January spent $3.6 billion to acquire Destiny 2 maker Bungie; snapped up Housemarque, maker of PS5 exclusive Returnal, in mid-2021; and bought Insomniac Games at the beginning of 2020. Sony also acquired fighting games’ Evolution Championship Series and anime streaming network Crunchyroll in 2021.

Tencent and FromSoftware’s parent were already in business together, with Tencent acquiring a stake in the Kadokawa Animation and Comics subsidiary in 2016, Kadokawa said in Wednesday’s statement.

The statement also mentioned that Sony and FromSoftware “have developed a collaborative business relationship across a wide range of areas,” and in 2021 entered into an agreement with the goal of “creating new IP of [Kadokawa/FromSoftware] and maximizing the utilization of its existing IP in anime and game fields.” In March, FromSoftware said it would focus on developing Elden Ring as a franchise in media beyond video games, as it touted the game’s sales of 12 million units, one month after launch.

The deal pumps ¥36.4 billion yen (roughly $262 million) into FromSoftware, with Tencent paying about $140 million of that and Sony $122 million.

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