It was announced that Amazon had canceled an online gaming deal with Leyou. This happened because Amazon could not come to an agreement with Tencent, the organization that recently acquired Leyou.
Tencent Holdings Ltd. completed its acquisition of Leyou back in December. The deal was reportedly worth $1.3 billion.
“What is more alarming is that Leyou has become a shadow of its former self, according to four people with knowledge of the matter who declined to be identified because the information is not public,” writes Josh Ye of the South China Morning Post. “For Shenzhen-based Tencent, those count as tiny setbacks when compared with its outsize position in the global video gaming market, where it continues to ‘ruthlessly’ snap up stakes in companies big and small at whatever the cost to dominate the industry, according to the people familiar.”
At this time, the future of Leyou appears to be in jeopardy. In fact, one former employee said the organization “has now become nothing more than ‘a satellite studio’ for Tencent.”
Leyou is a video game holding company based in Hong Kong, China. The organization was originally founded in February of 2010.
The Profit‘s Take:
This may be the first time Tencent has had a misstep in the world of gaming. Then again, Tencent has like 50 other studios, so they’re not relying heavily on Leyou to succeed. Tencent would inevitably make a bad investment. Nobody’s perfect.