Tencent is in talks to acquire Xiaomi-backed gaming smartphone brand Black Shark, laying the groundwork for the company’s metaverse business in the future, Chinese media outlet 36Kr reported.
Black Shark is one of the largest gaming smartphone makers in China. Once the deal is finalized, it will transition into a manufacturer of VR headsets for Tencent, 36Kr reported, quoting an unnamed source familiar with the matter.
This will mark Tencent’s first investment in a hardware maker related to its metaverse business. The tech giant will acquire Black Shark for RMB 2.7 billion (USD 420 million) and says it will provide games and content to the hardware maker.
Tencent is one of the largest video game companies in the world. Pony Ma, chairman and CEO of the company, told investors during its 2021 Q3 earnings call that Tencent will build its own metaverse through “multiple pathways.”
Games are one of the most accessible ways to engage with the metaverse—and the medium that Tencent will lean on in its endeavors. In September 2021, Tencent applied for two trademarks, “Kings Metaverse” and “TiMi Metaverse,” which are references to the company’s hugely popular mobile game Honor of Kings and one of its subsidiary video game studios, TiMi.
Tencent is also a prolific investor. It wrote checks for more than 67 video game companies in 2021, including Roblox, 36Kr reported.
Major Chinese tech companies recognize the metaverse as a part of their operations in the future, and are slowly shaping the ways people will live, work, and interact digitally.
ByteDance acquired VR headset maker Pico in August 2021 and invested in another Beijing-based VR developer in November last year. Baidu has launched a metaverse environment called Xirang, which is described as a virtual workspace and marketplace for users.
The concept has become a buzzword for smaller companies that may be after quick profits, especially for firms that are listed on China’s stock bourses. Regulators have already issued multiple warnings to metaverse game developers out of concern of market manipulation.