The world’s biggest videogame company is — not the one you think it is.
When most people think about the big names in the videogame industry, typically a few come to mind right away.
Nintendo (NTDOF) , known for both its family-friendly entertainment and its staple franchises like “Super Mario Bros” and “The Legend of Zelda,” is likely one of the first. Founded in 1889 as a playing-card company, Nintendo has been in the business the longest.
Sony (SNEJF) , while first and foremost a tech company, waded into the games industry in 1994 with its PlayStation console and quickly found an audience there. Praised for its excellent and wide-ranging games library, the PlayStation has gone on to become one of the cornerstones of quality gaming.
Microsoft (MSFT) – Get Microsoft Corporation Report was the last to join the fray, in 2001, with its Xbox, which was purposely marketed to male consumers and sold more than 24 million units. But as the product’s popularity grew, its vision expanded, and today Microsoft enjoys more than 100 million active users in its gaming community.
What’s perhaps most interesting here is that none of these videogame companies is the biggest in the world. That honor belongs to Tencent (TCEHY) , a Chinese company that many have never heard of, despite its market dominance. It has a market value of $364.2 billion as of 2022.
The large majority of Tencent’s hold on the industry is in China, where it also holds the keys to Tencent Music, which owns the majority of China’s music services, and WeChat, a free app for messaging and phone calls used by one billion people and counting.
Now Tencent is ready to enter the hand-held market, bidding to challenge Nintendo’s Switch and even Valve’s still-new Steam Deck.
Zhang Peng/LightRocket via Getty Images
What Is This New Videogame Console?
Tencent has said it would partner with tech company Logitech (LOGI) – Get Logitech International S.A. Report to create this new hand-held videogame console, which has no name as of yet.
“Today, Logitech G and Tencent Games announced a partnership to bring a cloud gaming hand-held to market later this year that will combine Logitech G’s expertise in hardware with Tencent Games’ expertise in software services,” the announcement posted on Logitech’s official blog reads.
The device will support “multiple cloud gaming services,” and both Tencent and Logitech are already working with the Xbox Cloud Gaming and Nvidia (NVDA) – Get NVIDIA Corporation Report GeForce Now teams to make that a reality.
“As one of the leading global platforms for game development, publishing and operations, Tencent Games has been at the forefront of innovation and it’s why we partnered with them,” said Ujesh Desai, general manager of Logitech G.
“As someone that grew up playing videogames, the idea of being able to stream and play AAA games almost anywhere is super exciting, and we can’t wait to show everyone what we’ve been working on.”
Is Cloud Gaming the Future?
There have been many efforts to make gaming as easy as using popular media streaming services like Netflix (NFLX) – Get Netflix Inc. Report. Those efforts include Google’s (GOOG) – Get Alphabet Inc. Report Stadia project and Amazon (AMZN) – Get Amazon.com Inc. Report Luna.
But many complain that the graphical quality of AAA games is compromised, a problem inherent to forms of streaming entertainment that demand a lot of juice to run via a wireless connection. Older games, or simpler games with less intensive requirements, tend to run fine in this format.
But there’s still plenty of room to create a 100% cloud-based hand-held experience that exceeds past efforts.
And considering how much financial power Tencent has on hand to sink into the project, it’s more than capable of producing a product that could give the other big names in the game industry something to worry about.