Tencent Is Buying Korea — Games, K-pop, Dramas, Quietly Encircling

{"time":1777977351716,"blocks":[{"id":"b0","type":"paragraph","data":{"text":"A $555B giant connected to 60% of domestic game publishers' revenue: the reality of a strategy that 'owns but doesn't interfere'"}},{"id":"b1","type":"delimiter","data":{}},{"id":"b2","type":"paragraph","data":{"text":"In 2001, South African media group Naspers invested $32 million in a cash-strapped Chinese startup. That company was Tencent. Today, Naspers' stake has grown hundredfold, and Tencent has become an $555 billion empire—larger than Samsung Electronics, LVMH, and ASML combined."}},{"id":"b3","type":"paragraph","data":{"text":"And right now, Tencent is buying Korea. Quietly, but systematically."}},{"id":"b4","type":"delimiter","data":{}},{"id":"b5","type":"header","data":{"text":"From Messenger to Universe","level":2}},{"id":"b6","type":"paragraph","data":{"text":"In 1998, Pony Ma launched QQ with four university classmates. Initially just a knockoff of Israeli messenger ICQ, it exploded in users after switching to free-to-play, becoming China's largest platform. WeChat, launched in 2011, bundled messaging, payments, shopping, and content into a single app—becoming the digital infrastructure of Chinese life. WeChat Pay's mobile payment system essentially solved China's counterfeit currency problem and dominated the financial market."}},{"id":"b7","type":"paragraph","data":{"text":"Tencent's path to becoming the world's largest gaming company is equally distinctive. It doesn't build—it buys. It owns 100% of Riot Games (League of Legends), 84% of Supercell (Clash of Clans), and 40% of Epic Games (Fortnite). In 2025, it increased stakes in Ubisoft's newly created games subsidiary (25%) and From Software (Elden Ring's parent company). By 2025, international game revenues alone exceeded $10 billion. Founder Pony Ma, unlike Alibaba's Jack Ma, operates as a recluse with minimal public appearances. Tencent's expansion happens quietly."}},{"id":"b8","type":"delimiter","data":{}},{"id":"b9","type":"header","data":{"text":"Korea Equity Map — The 'Second Shareholder' Strategy","level":2}},{"id":"b10","type":"paragraph","data":{"text":"Tencent's investment approach in Korea follows a pattern: it never targets control. It quietly sits as the second-largest shareholder."}},{"id":"b11","type":"paragraph","data":{"text":"Shift Up: 34.85% stake—just 3.5 percentage points behind founder Kim Hyung-tae (38.43%). Netmarble: 17.52% (second shareholder). Krafton: 13.86% (second shareholder). SLL Central (JTBC Studio): 10.11%, SM Entertainment: 9.7%, Kakao Games: 6.6%, Kakao: 5.95%, YG Entertainment: 4.3%. Analysts point out that 60% of domestic game publishers' revenue is now connected to Tencent-affiliated entities."}},{"id":"b12","type":"delimiter","data":{}},{"id":"b13","type":"header","data":{"text":"SM Acquisition — Penetrating K-pop's Heart","level":2}},{"id":"b14","type":"paragraph","data":{"text":"On May 27, 2025, Tencent Music Entertainment (TME) acquired Hive's entire SM Entertainment stake for approximately $165 million. Hive had marked this as a non-core asset after the 2023 SM management dispute. Tencent seized the opening. Post-deal, SM stated it would "create a comprehensive idol success model with TME," and SM's revenue in the following quarter surged 19% year-over-year."}},{"id":"b15","type":"paragraph","data":{"text":"South Korea's four major entertainment agencies combined have a market cap that's 1/40th of Tencent's. The negotiating table presents absolute asymmetry."}},{"id":"b16","type":"delimiter","data":{}},{"id":"b17","type":"header","data":{"text":"Even Drama — Three-Tier Vertical Integration","level":2}},{"id":"b18","type":"paragraph","data":{"text":"Tencent's penetration of Korea extends beyond games and K-pop. It's the third-largest shareholder of SLL Central (formerly JTBC Studio), maker of 'Extraordinary Attorney Woo' and 'The Youngest Son of a Conglomerate,' holding 10.11%. After injecting $73 million in 2021, it increased its stake through additional purchases. Shortly after acquisition, both companies signed an exclusive drama supply contract with Tencent Video, China's largest OTT platform."}},{"id":"b19","type":"paragraph","data":{"text":"The three-tiered structure reveals the strategy: Tier 1 (Platform): 5.95% Kakao stake to integrate WeChat-Kakao ecosystems. Tier 2 (Production): SLL Central, SM, YG stakes to secure original drama and K-pop IP. Tier 3 (Distribution): Tencent Video exclusive supply to monopolize Chinese OTT channels. Complete vertical integration—holding stakes simultaneously in companies that make Korean content and those that distribute it."}},{"id":"b20","type":"delimiter","data":{}},{"id":"b21","type":"header","data":{"text":"Naspers' Philosophy — 'Own but Don't Interfere'","level":2}},{"id":"b22","type":"paragraph","data":{"text":"Tencent's investment philosophy stems from Naspers, its largest shareholder. It secures board nomination rights while minimizing management interference. Operations are left to founders; financial returns are pocketed. Meanwhile, content from invested firms is drawn into Tencent's ecosystem to generate global publishing revenue."}},{"id":"b23","type":"paragraph","data":{"text":"Reports have surfaced of Tencent considering a $10 billion Nexon stake acquisition and proposing a 40% Kakao Mobility stake. Tencent denied both; Nexon and Kakao Mobility remained silent."}},{"id":"b24","type":"delimiter","data":{}},{"id":"b25","type":"header","data":{"text":"Risk — A Double-Edged Sword","level":2}},{"id":"b26","type":"paragraph","data":{"text":"Tencent's expansion carries two categories of risk."}},{"id":"b27","type":"paragraph","data":{"text":"First, Tencent's own risk. After Xi Jinping's 'common prosperity' declaration, Chinese Big Tech regulation caused Tencent's stock to plummet over 60% from its peak. Though protected by government to dominate the domestic market, it remains equally vulnerable to state control."}},{"id":"b28","type":"paragraph","data":{"text":"Risk to Korean companies also exists. In January 2025, the U.S. designated Tencent as a 'Chinese military enterprise.' This creates potential barriers for Korean firms with Tencent stakes entering the U.S. market. Persistent concerns about historical revisionism through gaming IP and content censorship pressure also loom. This is why the label 'Northeast Asia Project capital' has emerged."}},{"id":"b29","type":"paragraph","data":{"text":"Underlying all this is anticipation of lifting China's ban on Korean Wave content (Hallyu ban). With the Chinese government expanding economic cooperation with Korea, conventional wisdom holds that Tencent is seeking to monopolize the gateway for Korean Wave content's entry into China."}}],"version":"2.28.2"}