This article is reproduced from IT House
Capital surges in the game industry.
On March 22, Mutong Technology CEO Yuan Jing issued a letter to all employees, announcing that Mutong Technology and ByteDance's game business brand Chaoxi Guangnian reached a strategic acquisition agreement. After the acquisition, Mutong Technology will maintain independent operations and strengthen its in-depth integration with ByteDance in the fields of games and e-sports to jointly develop the global game market. At the same time, Yuan Jing will continue to serve as CEO, and Mutong Technology's reporting lines will remain unchanged.
The Passage Network quoted people familiar with the matter as saying that the acquisition of Bytedance paid 10 billion yuan in cash and 15 billion worth of equity, and paid a consideration of about 4 billion US dollars. Lieyun learned from industry insiders that the acquisition amount may be as high as US$5 billion. So far, the two parties have not responded to the purchase amount.
The person familiar with the matter also revealed that the domestic game "overlord" Tencent also tried to acquire Mutong Technology. It is reported that there have been entanglements between Tencent and Mutong Technology for many years, and the litigation battle between the two parties has not ended yet. Mutong Technology was also sentenced to more than 19.4 million in compensation to Tencent for violation of the confidentiality agreement and commercial prohibition agreement by its founder Xu Zhenhua, setting a record for the highest compensation in similar cases.
Byte and Tencent are competing to acquire, who is Mutong Technology?
Mutong Technology was established in 2014, and in September of the same year, it received an angel round of financing for the innovation factory. Considering that competition in the domestic game market is already fierce, Mutong Technology, whose initial team has only 20 people, chose to go overseas. In the past seven years, Mutong Technology has grown into the largest MOBA game company in Southeast Asia and one of the game companies with the most overseas users.
Soon after the birth of Mutong Technology, there were explosive games. "Magic Rush: Heroes", which was launched in April 2015, was rated as one of the best games of the year on Google Play in December of that year. The self-developed MOBA mobile game "Mobile Legends: Bang Bang (Endless Showdown)" launched in November 2016 is even more popular in Southeast Asia. Saying no heartbeat is false, after all, it has been two years since the official announcement of the game, and ByteDance is still waiting for a hit.
"Endless Duel" has set a number of domestic mobile games overseas records, topped the App Store best-selling rankings in 13 countries around the world, and ranked in the top ten best-selling rankings in 53 countries around the world. Up to now, the number of global monthly active users of the game has exceeded 90 million, and all of them are overseas users.
Source: SensorTower
"Endless Showdown" is also the "money printing machine" business of Mutong Technology, and its ability to attract gold should not be underestimated. SensorTower data shows that the annual growth rate of the global revenue of "Endless Showdown" from 2017 to 2019 was 36%. As of the beginning of 2020, the game's total revenue has reached 502 million U.S. dollars, and revenue in 2019 alone reached 214 million U.S. dollars. Among them, Southeast Asian players contributed a total of 307 million US dollars, accounting for 61% of the game's total revenue. In addition, Mutong Technology ranked among the top ten in the revenue ranking of Chinese game overseas manufacturers released by App Annie in 2019.
In this way, Mutong Technology does have the capital to be bid by the giants.
Lawsuits continue, the founder of Mutong was sentenced to pay Tencent more than 19.4 million
The entanglement between Mu Tong and Tencent started with the ex-employee leaving Tencent.
Xu Zhenhua, the founder of Mutong Technology, joined Tencent in 2009 to be responsible for online game operations. He is one of the main R&D leaders of "Plants vs. Zombies Online" and "Legend of Xuanyuan". In January 2014, Xu Zhenhua, who was still working at Tencent, established Mutong Technology. After leaving Tencent in May, he joined Mutong Technology. After that, Xu Zhenhua established 3 more subsidiaries.
It is reported that 70% of the team members come from well-known game companies such as Tencent, Xishanju, Giant, etc., and have participated in the production of many successful games with monthly revenues of more than 50 million in the Chinese market. Among them, Yu Jun, CTO of Mutong Technology, is from the Tencent Game "Tribal Guardian War" team.
Public information shows that since its establishment, Mutong Technology has had many litigation battles with Tencent, involving copyright ownership, infringement disputes, and commercial defamation disputes.
In 2017, Tencent’s Riot Game Studio sued Mutong’s three games "Mobile Legends: 5V5 MOBA", "Mobile Legends: Bang bang" and "Magic Rush: Heroes" for allegedly plagiarizing "League of Legends" and demanded Mutong Technology paid a total of US$150,000 (approximately 1.02 million RMB) and immediately ceased operations. In this regard, Mutong Technology publicly denied plagiarism and stated that "Mobile Legends" is a self-developed game with independent intellectual property rights.
From a legal perspective, the Mutong Technology plagiarism case has been tried more than a dozen times, and so far there is no conclusion. However, a lawsuit between Tencent and Mutong founder Xu Zhenhua set a record for the highest compensation in a similar case. In June 2017, Tencent filed a lawsuit for Xu Zhenhua's breach of confidentiality agreement and commercial prohibition agreement.
The case shows that in the labor contract signed between Xu Zhenhua and Tencent at the time of employment, the two parties agreed that the 200 yuan/month in the remuneration system was the compensation for Xu Zhenhua's non-competitive obligation after he left. However, in 2009 and 2012, the two parties successively signed two "Confidentiality and Non-competition Commitment Agreements" with the same main content. According to the agreement, Tencent Holding Company granted Xu Zhenhua restricted stock as consideration. Tencent returned all the proceeds from the exercise of restricted stocks during the tenure.
In view of the fact that Xu Zhenhua, while receiving huge compensation from Tencent for restricting competition, established a company on his own during his tenure, and operated the company after resignation, and the business scope of the four companies that were created successively overlapped with Tencent and its affiliates. Therefore, the court found that Xu Zhenhua violated the competition. Business restriction obligations. In the judgment of the first instance, the court required Xu Zhenhua to pay Tencent’s liquidated damages of more than RMB 3.72 million, and both parties filed an appeal.
The second-instance judgment once again clarified the fact that Xu Zhenhua violated the competition restriction, and revised the sentence based on the proceeds. The final judgment showed that 15,832 shares should be used to calculate the income, and Xu Zhenhua was required to pay Tencent RMB 19.4 million.
Since then, the two sides have also had many rounds of judicial disputes.
Under such a tense relationship, Tencent chose to bid for Mutong Technology with ByteDance, perhaps to guard against the impact on overseas business. In addition, Jinghe mentioned in the report that market speculation that Tencent’s move was to raise the price. The price makes bytes pay more.
Can the acquisition of Mutong make up for the genetic defects of byte game?
Anxious to expand in the game industry but lack the byte beating of game genes, it has been in the capital market for two years. Last year, the Touteng two launched fierce competition, aggressively acquiring and investing in game companies, and the domestic market has entered a situation where there are more monks and less meat. According to statistics, Tencent has invested in 26 game companies in 2020. This year, Tencent has accelerated the pace of investment and mergers and acquisitions. So far, Tencent has announced that it has invested in more than 20 game companies. ByteDance, which had not robbed Tencent at the time, decided to acquire Mutong Technology, starting a new round of capital war.
This time, Bytedance is also determined to increase investment in the game business. Not long ago, ByteDance also established the Morning Light Year Fantasy Fund to support traditional mature categories of games and unique categories of innovative games in order to improve its own game business capabilities.
However, ByteDance's game business is not ideal, and it has been looked down upon by the outside world due to lack of products and no heavy games. China Business News quoted investors’ opinions that the acquisition of Mutong Technology meant that Bytedance’s game business had a “hands” to take off. It believed that after the acquisition of Mutong Technology, Bytedance had gained the advantages of the latter, including Explosive heavy games, MOBA, e-sports ecology, etc.
In addition, combined with the previous acquisitions of Microgames, Stop Yu Zhishan, Gem Air and other overseas game companies, it is not difficult to see the ambition of Bytedance to develop the global game market. Microlab Games focuses on the European and American markets, but Zhishan has a good performance in the Japanese market. "Ragnarok RO: The Birth of a New Era" developed by Gem Air is currently the only product that can match the ByteDance head Internet company's coffee position. After the game was launched on the App Store and Google Play dual platforms in Hong Kong, Macau and Taiwan, it reached the top of the dual platform game list and continued to dominate the list for more than 30 days.
However, Mutong Technology's product research and development experience still has certain limitations for ByteDance's deployment in China and even the global market. At present, the trend of mobile games in the global market is obvious, but due to hardware and other facilities, Southeast Asia is still in the middle and early stages of mobile game development. It is the first priority to ensure a smooth game experience, and graphics, models, etc. can be made for this. sacrifice. Whether Mutong Technology's successful experience in Southeast Asia can be replicated in the global market is yet to be known, but it is certain that it lowers the threshold for entering competitive games for ByteDance, and provides a reference for product operation and construction of the system.
The launch of "League of Legends Mobile Games" will also share users of "Endless Duel". "League of Legends Mobile Games" will be launched in 12 countries and regions including Japan, South Korea, Indonesia, Malaysia, etc. at the end of October 2020, and will be launched in Taiwan, Vietnam, Oceania, Europe, the Middle East, North Africa and other regions successively in mid- to early December. With high game popularity, in the six Southeast Asian countries, the game has dominated the dual-platform download list for more than a week after it was launched. Sensor Tower data shows that as of December 16, 2020, "League of Legends Mobile Games" has received a total of 12.5 million downloads worldwide, attracting $10.5 million.
In terms of the life cycle of the game, "Endless Duel" has been born for five years, and it can be said that it has a long life. After "Endless Duel", Mutong Technology has no more popular games, and even Mutong Technology's official website only showed three games. In the era of rapid growth and death of mobile games, Mutong Technology will inevitably be anxious, and it is also waiting for the next explosion.
As for the qualitative leap of the Bytedance game business, it will take time to verify.