Tencent Buys US Game Developer Riot Games for $400 Million

Tencent, the largest Chinese internet company, has acquired Riot Games, an US-based game developer. Tencent is said to have paid about $400 million for its majority stake in the company which values the game maker at $472 million. It's one of the biggest investments by a Chinese web company in the US.

"We shared a philosophy and built a mutual respect with Tencent,” Brandon Beck, CEO of Riot Games, told VentureBeat in an interview while confirming the acquisition.

"It is an interesting time for games. Social and mobile games are very interesting, but it’s not our focus. We are very focused on core game experiences, which are also evolving from a packaged good to an online service," he added.

Riot Games is the creator of "League of Legends" an online game inspired by the Warcraft 3 mod Defense of the Ancients.

The game is free to play and relies on micro-transactions and the sale of virtual items for revenue. It has been fairly popular since its release in 2008 and has over one million players.

It's this game that piqued the interest of Tencent. The Chinese giant had already signed a deal to distribute the game in its home country.

Free online games are incredibly popular in China and where the use of virtual currency and items as a means to make money was pioneered.

Tencent will now be buying the company altogether, though it won't have an 100 percent stake since the management team will be keeping its shares.

Tencent is a giant in China and has over 600 million users of its QQ instant messaging service. It also owns and operates a myriad of services on top QQ, aggressively moving into new markets and leveraging its huge number of users. It is also a player internationally, it has a 10 percent ownership of DST the Russian group with stakes in Facebook, Groupon and Zynga.