Tencent negotiates exits from Japan game studios to fund AI push

Tencent Mulls Exits From Japan Game Studios Including Marvelous

Tencent Holdings is negotiating exits from several game studio investments in Japan, including Tokyo-traded Marvelous, as part of a sweeping reassessment of its global portfolio, according to people familiar with the matter.bloomberg

Redirecting Capital Toward AI

The Chinese gaming giant is evaluating its minority holdings across multiple studios and in some cases is preparing to sell stakes back to original management teams, even at a loss, the people said. Among the criteria for exiting an investment, Tencent considers whether its envisioned synergies with a portfolio company have lapsed, according to one of the people, who asked not to be named discussing private deliberations.moneycontrol

Marvelous highlighted a flurry of deals Tencent struck in Japan around 2020 in a push to acquire minority stakes in creative houses it deemed undervalued. It is now on the chopping block along with other names in the country that Tencent sees as underperforming. Stakes in marquee studios like PlatinumGames and Elden Ring maker FromSoftware and its parent Kadokawa remain unaffected, the people said.moneycontrol

AI Arms Race Drives the Shift

The divestitures come as Tencent accelerates spending on artificial intelligence to compete with rivals Alibaba and ByteDance. In March, the company disclosed plans to more than double AI capital expenditure to over 36 billion yuan ($5.2 billion) in 2026, up from roughly 18 billion yuan spent in 2025. To fund the pivot, Tencent said it would reduce share buybacks, and executives framed gaming’s role as primarily generating the operating cash flow that underwrites the AI push.reuters

“Video games are core to Tencent’s business,” the company said in a statement reported by Bloomberg. “We remain fully committed to working with our investees and maintaining our strong presence in the Japanese game market over the long term.”moneycontrol

Broader Portfolio Pressures

The Japan exits add to mounting pressure on Tencent’s sprawling gaming empire. Earlier this year, the Trump administration weighed whether to force Tencent to divest Western gaming holdings including Riot Games and Epic Games, according to a Financial Times report. The voluntary Japan pullback suggests the company is pre-emptively trimming positions it considers nonstrategic as it channels resources into a technology race it views as existential.reddit