Tencent snaps up 10% share of Sumo Group

Tencent has acquired a 10 per cent share of Sumo Group, the parent company of Crackdown 3 and LittleBigPlanet 3 developer Sumo Digital. The Chinese megacorp acquired 15 million shares from investor Perwyn, which reduces the latter’s stake in Sumo to 17.4 per cent. 

This means Tencent now not only owns League of Legends creator Riot Games but it also has stakes in a wide range of high profile game makers, including Activision Blizzard, Bluehole, Epic, Paradox Interactive, Sharkmob, Supercell, and Ubisoft, and partnerships with many others, including peripheral company Razer, Nintendo, and The Pokemon Company.

“We are glad to invest in Sumo Group, a leading independent co-development studio,” said Tencent Games’ Steven Ma. “We look forward to supporting Sumo’s growth and exploring collaborations with the company to bring more interactive entertainment experiences to global audiences.”

“We are delighted that Tencent have chosen to acquire a shareholding in the company, and we look forward to working with Tencent to explore co-development opportunities,” added Sumo Group CEO, Carl Cavers. “When Perwyn invested in Sumo Digital in September 2016 we were a private company with annual revenue of around £24m and operated from three studios in two countries. 

“We are now a public company and, following the recent announcement of our new studio in Warrington in the north west of England, now have ten studios in three countries and reported revenue of more than £38 million for the year ended 31 December 2018.

“I would like to thank Perwyn, once again, for their original investment and for their ongoing support of the business.” 

Sumo Group did indeed earn £38.1 million in revenue in the year ending December 31st, 2018, a 35 per cent increase year-on-year (YoY). Gross profit also increased – jumping 39 per cent YoY to £18.4 million – and EBITDA (earnings before interest, tax, depreciation and amortization) of £10.4 million, up 25 per cent YoY. However, as this is a non-GAAP (generally accepted accounting principle) metric, Sumo actually reports a pre-tax loss of £0.5 million – a significant improvement on 2017’s loss of £28 million.

Sumo Digital acquired The Chinese Room – which has since added a number of new staff “across a variety of disciplines” to its team – in a surprise move in August. The move is an important one for Sumo, which IPO late last year, with the company having previously been almost exclusively a work-for-hire studio. 

Sumo Digital also recently announced it has teamed up with Focus Home Interactive for a “multiplayer experience without compromise”. Describing the unannounced game as “as dark as it is violent”, the “first fruit of this collaboration” will be developed by Sumo Newcastle, the team behind EVE: Valkyrie.

The company also recently opened its seventh UK based studio, Sumo North West, in Warrington. Led by Scott Kirkland, the studio joins other studios across the UK in Leamington Spa, Sheffield, Nottingham, Brighton, Newcastle, and Leeds, as well as a further studio in Pune, India. Sumo Digital only moved into its new Leamington Spa office earlier this year, but already the studio is moving onto bigger premises.