Tencent acquires Riot Games for around $400 million

Chinese online services company Tencent as acquired a majority stake in LA-based developer Riot, which produces the competitive multiplayer RTS League of Legends.

The moves cements a long business relationship between the two companies, which began when Tencent signed a Chinese distribution deal for League of Legends in November, 2008.

In September of 2009, Tencent then became an investor in the company, alongside Benchmark Capital and FirstMark Capital as Riot was about to launch its game in the US.

Tencent has now bought out these other investors for a rumoured $400 million, leaving some stock in the hands of the management team.

The deal still leaves Riot with a largely independent remit, however, with CEO Brandon Beck telling press that Tencent see Riot more as investment partners than as a fully-owned subsidiary.

"Riot is going to remain completely independent. There are no redundancies, no layoffs, no synergy fishing, no leadership change," Beck told Gamasutra. "Nothing is going to change other than they're dramatically increasing their holding in the company. They see this more as an investment in a partner.

"We've been working together for a long time -- over two years," said Beck. "Tencent and Riot share a view of the game industry. As important as technology and IP is, the most important thing in the industry are the people and the talent, particularly when you're trying to innovate and trailblaze. To keep people exited, motivated, hungry to succeed, and maximise creativity, you have to have a really independent and autonomous structure."

Currently running in Europe and North America, League of Legends has over one million unique players each month, clocking up over a billion minutes of playtime. The game will launch in China and other international territories over the course of 2011. For a more in-depth analysis of Tencent's business and operating style, see this monthly column from investment banker Tim Merel.