After a significant increase in spending over the past six years Tencent it now appears to be backing away from several investments in game studios it sees as underperforming. As a whole, Tencent has recently been cutting back on its investment in games, canceling games and leaving several studios in need of cash as the company navigates the changing gaming landscape.
Tencent is a huge Chinese technology and entertainment conglomerate that has grown in size in recent years. The company boasts of owning the entirety of Riot Games, makers of mega-hits such as League of Legends and Valiantwhile also holding significant financial stakes in companies such as FromSoftware and Epic Games. However, since 2020, Tencent has been investing even more heavily in foreign game companies, and in 2025 it invested up to US$1.25 billion in Ubisoft. However, as the gaming world began to change due to rising production costs and rising technology prices, Tencent's investments are also shifting.
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Tencent is pulling out of several Japanese gaming companies
In a recent Bloomberg report, reporters Takashi Mochizuki and Cecilia D'Anastasio reported that Tencent Holdings is backing away from several investments in game studios, specifically in Japan. The only company named in the report is Marvelous Inc., the developers Daemon X Machina, A story of the seasons, and Rune Factorybut there are probably a few more in the works. Tencent appears to be shedding those investments as part of a larger restructuring of its portfolio, which will now focus on catching up with AI investing to join the ranks of Alibaba and ByteDance, which currently outpace Tencent in the sector.
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Tencent's original 20% stake in Marvelous Inc. came from a series of small bets the company made on some of Japan's smallest developers and entertainment studios, which it saw as undervalued. Along with studios like Marvelous, Tencent spent 2020 in Japan including parent company Splash Damage and Digital Extremes, which are known War frame. In total, Tencent invested in 31 companies in 2020 that may be at the top in 2026. Fortunately, some of the massive companies that Tencent has stakes in, like FromSoftware and PlatinumGames, are said to be safe from any exits at the moment.
This is just the latest development in an ongoing year in which Tencent appears to be scaling back operations and funding across several gaming investments. At the end of 2025, Tencent pulled the plug Horizon Zero Dawn a clone that has reportedly been in the works for some time.
More worryingly, Don't Nod, the development studio in the background life is strange reportedly running out of money, and Tencent is not interested in increasing its financial stake in the developer or funding its next project. Tencent is currently struggling to find its footing in an uncertain time in the gaming industry, and unfortunately, developers may end up paying the price. Where will companies like Marvelous Inc. end up? or Don't Nod after losing investors or lack of funding remains to be seen.
