The biggest trend in video games right now isn’t halfway Ring of Elden scams (again) – this is consolidation.
Over the past few months, historic deals have been struck between some of the biggest names in the industry – Microsoft and Activision, Sony and Bungie, and Take-Two and Zynga – and the phenomenon shows no signs of slowing down. Now, the latest rumor of a big merger revolves around a major player in the Chinese gaming market and an idiosyncratic French studio mired in recent controversy.
A March 30 post from the Dubai-based gaming blog eXputer by industry insider Tom Henderson claims that NetEase is in advanced talks to acquire Quantic Dream, the studio known for story-driven action-adventure games like Detroit: Become Human and Heavy rain. Henderson has a history of accurate leaks regarding the Call of Duty franchise, EA, and DICE. While it’s understandable that Henderson can’t name names in this situation, it’s nonetheless unclear how his sources are able to know so much about Quantic Dream’s future plans. We don’t know if these are current or former employees, or studios that work with Quantic Dream on a project basis.
The Chinese tech giant bought a small stake in Quantic Dream in 2019. What would be the benefits of taking this relationship to the next level? Reverse spoke to two industry analysts to find out just how plausible these deal rumors might be.
Extension for NetEase
On paper, such an agreement could be mutually beneficial for both parties. Chenyu Cui, Senior Gaming Analyst at Omdia, says Reverse the deal could help NetEase expand into the “console and AAA gaming space.”
Currently, NetEase has licensing agreements with Blizzard and Mojang that grant it exclusive distribution rights. Monitoring and Minecraft in China. After the successful launch of the action battle royale PC game Naraka: Bladepoint, Cui argues that NetEase is in a better position than ever to expand its reach to markets outside of China, and may feel the pressure to follow its biggest competitor.
“As Tencent accelerates investment in overseas development studios, NetEase doesn’t want to be left behind,” Cui said.
“NetEase don’t want to be left behind.”
Mike Futter, business analyst at F-Squared, agrees. “We’ve seen a growing appetite for minority investments and acquisitions from Western studios that have proven to help diversify revenue streams.”
While Quantic Dream is best known for narrative adventure games based on original IP like Detroit: Become Humanthe French studio has a big project in the works — Star Wars: Eclipse. This Star Wars license makes a potential deal “even more attractive for potential acquisition” for NetEase, Futter says.
Stability for Quantic Dream
For Quantic Dream, a possible agreement with NetEase could help obtain Star Wars: Eclipse ready for prime time sooner than the studio can currently handle. This action-adventure game with multiple protagonists is not expected to be released until 2024 or 2025 at the earliest.
A March 2022 report from Xfire – also written by Henderson – claims the game is “at least three or four years away”. This, Henderson speculates, is at least partly due to Quantic Dream’s struggles to attract development talent since 2018, after running a French newspaper. The world released a series of scathing allegations about toxic working conditions, sexual harassment and racist remarks by senior management. Many of these allegations have centered around controversial studio head David Cage.
“In recent years, Quantic Dream [was] involved in scandals and lawsuits, which led to [the] the loss of some core staff,” Cui explains. “I think the financial support from NetEase could help it to continue the development of the game.”
Futter agrees that NetEase’s “deep pockets” could solve many problems for the French studio and enable it to overcome future roadblocks from notoriously thorny Star Wars rights holder Disney.
“Self-publishing a game with a major license means you’re subject to approvals that can delay development,” says Futter. “Quantic Dream may not have the financial tolerance to do this alone comfortably.”
Although this deal is far from confirmed, Henderson’s piece in eXputer claims it will be announced in the summer of 2022. If the deal is all but done, why wait until the summer to reveal it? Analysts we spoke to said the timing would make sense.
“There are a lot of details to sort out, not to mention thorough due diligence for any transaction, especially one that crosses international borders,” says Futter.
“Quantic Dream may not have the financial tolerance to go alone comfortably.
Given that this deal is allegedly a 100% acquisition, it would likely involve a restructuring and potential reorganization at Quantic Dream. This could open the door for Cage to leave if he is seen as a potential obstacle to the success of Star Wars: Eclipse.
“Although Quantic Dream may end up operating independently – similar to the Riot-Tencent relationship, I think NetEase would still want to be engaged in Quantic Dream’s strategic plan and take care of human resources,” Cui says.
Quantic Dream representatives declined to comment for this story. NetEase representatives did not respond to Reverserequest for comments on the claims.
Star Wars: Eclipse is currently in development and does not have a confirmed release date.