Master the Meta: Why Bytedance is acquiring Moonton for $4 billion

Owen Soh breaks down the latest M&A

Master the Meta: Why Bytedance is acquiring Moonton for $4 billion

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Bytedance made a big splash this week, outbidding Tencent to acquire Moonton Technology for roughly $4 billion, the company’s largest mobile game studio acquisition to date.

More specifically, Moonton was acquired via Bytedance’s game unit, Nuverse.

So who is Moonton? And why did Bytedance pay a cool $4 billion for it?

Moonton Technology, based in Shanghai, is the maker of Mobile Legends: Bang Bang (MLBB) one of the most popular multiplayer online battle arena (MOBA) games in Southeast Asia.

Mobile Legends: Bang Bang is a 5-vs-5 MOBA similar to the likes of League of Legends and Arena of Valor. In fact, it’s so similar to League of Legends that Riot actually filed a lawsuit against Moonton in 2017.

While that case was dismissed in the Central District Court of California, Tencent (Riot’s parent company) filed a separate suit against Moonton’s co-founder, Watxon Xu (previously a senior ex-Tencent employee) for violating a non-compete clause. Tencent won a settlement of $2.9 million.

MLBB’s main market is Southeast Asia (SEA) - a region with a combined population of 650 million - and MLBB is a top-five grossing game on average across all 10 SEA countries.

SEA’s esports audience was just shy of 30 million at the end of 2019, up 22 per cent from 2018, and MLBB currently is the second most popular esports game in the region (33 per cent of viewers). The top spot goes to PUBG Mobile, which is watched by 40 per cent of SEA’s esports audience.

It’s likely that this acquisition signals that Bytedance will put a concentrated effort into SEA’s esports market.

Given that SEA esports is increasingly dominated by Tencent, MLBB provides a powerful (and maybe the only) opportunity to enter the market via its wide player base and existing SEA esports partnerships.

In the recently announced 31st SEA Games event, only two of eight games (Mobile Legends and FIFA Online 4) were not affiliated with Tencent. As mentioned in a previous newsletter issue, Tencent is the dominant force in Chinese esports since it has vertically integrated content, tournaments, and offline plus online distribution.

Next up, the game plan for Bytedance Nuverse is probably to push more esports content into SEA, including their shooter games Strike Royale and Terminal Battleground.

The company’s TikTok app will cover online viewership, but they’ll still need an equivalent of Tencent’s VSPN for offline tournament events expertise. Perhaps the hosts of 2021 Singapore Dota 2, Bucharest-based PGL or esports media ONE Esports, could be the next buy. 

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