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Why Did Tencent's Subsidiary Miniclip Spend $1.2 Billion To Acquire An IAA Mobile Gaming Company?

2024年11月29日 1285Browse 0Like 0Comments

Tencent’s subsidiary Miniclip recently announced a $1.2 billion acquisition of Easybrain from Embracer Group, with the deal expected to close in early 2025.

Miniclip, which joined Tencent in 2015 as a pioneer in the global casual gaming sector, has not only made significant progress in casual sports games but has also acquired over a dozen studios in recent years, greatly expanding Tencent’s footprint in the international casual gaming market.

The acquired company, Easybrain, is a top-tier developer in the casual puzzle genre, specializing in Sudoku, crossword, and jigsaw puzzle games. Just recently, Easybrain announced that its mobile games have surpassed 2 billion downloads, cementing its position in the global gaming market.

At first glance, the acquisition appears to be a union of two leading casual gaming giants. However, Miniclip’s CEO Saad Choudri has previously stated that companies should avoid over-reliance on any single monetization model. Easybrain, whose revenue model primarily relies on in-app advertising (IAA), appears to have limited room for innovation, especially in the context of rising user acquisition costs.

This raises an interesting question: Why would Miniclip pursue an acquisition that seemingly contradicts its philosophy? To understand this, we need to delve into the product philosophies and commercialization strategies of both companies.

01.Miniclip:Develop Games That Resonate With A Global Audience

In early 2022, Miniclip announced that its mobile game downloads had surpassed 4 billion. Its most popular title, 8 Ball Pool, earned a Guinness World Record in 2021 as the "Most Downloaded Mobile Pool Game," contributing over 1 billion downloads to this milestone.

Following the success of 8 Ball Pool, Miniclip shifted its focus to other sports-based games. According to AppGrowing’s Top Publishers tool, Miniclip has expanded into baseball, golf, and soccer games.

Source: AppGrowing

Miniclip's CEO has emphasized that the company aims to develop games that resonate with a global audience, with one of its primary goals being universal accessibility and appeal.

However, Miniclip adopts a cautious stance toward hyper-casual games, which prioritize download volume. This is due to their focus not only on user reach but also on player retention and daily active users (DAU), areas where hyper-casual games typically fall short.

Among Miniclip's top-advertised mobile games, all are long-running titles. In addition to the nearly 12-year-old 8 Ball Pool, the most-advertised game last month, Baseball Clash, and the third-ranked Ultimate Golf! have both been in operation for nearly five years.

Source: AppGrowing

In today’s competitive market, where acquisition costs are soaring, hyper-casual games’ heavy reliance on IAA lacks long-term potential. Leading hyper-casual developers, such as Voodoo, have been pivoting toward hybrid monetization in recent years. Miniclip's CEO shares this sentiment, advocating for a balanced revenue model that combines ads and in-app purchases.

02.Easybrain:Not A Hyper-casual Gaming Company

Easybrain specializes in puzzle games like Sudoku, crossword, and jigsaw puzzles—genres with low barriers to entry and strong global appeal. On November 14, Easybrain announced its mobile games had surpassed 2 billion downloads, highlighting their global influence.

Source: AppGrowing

Unlike hyper-casual games, Easybrain’s games often feature gameplay that is both simple and intellectually engaging, enabling long-term player retention. For example, in addition to the nearly 8-year-old Sudoku.com, the top three most-advertised products include the youngest game, Number Match, which has also been in operation for nearly 4 years.

Source: AppGrowing

From this perspective, Easybrain's products align more closely with traditional casual games rather than hyper-casual ones. They also match Miniclip’s emphasis on wide audience reach and longevity.

Despite its reliance on IAA, Easybrain’s long product lifecycles have effectively reduced user acquisition costs, driving significant revenue growth. According to Embracer Group, Easybrain’s revenue has nearly tripled over the past five years, exceeding $300 million in the fiscal year ending March 2023.

Easybrain’s advertising spend is substantial but efficient. AppGrowing data shows that Easybrain runs an average of 25,000 monthly ads, with peaks exceeding 30,000. However, its annual ad spend of less than $150 million represents only 45% of its revenue. Remarkably, its EBITDA profit margin reached 41%, far surpassing Voodoo’s 2022 margin of just 3%.

Source: AppGrowing

From a product and market perspective, Easybrain’s focus on long-lasting, globally appealing games complements Miniclip’s vision. Its strong financial performance and user base offer room for growth, particularly if the company transitions to hybrid monetization models under Miniclip’s guidance.

03.A Win-Win Collaboration For All Parties

Easybrain will continue operating as an independent developer and publisher, consistent with Miniclip’s approach of granting acquired studios significant autonomy. For instance, Sybo Games (Subway Surfers developer), acquired by Miniclip in 2022, has maintained its independence.

For Easybrain, joining Miniclip and, by extension, Tencent, provides opportunities for resource sharing and market collaboration. With Tencent’s expertise in monetization, Easybrain could explore hybrid models and unlock new revenue streams.

For Miniclip, the acquisition expands its reach into the puzzle gaming sector, complementing its existing portfolio across sports, endless runners, and simulation games. This strengthens its diversified strategy in the casual gaming space.

The acquisition also holds strategic value for Tencent’s global ambitions. Casual games account for a significant portion of mobile gaming revenue in key markets like the U.S., where they represent 60% of total mobile gaming revenue in 2023. Tencent aims to generate half of its gaming revenue from international markets, and Miniclip serves as a critical component of this strategy. Adding Easybrain’s 2 billion puzzle game users further solidifies Tencent’s influence in the global casual gaming sector.

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Tags: advertise casual games casual game Easybrain hyper casual games Miniclip Tencent
Last updated:2024年11月29日

weng, zitao

The man was lazy and left nothing behind

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