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Business Deals

Tencent and Square Enix team up with global gaming ambitions

WeChat operator seeks new pastures as China cracks down on video games

Esports players compete at the 2018 Asian Games in Jakarta, Indonesia. Organized video game tournaments are becoming increasingly popular around the world.   © AP

TOKYO -- China's Tencent Holdings is launching a strategic partnership with Square Enix Holdings, maker of the "Final Fantasy" series, in order to strengthen its international presence to counter a damaging crackdown on video games at home.

Tencent, which operates the popular WeChat messaging app, will now market and sell Square Enix's games in China, the Japanese company announced Thursday.

Japanese game developers customarily pick Chinese partners for each game title, so the duo's broad tie-up -- which also including a new joint venture and cooperation on game development -- is unusual. The companies have not yet decided on when to create their venture or how to split ownership, Square Enix said.

Tencent's abundant resources will likely be a boon for Square Enix, given the rising cost of game development. And the games could be marketed through Tencent's distribution platform that it said last month will be made available worldwide. They seek stronger collaboration amid the rise of esports -- multiplayer video game competitions.

China's gaming industry has been rattled by Beijing's freeze on video game approvals. Japanese developer Capcom's "Monster Hunter: World," distributed by Tencent, was pulled just a few days after its release.

"We will have to continue monitoring the business trend in China," said a public relations officer at Square Enix.

Tencent's revenue from its games business surged 51% surge in 2017 to $18.1 billion, according to research company Newzoo. The company is expanding its worldwide gaming operations through acquisitions and other steps.

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