Thoughts Re: Tencent Investing in Grinding Gear Games

I’m not sure how to feel about the acquisition of Grinding Gear Games by Tencent.

First off, I want to clarify the title of this article, which was inspired by the title given by Chris Wilson, lead developer of Path of Exile (PoE) and co-owner of Grinding Gear Games (GGG). I use “investing” since that’s the term that Chris used in the title; I’d venture that I’d probably use the term “acquired” or “has majority share”, since Tencent now owns 80% of GGG. Here’s a link to the original forum post for those interested: Tencent has Invested in Grinding Gear Games

Quick Breakdown

I’m a software engineer and not so much of a writer, so here’s a quick breakdown of the players and the scenario that just went down:

  • Grinding Gear Games is a video game development company based in Auckland, New Zealand. They were founded in 2006.
  • GGG’s first title, Path of Exile, entered open beta early 2013, with the full game being released October 2013. The game was crowd funded successfully; during closed beta, Path of Exile received US $2.2 million in crowd-sourced contributions.
  • Path of Exile is a free to play action roleplaying game (ARPG) which features a real-time isometric-view playing experience where a player controls a character that kills monsters which both award experience points and drops loot, both of which are used to improve one’s character to defeat more challenging encounters.
  • Path of Exile’s business model is to provide “ethical microtransactions (MTX)”, which are in-game cosmetic or quality-of-life (QoL) improvements to the game. Examples include armor skins, skill effect graphics changes, and additional stash tabs for storing acquired loot.
  • Tencent is a Chinese multinational investment holding conglomerate, with many subsidiaries ranging from entertainment, internet-based software, artificial intelligence, and technology. They are based in Nanshan District, Shenzhen.
  • Tencent Games is a subsidiary of Tencent,  it also happens to be the largest gaming company in the world by revenue and market value. They invest in both mobile and video games; arguably the most well-known mobile game they own is Clash of Clans. Familiar game titles owned or invested by Tencent include League of Legends, Fortnite,  Smite, ArcheAge.
  • GGG has actively been working with Tencent for over two and a half years; they were contracted by Tencent to create a Chinese version of Path of Exile, which entered open beta in August 2017.

Personal Experience

When I’m not slinging code and writing business applications, I’m an avid player of computer and video games. I currently play computer games mostly (I really need to get through my Steam collection), but also currently have a PS4, Xbox 360, and a Nintendo Wii hooked up and ready to my TV. I have a Nintendo 3DS that goes with me on light rail commutes, and a SEGA Genesis that’s currently in storage (with Shadowrun <3). I used to own other consoles, but I’ve decluttered many of them to friends, including a PS2, a NES, and a SNES.

I started really getting into Path of Exile in 2016 , when I purchased my first Supporter Pack (a bundle of MTX, coins to purchase additional MTX, and physical rewards). As a general rule, I usually opt out of purchasing MTX in the games that I play; I rarely bought Hearthstone cards, even when I was obsessed with the game. Path of Exile quickly became an exception, mainly because of their track record of ethical microtransactions and being generally open and receptive to player feedback, plus being an independent developer. Since then, I’ve spent over $500 in Supporter Packs to support Grinding Gear Games, and it *felt good* doing so; it felt rewarding being a patron for what I felt was an underdog in the video game community. I wear my two Path of Exile shirts with pride whenever I can. I would turn a blind eye to how pricy the MTX would normally be, just chalking it up to the price of being able to support an independent game developer.

Games as a Coping Technique

I started delving hard into Path of Exile in 2017, when it became a pillar of support through some difficult times in my life. I had played semi-regularly before December 2017, but a life event happened that I was increasingly ill-prepared to cope with. While I was on vacation in another state, my father suffered a massive stroke. I cut my vacation short, taking an emergency flight back to Denver to be at his side in the hospital for over a week, before his transfer to a rehabilitation facility that would be his home for the next two and a half months. I would visit him every day (if possible) for several hours, which was made easier by being between jobs after a layoff.

One thing that helped me during this time was being able to play Path of Exile. Here was something that I *could* control, planning out my character development and build tree, whereas I couldn’t control anything with what was happening to my father. It made me feel powerful, where I could kill entire groups of monsters in a single click, whereas at the rehab facility I could only watch, powerless, and hope that *today* was the day when my dad could finally move his finger for the first time, or if he could regain his swallowing. I could sit and play and process my feelings safely; Path of Exile gave me that for those three months, and for that I’ll ever be thankful. Games *can* be therapy.

I’ve made it a point since then to be a patron for GGG, to let others know how excellent of a game Path of Exile is; to encourage people to try the game out. I’ve become a patron for other entertainment that helped me through my struggle (Girl Ship TV is another one that I’ve become a patron for, I highly recommend checking them out if you’re a fan of queer content).

One of the main reasons why I suppose I’m struggling so much with the Tencent news is that I’m concerned about where my continued patronage support would actually go. I have no qualms when I know my support is going to support an independent game developer; I do have qualms when 80% of the profits of my supporter pack purchase is going off into a conglomerate. It seriously makes me reconsider purchasing further supporter packs, which I know isn’t ideal from a “support GGG” perspective, since that not only lowers the bottom profit line, but also would increase GGG’s reliance upon Tencent and the MTX support coming from the Chinese client.

Intellectual vs Emotional

I would be amiss if I didn’t step away from the emotional side of the decision and acknowledge how intelligent of a decision overall is for GGG. The open beta for the Chinese client of Path of Exile was staggering in its reception, which is plainly seen in how eager Tencent is in purchasing 80% of GGG less than a year after the open beta’s release. China is the largest economy in the world, ranking #1 in 2018 for GDP purchasing power parity. Tencent has plans for the Chinese PoE client, which is plainly stated in Chris Wilson’s statement on the “investment”, and it would not be surprising if many of them involved microtransactions to the game. This can be surmised from the following quote from the announcement:

Will Path of Exile become Pay to Win?
No. We will not make any changes to its monetisation on our international servers.

This more than anything concerns me, in that the Chinese client has some arguably less-than-ethical microtransactions, such as a “Revive coin” that can be purchased to remove experience loss penalty when attempting to revive at higher levels. It’s a good thing that they’ve kept it out of the international PoE client, but it is one mark against global ethical microtransactions. Regardless, if Tencent and GGG have additional plans for similar microtransactions for the Chinese PoE client, they stand to earn a lot of money from this deal.

Qualms about Acquisitions

I have other qualms about the acquisition, mainly because I’ve read enough business-speak (and have worked in other companies that have been acquired) that I put little faith and stock into common statements that turn out to be patently false.

One of the most common statements is that nothing will change under the change in ownership. We’ve seen it happen time and time again, and changes *always* happen.

Another statement is about project prioritization, about whether or not it’s going to change the prioritization and release of features of Chinese vs International PoE clients. There’s some side-stepping that occurs in the investment statement:

Will the Chinese version get some features ahead of the international one?
We develop almost all features on the international version. But sometimes, Tencent will request features that they want to try in the Chinese version that we don't plan to roll into the international version. If those features turn out to be a really good fit for both versions, then we of course port them back into the international version.

There’s an easier answer to this question: “Yes, the Chinese version will get some features ahead of the international one.”

Aside from those statements, there are other things that come along with conglomerates owning IPs that concerns me, the majority of which are litigation and other heavy-handed tactics that comes with massive companies that try to muscle other smaller companies out of business or into acquisitions.

Finally, the most unsettling thing was that it was /difficult/ to gather a lot of intel on Tencent. Perhaps there are others out there that are better with sleuthing than I am, but I also feel like I can chalk this up to what happens with large companies, where if they have a massive presence in internet and social media, they can get away with doing problematic things for a substantial period of time without getting caught. The things that I did find, however, were messed up and extremely problematic.

My Takeaway

My decision about what to do in the face of this news is relatively simple, but it doesn’t make it easy.

  • I’ll continue to play Path of Exile as long as it remains free to play (which I see being still the case), and as long as it’s interesting to play.
  • I’ll cease purchasing supporter packs and buying MTX for the foreseeable future.
  • I’ll take the money that I would have normally spent on supporter packs and instead support independent games. Example: I’ve been meaning to support Sean Bouchard and his latest game, From Ivan.
  • I’ll continue telling my friends about the game if the gameplay continues to be excellent, but I will mention that Tencent now owns Path of Exile, so consider where one’s money is going.