China’s game industry is still growing big despite the sluggish performance due to the government’s new regulation. Forgame, for example, acquires a majority stake in a Beijing-based VR startup. No other than to expand to the virtual reality world.
The game publisher now has 69.84% stake in Beijing Xigua Huyu Entertainment Technology Co., Ltd. For it, the company pays approximately $21.8 million.
The Beijing-based startup has around 100 VR experience stores scattered around the big cities of China. Starting from 2015, the company offers many games in the experience stores. Within the 150-200 square meters of the stores, customers can play games such as Invicible Force and Zombie Warfare.
Forgame is having VR as the company’s new project for the next ten years. Wang Dongfeng, chairman of the company predicts that the VR market will most likely grow massive in the next decade.
With the expected customers, companies are racing to make a VR content. Not only game, Chinese officials predicts that VR would be a defining medium for entertainment industry in general.
Ministry of Industry and Information Technology China stated the bright future of virtual reality in China. The industry expects annual growth rate of 95.2% within the next three years. It will grow up to $8 billion by 2021.
Forgame performance in 2018
Forgame itself reported that it has approximately $8 million of EBITDA by 2018. Wang stated that despite the harsh market environment, his company is performing steadily. Also he is confident about the future.
The company launched it’s flagship game, ‘Liberators’, globally back in 2016. By the end of 2018, the game earned the company a total of RMB 41 milion. Making it the company’s most successful game.
Xigua’s stock is not the only stock acquired by Forgame this year. Previously at the beginning of the year the company has acquired 19.99% equity interest in Tianjin LMDJ Internet Technology Co., Ltd.
The later is one of China’s most well-known e-sports venue brand. This acquisition, according to the company, signifies its commencement’s strategy to upgrade the game business.
