ByteDance has gained significant mobile gaming studio Moonton, highlighting its aspirations in the video game industry and pitting it in opposition to Chinese giant Tencent.

Known as the owner of TikTok or Douyin in China, ByteDance is looking to diversify past advertising and take a cut of the $86 billion mobile gaming market just as grow its footprint internationally.

ByteDance’s gaming arm Nuverse, established in 2019, was behind the acquisition.

“Moonton is the perfect partner to help expand our gaming strategy in international markets,” ByteDance said in a statement.

Reuters detailed that the deal valued Moonton at $4 billion, refering to two unnamed sources. ByteDance declined to comment on the value of the deal.

“This is a mega deal in the global gaming industry, not only within China. So the M&A craze in the gaming sector continues, and I believe ByteDance is still on the lookout for other studios,” Serkan Toto, CEO of consultancy Kantan Games, told CNBC.

“Be prepared for a long war between Tencent and ByteDance for acquiring game content.”

ByteDance’s international push

Tencent is a world leader in mobile gaming and behind a portion of the top titles. It has managed out how to do this in the past few years through acquisitions and taking strategic stakes in smaller companies just as developing its own titles. This has permitted Tencent to have a extensive portfolio of games that to rake in money for the organization.

It has additionally permitted Tencent to grow globally, an accomplishment that ByteDance is likewise hoping to achieve.

Moonton is well known for “Mobile Legends” a so-called multiplayer online battle arena (MOBA) game where teams fight each other in huge virtual arenas. Popular titles in this category include Tencent’s “Honor of Kings” and “League of Legends” which was created by Riot Games.

“Mobile Legends” is well known in southeast Asia. Also, ByteDance a year ago partnered with gaming firm Gravity to release “Ragnarok X: Next Generation” in the district.

“Bytedance is taking a global approach to its video game business from day one,” gaming analyst firm Niko Partners wrote in a note to clients.

TikTok leverage

ByteDance works short video application Douyin in China and TikTok in international markets. A year ago, ByteDance said Douyin had 600 million every day active clients and that TikTok had 700 million month to month active clients.

The organization could utilize the social media platform to promote games and attract users.

“With Bytedance at the helm, the two firms (Moonton and ByteDance) could leverage TikTok / Douyin to promote Mobile Legends in markets such as China and the US where Tencent’s Honor of Kings and Riots’ League of Legends: Wild Rift are the dominant mobile MOBA titles,” Niko Partners said.

In any case, ByteDance will most likely be unable to depend on acquisitions alone to be successful in gaming.

“The biggest challenge for Bytedance will be to create a self-developed hit that it can operate over the long term. Hence why it is signing publishing deals to publish games based on popular IP and acquiring game development firms with a proven record of success,” Niko Partners added.