BEIJING, December 12 (TMTPost)— Tencent Holdings Limited will sell its animation and comics business to its spinoff as the largest social media and video games company in China keeps increasing cost cuts and improving efficiency.

Credit：Visual China

China Literature Limited, the country’s largest online self-publishing and intellectual property (IP) incubation platform,  has entered into an asset transfer agreement with Tencent to acquire the related assets of Tencent Animation and Comics, including Tencent Animation and Comics’ applicatioin platform, the IP rights and related rights to its content, and its animation, film and TV series projects, for an aggregate cash consideration of RMB600 million (US$83.6 million).

Established in 2012, Tencent Animation and Comics is a leading animation and comic platform in China. It has nurtured an ecosystem for animation and comic creators and consumers, and incubated top-tier IPs including The Outcast, The Fox Spirit Matchmaker and Spare Me, Great Lord! . Among these, the comic title The Outcast has a popularity index of 30 billion and a rating of 9.8 out of 10 on the Tencent Animation and Comics platform, and its adapted animation series has accumulated over 6.5 billion video views. Another popular title, The Fox Spirit Matchmaker, has been added to 5.5 million users’ reading lists on the Tencent Animation and Comics platform, and the adapted animation series has received over 11 billion video views.

China Literature, waas listed in Hong Kong in 2017 after Tencent’s spinoff. The company is dedicated to building a deep and immersive IP universe for the Mandarin-speaking world and incubates original IPs from its online literature platform. It works with its shareholder and strategic partner Tencent and other third party partners to distribute and develop IP content and enhance value of its IP.  As the largest content provider of Tencent Animation and Comics, China Literature’s acquisition is right riding the wave of combining culture and comic in the content market. The deal can expand China Literature’s IP tool with more popular Chinese comic IP such as the Fox Spirit Matchmaker and improve the overall efficiency and effectiveness of Tencent-backed company’s IP industry chain.

“This acquisition will enrich China Literature’s reservoir of blockbuster IPs, bolster our pipeline of comic adaptations, and further expand our production capacity for animation,” said the CEO  Hou Xiaonan, noting that approximately 50% of Tencent Animation and Comics’ top 30 best-selling titles originate from China Literature’s IPs. Hou said his company intends to leverage artificial intelligence (AI) technologies to empower the adaptation of online literature into animation and comics, accelerating the visualization process of text-based IPs and thereby enhancing the efficiency of our IP commercialization efforts.

China Literature also announced it will expand partnership with Tencent on short drama publishing, cloud service. The two pair are expected to jointly publish about 40, 100 and 160 short drama projects each year from 2023 to 2025.
For Tencent, the latest deal could be another sign to streamline its businesses as Chinese internet giant’s ongoing effort for cost reduction and efficiency improvement is paying out. In the quarter ended September 30, Tencent’s total revenue surged 10% year-over-year (YoY) to RMB154.6 billion, slightly less than the analysts’ forecast of RMB154.8 billion. The net income slid 9% YoY to RMB36.2 billion but it grew 38% quarter-over-quarter (QoQ), better than the Wall Street expectation of RMB32.38 billion, and the operating profit fell 6% YoY to RMB48.48 billion with a QoQ growth of 20%, also above the estimated RMB43.4 billion. On the Non-IFRS basis, Tencent increased the net income 39% YoY to RMB44.92 billion beating analysts’ estimated RMB39.98 billion, and the operating profit of RMB55.48 billion delivered a 6% YoY decline and a 20% QoQ increase.

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