(MHN Park Sung Ha) Krafton's revenue significantly relies on the success of PUBG Mobile. For this reason, Krafton has maintained a strategic partnership with Tencent, which played a key role in PUBG Mobile’s success.

However, in countries like India and the United States, associations with Chinese companies like Tencent have become a regulatory risk. Tencent serves as both an ally driving Krafton's growth and a potential risk factor.

Krafton has long relied on its cooperation with Tencent, China's largest tech company, to expand the global reach of its core IP, PlayerUnknown’s Battlegrounds (PUBG).

Tencent holds a 13.5% stake in Krafton as the second-largest shareholder, and is responsible for developing and publishing the mobile version, PUBG Mobile, globally.

PUBG Mobile, developed by Tencent’s subsidiaries Timi Studios and Lightspeed & Quantum, has become one of the biggest successes in mobile gaming history, with over 1 billion downloads and $10 billion in cumulative revenue.

This collaboration has been pivotal in Krafton's expansion of overseas revenue. In fact, as of Q1 2025, 95% of Krafton’s total revenue came from abroad, making Tencent an indispensable distribution partner and a platform provider that lowers technological and market entry barriers.

For instance, in China, where it was difficult to officially launch PUBG, Tencent altered the game to meet local regulations and published it under the name "Game for Peace" (和平精英), effectively penetrating the Chinese market through this workaround.

However, Krafton's relationship with Tencent has also posed risks in certain countries. A representative example is India’s decision to ban PUBG Mobile in 2020. The Indian government cited national security concerns and data protection as reasons for banning over 100 Chinese apps, including PUBG Mobile, due to Tencent’s involvement.

Subsequently, Krafton severed ties with Tencent in India and established a separate entity to launch BGMI (Battlegrounds Mobile India), with local servers and content, to resume services in the country.

Such incidents highlight the geopolitical risks associated with intellectual properties connected to Chinese capital.

The United States is also increasing its scrutiny of Tencent. As evidenced during the Trump administration’s attempts to impose sanctions on TikTok and WeChat, the issue of data access by Chinese tech companies has remained a persistent concern in the U.S.

As Krafton aims to aggressively target the U.S. market, the structure of its collaboration with Tencent could become a political variable.

Thus far, Tencent has been an essential partner in Krafton’s growth. However, as regulatory environments become more complex worldwide, the potential for this partnership to turn into a regulatory risk remains a significant consideration in Krafton’s strategic planning.

As a result, Krafton is balancing its partnership with Tencent by establishing independent subsidiaries, separating publishing, and localizing servers in certain regions.

For Krafton, Tencent represents both a growth engine and an external variable. How the company manages the balance between the benefits and risks of this strategic partnership will be a crucial factor in determining Krafton’s future global business direction.
 

photo=Krafton, Yonhap news, Tencent