China, Tencent, Hong Kong discussed on The Information's 411
So for them, they have a lot invested in the game, but but for tencent is just one of many, many games in China that operates intensive is very pragmatic. You know, they're not gonna, you know, champion one game or the other unless they think it's going to make more money. Right. And so you know, for riot, they felt that you know, maybe the game wasn't getting the attention it deserved or they thought that they could do better. In China it because they were solely focused on this one game on the heavy other games. And so that's sort of kind of the motivation. And then you know what, right it was. You know, they thought, well, let's open up an office in Hong Kong and try to get involved more in what's happening in China. Maybe if we do a good job down the road, when we release feature games, we can get a beverage revenue split. So that was the other issue is that tens of was taking seventy percent of the revenue from the game in China before you reached? Right. And so now that was a big that was fine. You know, when they signed that deal in two thousand eight for they even came was gonna. Do you know blockbuster, you know, in China, but you know, flash forward, you know, six years later in the game is most of the revenues from from China, and they're only seeing rights only seen thirty percent of it right now. Why is that an issue though? When riot is you know, ninety plus percent owned by by tencent while this don't care? Yes, because the employees, right. The employees are get paid right based on how the gaming does. Right? So you know, they're, they're not gonna see higher bonus or their shares in the company aren't going to be as valuable if the game doesn't. You know if they don't make sure the game does well in China, right? Which is a bit of a misalignment in incentives, right? I mean, theoretically, it all should be towards, you know, making parent company more successful because that's all that's who owns you. Right? Right. Yeah, you would think so from the outside point of view, but you know, once you know, I started digging digging into the motivations. I realize like, oh, this is why it's because you know the dates about, you know, you know, it's about money, it's about with employees get. Yeah. So as you reporting out this story and we talked before the podcast, but you're saying it was kind of an intense process of working on l..