Tencent Is Buying Korea — Games, K-Pop, and Dramas: A Silent Encirclement

A $562B giant now connected to 60% of Korea's major game studio revenues… the reality behind the 'own but don't interfere' strategy

In 2001, South African media conglomerate Naspers invested $32 million in a cash-strapped Chinese startup. That company was Tencent. Today, Naspers' stake has multiplied hundreds of times over, and Tencent has grown into an empire with a market capitalization of $562B — larger than Samsung Electronics, LVMH, and ASML combined.

And Tencent is now buying Korea. Quietly, but systematically.

From Messenger to Empire

In 1998, Pony Ma and four college classmates launched QQ. It began as little more than a clone of Israeli messenger ICQ. But after going free-to-use, its user base exploded, making it China's dominant platform. WeChat, launched in 2011, became the digital infrastructure of Chinese daily life — combining messaging, payments, shopping, and content in a single app. WeChat Pay effectively replaced China's counterfeit cash problem with mobile payments, seizing control of the financial ecosystem.

Tencent's rise to become the world's largest gaming company followed an equally distinctive playbook: it doesn't build — it buys. The company holds 100% of Riot Games (League of Legends), 84% of Supercell (Clash of Clans), and 40% of Epic Games (Fortnite). In 2025, it expanded its stake in a newly carved-out Ubisoft gaming subsidiary (25%) and increased its holding in the parent company of FromSoftware (Elden Ring). International game revenue alone surpassed $10 billion in 2025. Unlike Alibaba's Jack Ma, founder Pony Ma is a recluse who rarely makes public appearances. Tencent's expansion happens in silence.

Korea Stake Map — The 'Second-Largest Shareholder' Strategy

There is a clear pattern to how Tencent invests in Korea. It does not pursue controlling interests. It quietly settles in as the second-largest shareholder.

Tencent holds 34.85% of Shift Up — just 3.5 percentage points behind founder and CEO Kim Hyung-tae's 38.43%. It is the second-largest shareholder in both Netmarble (17.52%) and Krafton (13.86%). Additional stakes include SLL Jungang (JTBC Studios) at 10.11%, SM Entertainment at 9.7%, Kakao Games at 6.6%, Kakao at 5.95%, and YG Entertainment at 4.3%. This is why analysts estimate that 60% of major Korean game studio revenues are now structurally connected to Tencent.

The SM Acquisition — Penetrating the Heart of K-Pop

On May 27, 2025, Tencent Music Entertainment (TME) acquired HYBE's entire stake in SM Entertainment for approximately $167M. Tencent moved in as HYBE divested the shares it had accumulated during the 2023 SM management dispute, treating them as non-core assets. SM immediately announced plans to 'build a comprehensive idol success model' with Tencent Music, and SM's revenue for the following second quarter rose 19% year-over-year.

The combined market capitalization of Korea's Big Four agencies — HYBE, JYP, YG, and SM — is less than one-fortieth of Tencent's. The asymmetry at any negotiating table is absolute.

Into K-Dramas — A Three-Tier Vertical Integration

Tencent's penetration of Korea extends beyond games and K-pop. It is the third-largest shareholder in SLL Jungang (formerly JTBC Studios) — producer of Extraordinary Attorney Woo and Reborn Rich — with a 10.11% stake. After committing $69M in a 2021 rights offering, Tencent subsequently increased its position. Immediately following the investment, the two companies signed an exclusive content supply deal for Tencent Video, China's largest OTT platform.

Viewed as three distinct layers, the strategic logic becomes clear. Layer one (platform): a 5.95% stake in Kakao enabling ecosystem linkage between WeChat and KakaoTalk. Layer two (production): stakes in SLL Jungang, SM, and YG to secure original IP across K-dramas and K-pop. Layer three (distribution): exclusive supply through Tencent Video into the Chinese OTT market. It is a complete vertical integration — with equity in both the creators and the distributors of Korean content.

The Naspers Philosophy — 'Own, But Don't Interfere'

Tencent's investment philosophy traces back to its controlling shareholder, Naspers: secure board nomination rights, but minimize operational interference. Leave management to the founders, and capture the financial returns. Meanwhile, draw portfolio companies' content into the Tencent ecosystem to generate global publishing revenue.

Reports have also surfaced of Tencent exploring an acquisition of roughly a $15 billion stake in Nexon, and a proposal to acquire a 40% stake in Kakao Mobility. Tencent denied both, but Nexon and Kakao Mobility declined to comment.

Risks — A Double-Edged Sword

Tencent's expansion carries two distinct categories of risk.

The first is Tencent-specific. Following Xi Jinping's 'Common Prosperity' campaign, a sweeping crackdown on Chinese Big Tech sent Tencent's share price plummeting more than 60% from its peak. The same government protection that enabled its domestic dominance means Tencent cannot operate freely from state control.

The second risk falls on Korean portfolio companies. In January 2025, the U.S. designated Tencent as a 'Chinese military company.' This effectively creates a potential barrier for Tencent-backed Korean firms seeking to enter or expand in the U.S. market. Concerns about historical distortion through game IP and pressure for content censorship are also persistently raised — fueling criticism that frames Tencent's activity as 'Northeast Project capital.'

Underlying all of these moves is anticipation of a lifting of China's ban on Korean cultural content (the hallyu ban). The prevailing view among analysts is that Tencent is positioning itself to control the gateway for Korean content entering China, ahead of any formal easing — capitalizing on the broader trend of expanding Sino-Korean economic cooperation.