Bytedance in talks for potential sale of its gaming unit Moonton

ByteDance, the parent company of TikTok, is reportedly in talks regarding the potential sale of its gaming unit, Moonton Technology, two years after acquiring the Shanghai-based studio in a deal valued at $4 billion, according to an exclusive report from Reuters.

Per the report, potential buyers for Moonton Technology have been in discussions with ByteDance, including at least one Saudi-based firm, Reuters reported, citing insiders familiar with the ongoing talks.

While the talks are in the early stages, it is unclear whether a deal will materialize. The decision to explore a sale comes as ByteDance prioritizes resources for its core business.

Moonton, based in Shanghai and founded in 2014, is known for developing the widely popular mobile game Mobile Legends: Bang Bang with over 1 billion registered users, is also the publisher of other successful titles like Arena of Valor and Magic Rush Heroes. Moonton’s acquisition in 2021 marked ByteDance’s significant entry into the $187 billion global video games market. However, ByteDance’s venture into the gaming industry has faced challenges.

Reports show that ByteDance is considering the sale of Moonton as part of a strategy to concentrate on its core businesses in social media and e-commerce. ByteDance has been facing increased scrutiny from Chinese regulators and is under pressure to enhance the monetization of its operations.

The potential sale of Moonton would represent a significant setback for ByteDance’s gaming aspirations. However, strategically, it could be a wise move for the company, allowing it to divest a non-core business and redirect its focus towards more profitable ventures.

In addition, Moonton’s underwhelming performance post-acquisition is cited as a key factor driving ByteDance’s desire to sell, according to sources. ByteDance has faced setbacks in its broader gaming expansion, including the disbanding of its Shanghai-based game development unit, 101 Studio, last year. This month, ByteDance announced an overhaul of its virtual reality (VR) unit, Pico, focusing on hardware and cutting software and games-related jobs.

ByteDance’s acquisition of Moonton was also followed by a government crackdown on the video games sector in China, causing the industry to contract for the first time last year.

Moonton, as per its website, boasts more than 1,600 employees globally and operates not only in mainland China but also in Indonesia, Malaysia, Singapore, and Hong Kong.

Founded in 2012 by Zhang Yiming, ByteDance is the developer of the video-sharing social networking services and apps TikTok and Douyin, the Chinese-specific counterpart to TikTok. The company owns a series of content platforms that enable people to connect with consuming and creating content through machine learning technology.

The company has more than 200 million daily active users that spend an hour every day on its products. Bytedance also operates a series of products popular with mobile users around the world, including Topbuzz, Flipagram, and a number of UGC short-form video apps.