Tencent Holdings Limited, China's biggest tech company by market capitalization, and Singapore-based gaming and internet platform Sea Limited signed a binding letter of intent that allows Garena the right to sell and distribute Tencent mobile and PC games in Indonesia, Taiwan, Thailand, the Philippines, Malaysia, and Singapore.
The agreement, signed on Nov. 19, is another important step in fostering the long-standing strategic partnership between Garena and Tencent. It will stand for a period of five years, Sea Limited said during its announcement.
Garena, the online entertainment unit of Sea Limited, had published various games from Tencent, including Arena of Valor and League of Legends. Under the deal, the two companies pledged to distribute and promote gaming titles from Tencent's portfolio across relevant Southeast Asian markets.
The announcement about the extended partnership was followed by Sea Limited's reporting of its financial results for the quarter ended on Sept. 30.
Sea Limited reported total adjusted revenue of $242.8 million, up 60.1 percent year-on-year from $151.7 million for the third quarter of 2017 and up 10.6 percent quarter-on-quarter from $219.6 million for the second quarter of 2018.
Forrest Li, chairman, and group chief executive officer of Sea, highlighted that its e-commerce platform, Shopee, posted its best-ever quarterly gross merchandise value. The platform also leads as the largest e-commerce platform in Southeast Asia by volume orders, Forrest said.
Sea Limited also has its own gaming content under its belt. Free Fire, for instance, became one of the world's most popular online games. The content generated record daily active users of more than 27 million and surpassed 200 million registered users globally.
Forrest highlighted that the new arrangement with Tencent will boost the company's game pipeline. The chairman acknowledged Tencent as its long-term investor and strategic partner.
Tencent, meanwhile, also reported its third-quarter results on Nov. 14. The company said its third-quarter net profit increased by 30 percent, beating the average estimates from analysts.
Tencent third quarter saw 23.3 billion yuan net profit compared to an average estimate of 19.32 billion yuan from analysts polled by Reuters.
Analysts acknowledged that Tencent exceeded their expectation but its performance could be better boosted if Chinese regulators green light the monetization of its PUBG Mobile. Analysts believed that with the approval, the game could bring in an additional $1 billion a year in Tencent's profit.
Tencent is currently faced with tougher gaming policies in China as the government wants to ensure safe and healthier gaming experiences among its citizens, particularly among the youth.
