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Tencent to grow gaming empire with $148M acquisition of Conan publisher Funcom in Norway

Tencent, one of the world’s biggest videogaming companies by revenue, today made another move to help cement that position. The Chinese firm has made an offer to fully acquire Funcom, the games developer behind Conan Exiles (and others in the Conan franchise), Dune and some 28 other titles. The deal, when approved, would value the Oslo-based company at $148 million (NOK 1.33 billion) and give the company a much-needed cash injection to follow through on longer-term strategy around its next generation of games.

Funcom is traded publicly on the Oslo Stock Exchange, and the board has already recommended the offer, which is being made at NOK 17 per share, or around 27% higher than its closing share price the day before (Tuesday).

The news is being made with some interesting timing. Today, Tencent competes against the likes of Sony, Microsoft and Nintendo in terms of mass-market, gaming revenues. But just earlier this week, it was reported that ByteDance — the publisher behind breakout social media app TikTok — was readying its own foray into the world of gaming.

That would set up another level of rivalry between the two companies, since Tencent also has a massive interest in the social media space, specifically by way of its messaging app WeChat . While many consumers will have multiple apps, when it comes down to it, spending money in one represents a constraint on spending money in another.

Today, Tencent is one of the world’s biggest video game companies: in its last reported quarter (Q3 in November), Tencent said that it make RMB28.6 billion ($4.1 billion) in online gaming revenue, with smartphone games accounting for RMB24.3 billion of that.

Acquisitions and controlling stakes form a key part of the company’s growth strategy in gaming. Among its very biggest deals, Tencent paid $8.6 billion for a majority stake in Finland’s Supercell back in 2016. It also has a range of controlling stakes in Riot Games, Epic, Ubisoft, Paradox, Frontier and Miniclip. These companies, in turn, also are making deals: just earlier this month it was reported (and sources have also told us) that Miniclip acquired Israel’s Ilyon Games (of Bubble Shooter fame) for $100 million.

Turning back to Funcom, Tencent was already an investor in the company: it took a 29% stake in it in September 2019 in a secondary deal, buying out KGJ Capital (which had previously been the biggest shareholder).

“Tencent has a reputation for being a responsible long-term investor, and for its renowned operational capabilities in online games,” said Funcom CEO Rui Casais at the time. “The insight, experience, and knowledge that Tencent will bring is of great value to us and we look forward to working closely with them as we continue to develop great games and build a successful future for Funcom.”

In retrospect, this was laying the groundwork and relationships for a bigger deal just months down the line. 

“We have a great relationship with Tencent as our largest shareholder and we are very excited to be part of the Tencent team,” Casais said in a statement today. “We will continue to develop great games that people all over the world will play, and believe that the support of Tencent will take Funcom to the next level. Tencent will provide Funcom with operational leverage and insights from its vast knowledge as the leading company in the game space.”

The rationale for Funcom is that the company had already determined that it needed further investment in order to follow through on its longer-term strategy.

According to a statement issued before it recommended the offer, the company is continuing to build out the “Open World Survival segment” using the Games-as-a-Service business model (where you pay to fuel up with more credits); and is building an ambitious Dune project set to launch in two years.

“Such increased focus would require a redirection of resources from other initiatives, the most significant being the co-op shooter game, initially scheduled for release during 2020 that has been impacted by scope changes due to external/market pressures with increasingly strong competition and internal delays,” the board writes, and if it goes ahead with its strategy, “It is likely that the Company will need additional financing to supplement the revenue generated from current operations.”

NordVPN confirms it was hacked

NordVPN, a virtual private network provider that promises to “protect your privacy online,” has confirmed it was hacked.

The admission comes following rumors that the company had been breached. It first emerged that NordVPN had an expired internal private keys exposed, potentially allowing anyone to spin out their own servers imitating NordVPN.

VPN providers are increasingly popular as they ostensibly provide privacy from your internet provider and visiting sites about your internet browsing traffic. That’s why journalists and activists often use these services, particularly when they’re working in hostile states. These providers channel all of your internet traffic through one encrypted pipe, making it more difficult for anyone on the internet to see which sites you are visiting or which apps you are using. But often that means displacing your browsing history from your internet provider to your VPN provider. That’s left many providers open to scrutiny, as often it’s not clear if each provider is logging every site a user visits.

For its part, NordVPN has claimed a “zero logs” policy. “We don’t track, collect, or share your private data,” the company says.

But the breach is likely to cause alarm that hackers may have been in a position to access some user data.

NordVPN told TechCrunch that one of its datacenters was accessed in March 2018. “One of the datacenters in Finland we are renting our servers from was accessed with no authorization,” said NordVPN spokesperson Laura Tyrell.

The attacker gained access to the server — which had been active for about a month — by exploiting an insecure remote management system left by the datacenter provider, which NordVPN said they were unaware that such a system existed.

NordVPN did not name the datacenter provider.

“The server itself did not contain any user activity logs; none of our applications send user-created credentials for authentication, so usernames and passwords couldn’t have been intercepted either,” said the spokesperson. “On the same note, the only possible way to abuse the website traffic was by performing a personalized and complicated man-in-the-middle attack to intercept a single connection that tried to access NordVPN.”

According to the spokesperson, the expired private key could not have been used to decrypt the VPN traffic on any other server.

NordVPN said it found out about the breach a “few months ago,” but the spokesperson said the breach was not disclosed until today because the company wanted to be “100% sure that each component within our infrastructure is secure.”

A senior security researcher we spoke to who reviewed the statement and other published evidence, but asked not to be named as they work for a company that requires authorization to speak to the press, called these findings “troubling.”

“While this is unconfirmed and we await further forensic evidence, this is an indication of a full remote compromise of this provider’s systems,” the security researcher said. “That should be deeply concerning to anyone who uses or promotes these particular services.”

NordVPN said “no other server on our network has been affected.”

But the security researcher warned that NordVPN was ignoring the larger issue of the attacker’s possible access across the network. “Your car was just stolen and taken on a joy ride and you’re quibbling about which buttons were pushed on the radio?” the researcher said.

The company confirmed it had installed intrusion detection systems, a popular technology that companies use to detect early breaches, but “no-one could know about an undisclosed remote management system left by the [datacenter] provider,” said the spokesperson.

It’s also believed several other VPN providers may have been breached around the same time. Similar records posted online — and seen by TechCrunch — suggest that TorGuard and VikingVPN may have also been compromised, but spokespeople did not return a request for comment.


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McDonald’s starts selling its Beyond Meat-based “P.L.T.” sandwich in Canada

McDonald’s first foray into the plant-based protein patty market in North America is launching today in Canada.

The company’s “P.L.T.” (plant, lettuce, and tomato) sandwich, which uses patties from Beyond Meat, is now on sale at several locations in Canada.

This isn’t the first new vegetarian sandwich to launch at a “Golden Arches” location this year. Back in April, the company launched a new vegan sandwich for customers in its franchise locations across Germany.

McDonald’s has had vegetarian and vegan sandwich options on its international menu sporadically for years. Two years ago, it partnered with a specialty Norwegian food company called Orkla to launch its McVegan burger in Finland and Sweden.

With the launch in North American locations, McDonald’s is taking another step down the path toward potentially adding a vegetarian sandwich option to its menu in the U.S.

As the largest fast food restaurant in the world, any steps McDonald’s takes to move to adopt a plant-based protein product from Beyond Meat would represent a significant boost for the company.

It’s happening at a time when some of the world’s largest companies are beginning to launch their own meat-replacement products. Nestle, which partnered with McDonald’s on the launch of their vegan burger in Germany, is using products developed from the team responsible for Sweet Earth Foods.

Nestle bought the Moss Landing, Calif.-based business back in 2017 to get into the plant-based market, just as the company was beginning its work on a plant-based patty.

Other large food companies like Tyson have launched protein-based meat replacements, while industry players in the prepared food space including, McCain Foods have invested in Nuggs.

The fact that McDonald’s decided to go with Beyond for its North American debut points to the fact that the market for suppliers to the biggest restaurant chains is still contested.

Indeed, the major fast food burger chains appear to be taking a largely regional strategy with vendors as supply chain issues for meatless patties seemingly remain a concern.

For instance, while Burger King uses Impossible Foods patties for its Impossible Whopper, sources have said that the company may look for a regional supplier for plant-based products in Latin America.

And it’s important to note that these pilot tests don’t mean that fast food chains will stick to keeping plant based products on the menu. Even as Beyond Meat scores its huge win with its McDonald’s pilot across 28 locations in Canada, the company’s burgers were pulled from locations in another big regional Canadian fast food chain — Tim Hortons .

Beyond Meat benefits from a wider array of plant-based offerings than its closest competitor, Impossible Foods, which has stayed focused on a replacement for ground beef. The El Segundo, Calif.-based company has inked pilot deals with KFC for a plant-based chicken nugget, and a number of fast food outlets like Dunkin, are selling the company’s breakfast sausages.

But the competition extends beyond fast food chains. Big food service vendors like Sodexo and others that cater to corporations, colleges, and universities are trying to lock in suppliers of protein replacements as well.

Meanwhile, demand for alternative proteins continues to skyrocket, with most financial analysts predicting that the market for these types of products could take a significant bite out of the traditional meat industry over the next decade.

Analysts at Barclays predict the market for alternative proteins could hit $140 billion by 2029.

“During this test, we’re excited to hear what customers love about the P.L.T. to help our global markets better understand what’s best for their customers,” said Ann Wahlgren, McDonald’s VP of Global Menu Strategy, in a statement last week. “This test allows us to learn more about real-world implications of serving the P.L.T., including customer demand and impact on restaurant operations.” .