Alibaba Sells Gaming Unit for $2 Billion
Chinese tech giant offloads Lingxi Games to Trustar Capital as it shifts focus to artificial intelligence and cloud computing, with deal worth at least $1.5 billion
Alibaba Group is selling its gaming subsidiary, Lingxi Games, to Asian private-equity firm Trustar Capital in a deal worth at least $1.5 billion, with some sources estimating the transaction to be worth more than $2 billion. The sale is part of Alibaba's broader strategy to sharpen its focus on artificial intelligence and cloud computing.
Lingxi Games is best known for its multiplayer strategy game, Three Kingdoms: Strategy Edition, which has been a reliable earner for the company. Despite its success, Alibaba is parting with the gaming unit as it no longer fits the company's strategic priorities. CEO Eddie Wu has been restructuring the company around two pillars, AI and cloud computing, and has been systematically shedding non-core assets.
The deal comes as Alibaba targets $100 billion in combined AI and cloud revenue within five years. The company has already pledged $53 billion to its AI infrastructure over three years and has made significant progress in the field. Lingxi Games' CEO Zhou Bingshu will continue to lead the company after the ownership change.
Trustar Capital, an Asia-focused private-equity firm, emerged as the preferred bidder ahead of strategic buyers from the gaming industry. The sale of Lingxi Games is the latest example of Alibaba's efforts to concentrate resources on its core businesses, including e-commerce, cloud computing, and AI.
## Why it matters The sale of Lingxi Games is significant as it marks a major shift in Alibaba's priorities. The company is increasingly focusing on artificial intelligence and cloud computing, and is willing to offload profitable businesses that do not fit into its strategic plans. This move is likely to have a significant impact on the gaming industry, as well as on Alibaba's own business and revenue streams.
The deal also highlights the growing importance of artificial intelligence and cloud computing in the tech industry. Alibaba's investment in these areas is likely to drive growth and innovation, and the company's target of $100 billion in combined AI and cloud revenue within five years is ambitious. As the company continues to sharpen its focus on these areas, it will be interesting to see how the sale of Lingxi Games affects its overall business and strategy.
