Phoenix Labs – Singapore’s Garena acquires North America developer of Dauntless

Sea Limited, the parent company of games company Garena, has acquired Phoenix Labs, an acclaimed independent games development company and the studio behind the popular cross-platform co-op action RPG, Dauntless. The teams intend to work together to continue building Phoenix Labs’ development team, support the growth of Dauntless, and exploring new opportunities in global markets and on mobile. The transaction closed in recent days.

Phoenix Labs was founded in Vancouver in 2014 by veteran game executives with a record of working on some of the world’s best-known game franchises. It now has a team of more than 100 developers with decades of experience in building world-class AAA games across its offices in Vancouver, Canada, San Francisco, and Seattle, Washington. Phoenix Labs officially launched its debut title Dauntless, a cross-platform co-op action RPG, in 2019.

Headquartered in Singapore, Garena had over 320 million quarterly active users in the third quarter of 2019. Its self-developed title, Free Fire, is one of the world’s most popular mobile games and was the most downloaded mobile game globally in 2019 according to App Annie. Garena was one of Phoenix Labs’ earliest investors and has supported the growth of the company and the development of Dauntless over the last several years.

Following the acquisition, the existing management team at Phoenix Labs will continue to run the studio. In addition to bolstering Garena’s in-house content creation capabilities, the partnership allows Phoenix Labs to tap into Garena’s global network. The two companies will work together to continue adding new features to Dauntless and explore new growth opportunities in emerging markets such as Asia and Latin America, and on mobile platform.

My personal concerns

Sea Limited is making massive annual losses. From what I know according to financial reports, Sea Limited made a loss of USD 332.1 million for the full year of 2017, and then made a loss of USD 694 million for the full year of 2018. In just 2 years, Sea Limited made a total loss of over USD 1 billion! On the slightly bright side, Garena is the only team under Sea Limited which has been making tidy profits over the years.

Still, some might say despite the losses, there is nothing to worry about as Sea Limited is backed by China’s largest technology company, Tencent Holdings. From what I understand, there are many former Tencent employees from China working in Sea Limited these days.

Sea Limited has failed with acquiring a Western studio before. Back in 2015, Garena acquired the team which developed Heroes of Newerth. The PC MOBA was really popular in Asia back then. Under the new name of Frostburn Studios, no new titles came out of the acquisition and Heroes of Newerth saw its final major patch in early 2019.

Sea Limited once purged its gaming teams to focus more on e-commerce. From what I understand, Sea Limited laid off many of its gaming team members a few years back to focus on its e-commerce endeavor known as Shopee. This is also the team which contributed most to the massive losses. Perhaps by external pressure, Sea Limited started hiring again for its gaming team last year. However, I would say that the hiring focus is more on graduates with big qualifications, as I received a press release with screenshots together in a PDF file! A quick check on LinkedIn revealed that the new PR contact is indeed a young, fresh face with a list of really impressive educational qualifications.