Asian private equity firm Trustar Capital has agreed to acquire Alibaba Group’s video game business, Lingxi Games, according to Bloomberg, citing an internal memo. The deal could value the studio at more than USD 1.5 billion. Trustar will acquire Alibaba’s entire stake in Lingxi, although the transaction value and closing timetable have not been disclosed.
On June 23, several media outlets reported that Alibaba was seeking to sell Lingxi Games for RMB 7–9 billion (USD 1.0–1.3 billion). That range was below the valuation indicated by the latest deal.
Judging by its valuation and revenue, Lingxi Games is no longer in a period of rapid growth. But it is a mature business with stable cash flow. So what explains Alibaba’s decision to sell it?
Its most important cash generator is Three Kingdoms Tactics.
Launched in 2019, the game has surpassed 100 million registered users worldwide. It has remained near the top of China’s mobile game revenue rankings on Sensor Tower and other charts for years, making it one of the country’s more consistently monetized strategy titles.
According to 36Kr, citing data from third-party platforms, Three Kingdoms Tactics generated roughly RMB 180–250 million (USD 26.6–37.0 million) in monthly gross player spending in 2025.
Lingxi’s ambitions, however, extend beyond a single hit.
The company currently oversees five R&D studios and two operations businesses, giving it capabilities across game development, publishing, and distribution.
Its portfolio reflects an effort to diversify beyond strategy games, including card games, titles aimed at female players, and projects developed or published across several genres. These initiatives have yet to produce a title on the scale of its flagship game.
Lingxi has also undergone organizational changes within Alibaba.
In August 2025, its reporting line shifted from Luyuan Fan, chairman of Alibaba’s Digital Media and Entertainment Group, to Alibaba CFO Toby Xu. The change came as Alibaba continued to reassess the place of noncore businesses within the group.
An internal speech by Fan in December 2024 drew attention to that tension. His remarks led some outside observers to question how well Alibaba’s in-house gaming business fit within the broader group. The roots of that issue stretch back to how Alibaba entered gaming.
Lingxi originated with Guangzhou Ejoy, founded by former NetEase COO Zhonghui Zhan. Alibaba acquired the company for about RMB 1 billion (USD 148 million) in 2017 and later folded it into its Digital Media and Entertainment Group, where it was rebranded as Lingxi Games.
Lingxi therefore entered Alibaba with a team and culture shaped outside the group. When Fan said in his speech that the business “doesn’t have Alibaba in its blood,” he was describing that longstanding difference in identity.
Xu took over oversight of Lingxi amidst Alibaba’s broader restructuring.
From Intime and Sun Art Retail to Freshippo and other noncore assets, Alibaba has been reviewing or divesting businesses as it concentrates more resources on areas including artificial intelligence and cloud computing.
For Lingxi, the question came down to whether the business offered Alibaba more value as a gaming operation it continued to build or as an asset it could sell.
The Trustar deal suggests Alibaba has made that choice.
From acquiring Ejoy to expand its gaming presence to ultimately selling Lingxi, Alibaba has spent close to a decade in the business. Its experience also reflects an earlier period when China’s largest internet companies sought to expand their ecosystems into almost every corner of consumer life.
Around 2014, Baidu, Alibaba, and Tencent, collectively known as BAT, were pushing beyond their original businesses. Tencent expanded further into gaming, Baidu moved from search into content, and Alibaba sought to build a broad ecosystem around e-commerce spanning entertainment, finance, and services.
Film, music, sports, literature, and gaming all became part of that expansion. Businesses that could capture users’ time and spending were increasingly brought inside larger internet ecosystems.
Alibaba’s reason for entering gaming was relatively simple. If users were already shopping on Taobao and paying through Alipay, gaming could potentially give them another reason to spend time and money within Alibaba’s ecosystem.
The company tried multiple approaches, including licensing, publishing, internal development, acquisitions, and investments. But gaming proved difficult to build through traffic and capital alone.
Tencent and NetEase did not manage to establish leading positions simply because they had large user bases. They also built mature R&D and publishing systems, along with processes for developing, operating, and sustaining successful games.
Gaming is fundamentally a content business. It requires creative development, operations, community management, and sustained investment, capabilities that are difficult to reproduce quickly through capital or distribution alone.
Over a longer period, Lingxi’s development can be divided into two phases.
The first ran from 2017 to 2019. Alibaba acquired Guangzhou Ejoy for roughly RMB 1 billion, bringing a team with deep NetEase roots into the group. Two years later, Three Kingdoms Tactics launched. Developed primarily by Lingxi’s early team, the title became a major success in China’s strategy game market and remained among the country’s top-grossing iOS games for an extended period.
From a product perspective, it became one of the most important titles in the history of Alibaba’s gaming business. Organizationally, it was also the clearest result delivered by the Ejoy team after joining Alibaba.
The second phase began after the game’s launch and continues today.
Lingxi has not produced another title of comparable scale despite the success of Three Kingdoms Tactics. Its revenue and profit structure continue to depend heavily on its flagship game.
That matters for how the business is valued. When a company depends increasingly on a mature product for earnings, investors may begin to view it less as a high-growth business and more as a cash-generating asset.
For a potential buyer, that distinction could make Lingxi easier to evaluate as an acquisition target.
Lingxi would not be the first major game developer to change hands despite owning a durable hit.
Moonton Games, developer of Mobile Legends: Bang Bang (MLBB), was acquired by ByteDance in 2021 before being sold to Saudi Arabia’s Savvy Games Group this year. Its valuation rose from USD 4 billion to over USD 6 billion across the two transactions. Over those five years, MLBB remained one of Southeast Asia’s leading multiplayer online battle arena games. Its continued popularity did not prevent its owner from eventually deciding to sell.
Lingxi has now reached a similar point. A mature hit can generate durable cash flow, but that does not necessarily make the business strategically essential to its parent company.
KrASIA features translated and adapted content that was originally published by 36Kr. This article was written by Han Dao for 36Kr.
Note: RMB figures are converted to USD at rates of RMB 6.76 = USD 1 based on estimates as of August 19, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.