Alibaba Sells Lingxi Games to Trustar Capital for $1.5B+

Alibaba Group is divesting its video game division, Lingxi Games, in a significant move signaling a strategic pivot away from non-core assets. The deal, reportedly struck with Asian private equity firm Trustar Capital, is anticipated to value the gaming studio at over $1.5 billion. This transaction marks the culmination of Alibaba's nearly decade-long foray into the competitive gaming sector, which began with the acquisition of Guangzhou Ejoy in 2017.

Lingxi Games, known for its flagship title Three Kingdoms Tactics, has been a consistent revenue generator, particularly in China's mobile strategy game market. Launched in 2019, Three Kingdoms Tactics has amassed over 100 million registered users globally and frequently ranks among the top-grossing mobile games. In 2025, the game was estimated to generate between $26.6 million and $37.0 million monthly in player spending, underscoring its mature yet stable cash flow. However, Lingxi's broader portfolio, which includes efforts to diversify into card games and titles targeting female players across five R&D studios, has yet to replicate the success of its primary cash cow.

The sale underscores Alibaba's broader corporate restructuring initiative, which prioritizes investments in artificial intelligence and cloud computing. Under the leadership of CFO Toby Xu, who assumed oversight of Lingxi in August 2025, the company has been systematically evaluating its non-core holdings. This strategic reassessment aims to streamline operations and reallocate resources towards its core technological ambitions. Lingxi's distinct operational history, originating from Guangzhou Ejoy with roots in NetEase, has been cited as a factor in its integration challenges within the Alibaba ecosystem.

The gaming industry in China, dominated by giants like Tencent and NetEase, demands robust R&D, sophisticated publishing capabilities, and sustained operational expertise. While Alibaba invested capital and leveraged its existing user base, building a leading gaming entity proved challenging. The acquisition of Guangzhou Ejoy for approximately $148 million was intended to bolster Alibaba's gaming presence, but Lingxi's development trajectory has been largely defined by the singular success of Three Kingdoms Tactics. The company's subsequent diversification efforts have not yet yielded another breakout hit on the same scale.

This divestiture reflects a broader trend among China's tech behemoths, which in the mid-2010s, including Baidu, Alibaba, and Tencent (BAT), aggressively expanded into diverse consumer sectors like entertainment, finance, and services to broaden their ecosystems. However, the inherent complexities of content-driven businesses like gaming, requiring creative talent and long-term operational commitment, have proven difficult to cultivate solely through capital infusion or distribution channels. The sale of Lingxi Games suggests Alibaba has concluded that monetizing this asset through a strategic sale offers greater value than continued internal development.