Alibaba Sells Gaming Unit Lingxi Games for Over $1.5 Billion to Fund AI Development

Alibaba Divests Gaming Arm

Alibaba has reached an agreement to sell its game development unit, Lingxi Games, to the Asian private equity firm Trustar Capital. The transaction, reported in an internal staff memo by Lingxi CEO Zhou Bingshu, signifies Alibaba's complete exit from in-house game development.

Financial Details and Strategic Shift

Sources indicate the sale could generate over $2 billion for Alibaba, with Bloomberg valuing the studio at no less than $1.5 billion. This capital will be directed towards funding Alibaba's AI infrastructure program, which has already surpassed its original $53 billion budget. Lingxi CEO Zhou Bingshu and his management team will continue to lead the studio under its new ownership.

Increased Investment in AI

Alibaba committed 380 billion yuan (approximately $53 billion) to cloud and AI infrastructure over three years starting in February last year. CEO Eddie Wu stated in May that the company would exceed this figure due to data center buildout costs, targeting $100 billion in AI revenue within five years. This sale is part of broader asset divestments, including stakes in Sun Art and Intime, totaling $2.6 billion, to finance these AI ambitions.

Lingxi Games and Market Context

Guangzhou-based Lingxi Games is primarily known for 'Three Kingdoms: Strategy Edition,' a mobile multiplayer strategy title developed with Koei Tecmo. Alibaba had reportedly been seeking a buyer for the studio for some time, and a fundraising effort by Lingxi in late 2023 stalled following proposed tighter regulations for the online gaming sector in China.