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Tencent strikes deal with Lego to develop online games

Deal includes potential social network aimed at Chinese children

Chinese internet giant Tencent has brokered a deal with Lego to jointly develop online games and potentially even a social network geared towards children.

As reported by Reuters, the Danish toymaker has endured a recent slowdown in sales growth while the Chinese market grew an estimated 25-30% in 2016.

"What we are looking for now with Tencent is just to find more creative ways... [of] reaching children, and creating bespoke content with Tencent, in this case, video games," Jacob Kragh, head of Lego in China, told Reuters.

By teaming up with China's largest social network and gaming company, Lego now finds itself in a prime position to slice off an even bigger chunk of the $31 billion toys and games market in the region.

With around 3% share of the Chinese market Lego is already a brand leader in the country, ahead of both Mattel and Hasbro with 2% and 1% respectively, according to Euromonitor International.

However, the partnership could help catapult Lego into a more dominant position with the proposed development of a Lego video zone for children, hosted through Tencent Video, in addition to licensed games. The deal also includes plans for Lego Boost, a building and coding set that lets children turn their brick creations into moving objects.

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