Journalist |
Editor | Wen Shuqi
On August 17, 2026, Zhou Bingshu, CEO of Lingxi Interactive, sent an internal letter to all employees, announcing that Alibaba Group and CITIC Capital had officially reached a transaction agreement. Under the agreement, Alibaba will transfer all of its shares in Lingxi Interactive, making CITIC Capital the new shareholder of the company.
In his internal letter, Zhou Bingshu stated that the entire transaction was “concluded smoothly in a friendly, stable, and win-win atmosphere.” Both the original shareholder, Alibaba Group, and the new shareholder, CITIC Capital, fully recognized the value of Lingxi and the efforts of its team. Zhou Bingshu said that he and the management team will continue in their roles, leading the company into a new chapter of independent development. The letter also mentioned that CITIC Capital brings rich industrial resources and professional empowerment experience, which will inject fresh momentum into the company’s future growth.
Lingxi Interactive’s history dates back to Alibaba’s acquisition of Guangzhou JianYue in 2017. In that year, Alibaba acquired Guangzhou JianYue—founded by Zhan Zhonghui, former COO of NetEase—for approximately 1 billion yuan. Guangzhou JianYue was later integrated into Alibaba’s Digital Media and Entertainment Group. In 2020, Alibaba’s interactive entertainment division was officially upgraded and rebranded as Lingxi Interactive.
Today, Lingxi Interactive has a team of around a thousand people, operating five R&D studios—Pingping Wuqi Studio, Nangua Studio, Xingchen Studio, Yuan Studio, and Innovation Studio—alongside two platform businesses: 9Game and Trading Cat. Its main products include the SLG (strategy) game Three Kingdoms: Strategic Edition, the card game Three Kingdoms: Fantasy Land, the women-oriented game Like Iris, and the MMORPG Wind of the Continent. On the premium game front, it also offers survival-crafting titles like Soul Mask. Recently, Lingxi posted a recruitment notice for a 3A open-world Three Kingdoms SLG project built with UE5.
Although its product lineup is fairly diverse, Lingxi Interactive’s revenue streams are relatively concentrated.
Lingxi’s flagship title, Three Kingdoms: Strategic Edition, has amassed over 100 million users globally to date, contributing roughly 70% of the company’s revenue. But the game launched back in 2019 and has been running for seven years now. While its cash flow remains robust, the natural decline of game revenue over time is inevitable—and Three Kingdoms: Strategic Edition is no exception to that rule.
A gaming industry insider told us that as a veteran SLG product on the market for years, Three Kingdoms: Strategic Edition has posted fairly stable revenue performance. Looking at Lingxi’s overall product matrix, the company has experimented across multiple genres, but none have come close to matching the market success of 3K: Strategic Edition. This reality likely pushes the company to allocate more strategic resources toward that one title, which in turn deepens its path dependency on the Three Kingdoms theme across its product roadmap.
So far, Lingxi Interactive has failed to replicate another blockbuster at the same level as Three Kingdoms: Strategic Edition.
In 2023, Lingxi Interactive was downgraded from an independent business group to fall under Alibaba’s Digital Media and Entertainment division. In August 2025, its reporting line shifted from Fan Luyuan, chairman of Alibaba’s Digital Media and Entertainment Group, to Group CFO Xu Hong. A gaming company insider told us that this move was widely seen within the industry as a precursor to a sale.
Alibaba’s decision to sell Lingxi Interactive this time around is likely a continuation of its broader strategy to divest non-core assets and sharpen its focus on core priorities.
In February 2025, Wu Yongming announced plans to invest over 380 billion yuan in cloud and AI hardware infrastructure over the next three years. In May 2026, in a letter to shareholders, Wu reiterated the commitment to “continuously increase investment in AI infrastructure and self-developed chips.”
In recent years, Alibaba has gradually offloaded non-core assets such as Intime and Sun Art Retail. At the end of 2024, Alibaba sold its entire stake in Intime Department Store for 7.4 billion yuan; in January 2025, it sold its full 78.7% stake in Sun Art Retail for up to approximately HK$13.138 billion. The divestiture of Lingxi Interactive aligns with this overarching logic of focusing on AI and core e-commerce. Zhou Bingshu also noted in his internal letter that Alibaba’s sale of Lingxi is “based on its own strategic focus and overall layout.”
The acquiring party, CITIC Capital, is the private equity investment platform under CITIC Capital Holdings Limited. According to public information, CITIC Capital manages approximately US$10 billion in total funds. The firm specializes in buyout investments and has completed over 100 investments across China, Japan, the United States, and Europe. This isn’t CITIC Capital’s first foray into gaming either—CITIC Capital previously participated as a co-investor in Tencent-led acquisition of Finnish game company Supercell, which owns popular titles like Clash Royale and Hay Day.
As for the rationale behind this acquisition, a gaming industry professional told us that CITIC Capital’s core logic in buying Lingxi Interactive lies in betting on its stable cash flow. Based on revenue estimates from Sensor Tower, Lingxi’s annual revenue sits steadily between 3 billion and 4 billion yuan, with net profits approaching 2 billion yuan. What CITIC Capital likely wants is to buy into a proven business with a loyal customer base that can boost margins through meticulous operational refinement—not to gamble on the next big hit.
Some gaming industry analysts believe that after the shareholder change, Lingxi Interactive may see adjustments in its release cadence, user acquisition budgets, and long-term investment intensity. On the financial side, the new capital partner is likely to focus more on overall return rates; on the user acquisition front, advertising strategies are expected to become more ROI-driven and generally more conservative. The first few months following the deal’s completion will primarily be about maintaining stability, with substantive changes likely only becoming visible after the first full budget cycle and performance review period. Additionally, Lingxi’s mid-to-long-tail products and ongoing R&D projects may face some resource pressure.
Regarding the post-acquisition trajectory, some observers note that private equity firms typically seek an exit at an opportune time to realize investment returns. CITIC Capital does have a track record of selling assets after acquisition—in August 2023, it sold optical technology company Moritex Corporation to Cognex; in January 2024, CITIC Capital completed the sale of its shares in MARK STYLER Corporation to the company’s management.
However, a resale also depends on finding a suitable buyer willing to take over. For a gaming asset changing hands a second time, one key consideration is the policy and game license environment. Lingxi Interactive’s future direction remains subject to multiple factors, including the subsequent market environment and CITIC Capital’s own strategy.
