Surge In Gaming Sale Helps Revenue Growth For China’s Tencent

Higher demand and revenues from its gaming business helped the Chinese tech giant Tencent to report 26 per cent rise in its quarterly sales.

While Tencent’s PUBG Mobile continued to do well all across the world, its Honor of Kings remained a top-ranked game in China.

In the last quarter of 2020, the company’s revenues from its Online gaming business increased by 29 per cent year on year to $6bn.

However, in recent months, there has been greater scrutiny of the company by China’s regulators who have in recent months taken a tougher approach in regulating the tech giants of the country.

In the last quarter of 2020, Tencent reported overall revenues to $20.5bn with a profit of $5.2bn. For the same period, the company reported a 22 per cent jump in its revenues from its online advertising while there was a 29 per cent growth in the revenues from the company’s financial technology (fintech) and business services units.

“We extended our leading position in the consumer internet space with enriched content and innovations across our products, while making notable progress in international expansion, starting with games,” Tencent’s chief executive Ma Huateng said.

There was also a 43 per cent year on year growth in the international sales of the games of Tencent even though the majority of the gaming revenue of the company is still generated from its Chinese market.

Gaming sales of the company were also boosted by its Peacekeeper Elite and Moonlight Blade Mobile games in addition to the company’s two most popular titles.

However other Chinese tech companies, such as ByteDance, the owner of the short video sharing app TikTok, which has made some gains in the gaming business’ market share, are providing increasing competition for Tencent.

The Shanghai-based gaming studio Moonton Technology, which is best known for Mobile Legends, a game which is popular in Southeast Asia, was acquired by ByteDance as it outbid Tencent last week for the acquisition.

But over the past month, the stocks of the company have fallen despite its robust earnings.

“Tencent’s share price reversal has occurred amid a broader tech rout on the Hang Seng Index and is amplified by the prospect of tougher regulatory scrutiny,” said Michael Norris, research and strategy lead at Agency China.

Tencent was among those Chinese tech companies that were put under its scanner by China’s State Administration for Market Regulation earlier this month over charges of  violations of anti-monopoly rules.

So far, the strongest pressure in this regards has been faced by China’s e-commerce giant Alibaba and there is apprehension among investors that regulators would go after Tencent next.

The public listing of Alibaba-backed Ant Group, which was touted to be the biggest initial public offering this year, was blocked by Chinese regulators in October. Ant Group operates China’s biggest digital payments service, which competes directly with Tencent’s WeChat Pay.

(Adapted from BBC.com)



Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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