The Chinese technology conglomerate Tencent Holdings has pledged to sharply increase investments this year, after posting a 25 percent gain in quarterly revenue, aiming to keep rival ByteDance at bay and sustain its pandemic-era boom in gaming and cloud.
China’s three largest tech corporations (Tencent, Alibaba and ByteDance) are competing to woo users in the fast-growing areas of online grocery and video. Tencent said it plans to invest a larger portion of its incremental profits this year in areas including cloud services, games and short form video content, joining Jack Ma’s Alibaba Group and Meituan in pledging to boost spending.
Tencent is trying to sustain growth in revenue, which climbed to $21 billion in the three months ended March, roughly in line with analyst estimates. The results reinforced the resilience of the world’s largest game publishing business even as the pandemic recedes.
Tencent has shed roughly $200 billion in market value since its January peak, part of a broader Chinese tech selloff. But Tencent, owned by Pony Ma, has largely escaped the Chinese government’s scrutiny despite its WeChat app offering unrivaled insights into all aspects of Chinese life and a commanding lead in gaming, music and social media markets.
Escaping the scrutiny
Meanwhile, rivals like ByteDance argue WeChat is locking users inside its ecosystem by blocking links to external services. Startups like Yuanfudao and Shixianghui have been penalized for unfair price tactics and other anti-competitive behaviors. And Tencent’s fintech arm, the closest rival to Jack Ma’s Ant Group in China, is said to be the next in line for increased supervision.
Tencent executives have sought to assure investor concerns, saying the company has always been cautious with fintech regulations and will stick with its normal practice of acquiring minority stakes in startups. Compliance is the company’s “lifeline,” President Martin Lau reiterated to investors during Tencent’s annual general meeting recently.
Gaming and social content
For now, gaming and social content remain Tencent’s biggest and steadiest cash cows. Online gaming revenue rose 17 percent during the quarter, helped by mainstay titles like Honour of Kings, PUBG Mobile and Peacekeeper Elite as well as newer games including Moonlight Blade Mobile.