Tencent, the Internet giant, under pressure in China – Companies

Chinese internet giant Tencent reported a further drop in quarterly revenue on Wednesday, amid regulatory restrictions in China on its video games and technology sector.

After years of explosive growth in one of the world’s most dynamic and connected markets, Internet companies in China are now under pressure. Since 2020, the authorities have been particularly concerned about competition and personal data issues. Major tech players have been reeling after years of relative weakness, which has destabilized the sector.

Tencent has not been spared: in order to limit the addiction to video games among the youngest, the authorities have imposed since last year for those under 18 a drastic weekly limit of three hours for online games. This measure penalizes Tencent’s wildly popular multiplayer game “Honor of Kings.” In this context, the world’s number one in video games recorded a 2% drop in quarterly turnover, to 140 billion yuan (19 billion euros). Already last quarter, Tencent had recorded its first decline in turnover since 2004.

“The number of paying players decreases”

Its net profit for the July-September period rose 1% year-on-year to 39.94 billion yuan (5.4 billion euros). Progress, however, much softer than last year during the same period when sales increased by 29%. “Difficulties in the sector have led to a decline in the number of paying players” in China, Tencent admitted in a press release. In July 2021, Beijing also froze all new video game licenses in China, which had weighed heavily on the sector’s profitability. Licensing resumed in April, but Tencent has yet to receive any majors.

In a sign of the difficulties, the Shenzhen (southern China) group shed nearly 2,000 employees, according to a comparison of its workforce with the previous quarter. Tencent also announced on Wednesday that it will pay its shareholders a dividend of 19.5 billion euros in the form of Meituan shares, drastically reducing its ties to the Chinese meal delivery champion.

Heading to Europe

Bored at home, the group is now looking for other outlets, especially in Europe, where the firm is strengthening itself through the acquisition of stakes in emblematic studios. In September, Tencent thus formalized a capital increase of the French giant Ubisoft. Tencent is essential in China thanks to its WeChat app (messaging, online payments, social network).

Indispensable in the daily lives of hundreds of millions of Chinese, this application is present on almost all phones and also serves as a means of payment, in a country where cash is becoming increasingly scarce.

After years of explosive growth in one of the world’s most dynamic and connected markets, Internet companies in China are now under pressure. Since 2020, the authorities have been particularly concerned about competition and personal data issues. Major tech players have been reeling after years of relative weakness, which has destabilized the sector. Tencent has not been spared: in order to limit the addiction to video games among the youngest, the authorities have imposed since last year for those under 18 a drastic weekly limit of three hours for online games. This measure penalizes Tencent’s wildly popular multiplayer game “Honor of Kings.” In this context, the world’s number one in video games recorded a 2% drop in quarterly turnover, to 140 billion yuan (19 billion euros). Already in the previous quarter, Tencent had recorded its first decline in turnover since 2004. Its net profit for the July-September period rose 1% year-on-year to 39.94 billion yuan (5.4 billion euros). Progress, however, much softer than last year during the same period when sales increased by 29%. “Difficulties in the sector have led to a decline in the number of paying players” in China, Tencent admitted in a press release. In July 2021, Beijing also froze all new video game licenses in China, which had weighed heavily on the sector’s profitability. Licensing resumed in April, but Tencent has yet to receive any majors. In a sign of the difficulties, the Shenzhen (southern China) group shed nearly 2,000 employees, according to a comparison of its workforce with the previous quarter. Tencent also announced on Wednesday that it will pay its shareholders a dividend of 19.5 billion euros in the form of Meituan shares, drastically reducing its ties to the Chinese meal delivery champion. emblematic studios. In September, Tencent thus formalized a capital increase of the French giant Ubisoft. Tencent is essential in China thanks to its application WeChat (messaging, online payments, social network) Indispensable in the daily life of hundreds of millions of Chinese, this application is present on almost all phones and is also used as a means of payment, in one place where cash is becoming increasingly scarce.

Leave a Comment