Overseas gaming a rare bright spot in Tencent’s weak Q3 report
Business & Technology
Tencent has its slowest revenue growth in 17 years, but overseas gaming may be a lifeboat. This story is from the The China Project A.M. newsletter — sign up for free here.
Tencent’s latest quarterly report shows the bruises from China’s crackdown on tech monopolies, gaming, and advertising :
- Its revenue grew at the slowest pace since its 2004 IPO, missing expectations at 13% year-on-year, while net profit rose just 2.5% since last year, to 39.5 billion yuan ($6.1 billion).
- Advertising revenue grew just 5%, given weaker ad spending at real estate and tutoring firms, as well as new restrictions on how Tencent can show ads on platforms like WeChat.
- Minors now account for just 0.7% of time spent on Tencent’s games, down from 6.4% last September after China restricted under-18s to playing three hours a week.
However: The report also showed growing opportunities in overseas gaming:
- Compared to 5% growth in domestic games, overseas revenue grew 20%.
- Notably, Tencent reported each segment separately, which it previously only did in annual reports but said it will do from now on.
Also relevant: NetEase, another major Chinese gaming firm, has found an international winner in Naraka, a three-month-old game that is sweeping international gaming communities and becoming one of the country’s fastest-selling PC games ever.
