Tencent Holdings rakes in $15 billion

Chinese eCommerce giant Tencent Holdings increased its revenues last year by 30 per to RMB101.9 billion ($US15.7 billion).

Excluding its eCommerce business, the revenue increase was 38 per cent, to RMB102.2 billion.

Tencent’s subsidiaries provide media, entertainment, internet and mobile-phone value-added services, and provide online advertising services in China.

Chairman and founder Ma Huateng says its online game business had healthy revenue growth, mainly driven by smartphones, key PC titles and new client games launched during the year. The company’s social network revenues also grew, from increased digital content subscription services, QQmembership subscription services and virtual item sales.

Revenues from online advertising shot up 110 per cent to RMB17.5 billion.

Hong Kong- and Singapore-listed Tencent continued its traffic leadership in multiple online media categories such as video, sports, music, news and literature through partnering with premium content providers including the NBA, HBO, Paramount, Sony Music and Warner Music, and investing in original content.

“During the year, we further executed our ‘connection’ strategy, bringing our own and our partners’ products and services to our consumers through cultivating an ecosystem around our core communication and social platforms,” says Ma in his chairman’s statement.

Key initiatives for the group’s “internet-plus” ecosystem included:

* Enriching products and services available within its platforms, such as introducing personal micro-loan products and municipal services like visa applications

* Promoting online payment services

* Growing mobile utility services, including security, a browser, an application store and strengthened infrastructural supports

* Investing in equity stakes in leading companies in related internet verticals, such as Internet Plus Holdings.

Industry trends

Ma also noted a range of industry trends…

“Messaging and social networking continued to rank as the highest time spent and widest penetration activities on smartphones, and evolved into increasingly relevant content-discovery media. Search queries moved primarily to mobile, and search remained an important content-discovery tool, along with application stores.

“Online shopping became increasingly widespread, especially in lower-tier cities, and eCommerce transaction volumes sustained healthy growth rates.

“Online advertising activity shifted decisively from PC to mobile, with particular growth in areas such as performance advertising on social networks, pre-roll advertising in video services, and in-feed advertising in news services.

“Users proved increasingly willing to pay for digital content such as movies, TV series and music.

“Mid/hard-core smartphone games, including PC game franchises moving to smartphones, boosted game-industry revenue.”

Ma says China’s internet companies in sectors such as ride-hailing, classified listings, group buying, and online travel services competed with heightened intensity last year, leading to rapid user growth but reduced or negative profitability. “Consequently, several leading companies in these sectors consolidated with competitors, creating a wave of merger and acquisition activities.”

There were more offline-to-online transactions last year which, together with the emergence of person-to-person payment transactions, contributed to substantial growth in online payments.


Key platforms

On Tencent’s key platforms, the QQ Wallet payment service gained popularity, with about 6 billion red envelopes exchanged within six days during the Lunar New Year holidays early this year.

Qzone user activity benefited from enhanced features in areas such as sticker sharing and photo-album editing.

There was year-on-year growth of 39 per cent for Weixin and WeChat together, with official accounts becoming a leading platform to connect users to content creators, merchants and advertisers.

Weixin Pay also increased in popularity, with more than 32 billion red envelopes being exchanged within the six-day Lunar New Year holidays – growing by nine times year-on-year.

Ma says the group’s social networks experienced 30 per cent revenue growth last year as digital content subscription services, QQ membership subscription services and virtual item sales were improved.

“Our cloud service achieved more than 100 per cent year-on-year revenue growth as we promoted our services to key enterprise customers from a range of verticals such as eCommerce, O2O services, online games, online video and internet finance.”

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