Tencent's quarterly revenue rises: "It was a great performance"

CGTN Europe interviewed Ray Wang, Principal Analyst at Constellation Research

Transcript

00:00Tencent's second quarter earnings make happy reading for investors in the Chinese tech giant.

00:05Its gaming business has helped boost revenue by 8%.

00:09Ray Wang is Principal Analyst at technology research and advisory firm Constellation Research.

00:15Welcome back to the program. Good to have you, Ray.

00:17So, what's behind this strong performance for Tencent?

00:22Yeah, it was a great performance. Domestic game sales were up 9% and that's like 6.66 billion US dollars.

00:28DNF Mobile was the key title. If you haven't played the game, it's one of those shoot-em-up titles.

00:33And of course, WeChat with their install base of 1.3 billion users had payments up 4%.

00:38And so that, with online ads up 19% year-over-year at 4.2 billion,

00:43really made a lot of people happy after two quarters of declining growth.

00:48And so, Dungeon & Fighter Mobile, or DNF, has been a major success in the Chinese market.

00:54What's it doing right?

00:57Well, first of all, the Chinese regulators actually opened up foreign titles and that really helped.

01:03And of course, this is a game coming from Nexon, a Korean title company.

01:07And of course, the distribution really helped.

01:08And so, I think, you know, it's just a fun multiplayer shoot-em-up game.

01:12King of Glory is getting a bit old, so this was good timing.

01:16And of course, you know, you got to get excited about these mobile games when they do come out.

01:21Well, yes. I'm not such a gamer myself, but yes, of course.

01:25Now, Tencent's China games revenue saw a 9% increase this quarter.

01:29What other games, Ray or Trends, are contributing to this growth beyond DNF Mobile?

01:36Well, there's a big shift, right?

01:38And especially in China, you have these all-in-one apps and Tencent's one of the players in the space.

01:43So, mobile gaming, chatting, payments, social networks are all combined into one.

01:48And so, mobile games are still beating consoles and PCs.

01:52Users definitely have less time.

01:53And what Tencent is doing is it's competing for the time and attention of users.

01:58And what they do is because they've got them in all the other areas.

02:01You know, you got a split second, you got 30 seconds, you've got 5 minutes in between.

02:04You might have 20 minutes between meetings.

02:06You want to be able to play games or occupy your time.

02:09And they've done a really good job of attracting people's time and attention.

02:13Right. And Tencent's online advertising revenue grew by 19% year on year.

02:19How significant is this growth for Tencent's overall business?

02:23It's a massive company.

02:26It's a massive company, but it's important to grow that in a digital giant, the trick is to monetize on six areas.

02:33There's ads, which they're doing. There's search, which they're part of.

02:36There's subscriptions, memberships, goods and services.

02:39And in China, the digital giants in China are actually really good at monetizing all six of these.

02:45And it's a war for advertising.

02:47If you've got, you know, a billion plus users, you definitely want to be able to have a way to reach them.

02:52And in this case, Tencent can do it through advertising as well as memberships and subscriptions.

02:57Ruo Wang, great to talk to you. Thanks so much for joining us.