Asia’s richest man sees advertising, social media driving growth amid addiction debate
Internet giant Tencent’s strategy builds on how it continues to develop the do-everything WeChat, which has evolved from a mobile messaging service into China’s largest social network and popular payments platform
Tencent Holdings, the world’s largest video game company, is betting that its new initiatives in advertising and social media would spur growth amid renewed debate in China over gaming addiction among the youth.
“Social and performance-based advertising will be a big growth driver for us in the future,” said Tencent chairman and chief executive Pony Ma Huateng – Asia’s richest man, according to Forbes – in an interview with state media China Daily that was broadcast online.
“We are also actively exploring new forms of social networks”, including various ways to integrate short video into these platforms, said Ma on the sidelines of the annual parliamentary sessions and meetings of the top political advisory body in Beijing on Thursday.
Hong Kong-listed Tencent already operates WeChat, China’s largest social network, which hit a milestone of 1 billion monthly active users during the Lunar New Year holiday last month. Marketed as Weixin on the mainland, WeChat has evolved into the country’s largest social network, as well as a popular online platform for payments and money transfers.
Honour of Kings, a multiplayer fantasy smartphone game by Tencent, is China’s most popular game with more than 200 million players.
Ma’s comments to media followed renewed debate on gaming addiction at the annual gathering known as the Two Sessions.
He found himself again on the defensive after a member of the country’s top political advisory body on Wednesday proposed a classification system for video games, calling them the new “opium” because an obsession with them was enfeebling the younger generation.
Another delegate called on video game companies to install safeguards, including using facial recognition, to prevent children from bypassing gameplay restrictions.
Ma acknowledged in an earlier press briefing the need for control but called on responsibility from all parties, including parents, to police screen time for the young. Not all games should be “demonised”, he said.
About 560 million people – or seven in 10 of the country’s online population – play games in China, according to the latest estimate by research firm Newzoo.
The popularity of Honour of Kings was one of the major factors behind Tencent’s 61 per cent increase in third-quarter revenue last year to 65.2 billion yuan (US$10.3 billion), which marked the fastest growth for the company since 2010.
Tencent and Nasdaq-traded NetEase account for more than 60 per cent of China’s growing video games market, according to a recent report by Jefferies equity analyst Karen Chan.
While China’s games market continues to grow, Tencent is looking to help implement certain safeguards against gaming addiction.
Ma had said Tencent plans to introduce so-called digital contracts that would allow parents and children to negotiate time limits for playing Honour of Kings.
The company’s plans for greater integration of video into social networks is supported by its strong position in China’s video streaming market.
Tencent Video, a unit of Shenzhen-based Tencent, is one of the country’s top video-streaming services operator, with Baidu-backed iQiyi as its main competition.
Jefferies’ Chan has said that Tencent Video and iQiyi already provide the most preferred combination of online video platforms watched by mainland viewers.
Tencent had attributed its third-quarter online advertising revenue, which grew 48 per cent to about 11 billion yuan, to high media advertising on its video-streaming platform as subscriptions climbed steadily.
Ma on Thursday said Tencent was also upbeat on its business-to-business operations, such as Tencent Cloud.
The company is expected to report its fourth quarter and full-year earnings results on March 21.