Mergers & Acquisitions

Tencent aims to hook more online gamers, viewers with TV tie-ups

To hook more users to play Honour of Kings, watch its dramas and variety shows, Tencent has been teaming up with China’s biggest TV makers

PUBLISHED : Wednesday, 05 July, 2017, 10:14pm
UPDATED : Thursday, 06 July, 2017, 9:04am

Tencent Holdings, the largest social network operator in China, aims to expand coverage of its content products, such as videos and games, from mobile devices to television screens after teaming up with China’s major TV manufacturers.

The latest cooperation with TCL Group will allow Tencent, one of China’s major content producers of television series, variety shows and popular computer and online games, to tap TCL’s internet TV users and the hundreds of millions of television owners, said Guo Tong, chief executive of FFalcon Technology during a press conference in Shenzhen on Wednesday. FFalcon is a wholly-owned subsidiary of TCL Multimedia Technology Holdings.

Hong Kong-listed Tencent announced on Monday that its Tencent Digital has agreed to invest 450 million yuan (US$66 million) for a 16.67 per cent stake in Shenzhen Thunderbird Network Technology, an internet television operator backed by TCL Multimedia.

The strategic investment will make Tencent Digital the second-largest shareholder of Thunderbird, while Hong Kong-listed TCL Multimedia, which indirectly owns Thunderbird through FFalcon, will have its stake in the reduced from 54.05 per cent to 45.55 per cent.

FFalcon will create a new smart TV environment that combines integrated online and offline channels, hardware products, internet contents to host the massive copyrighted content from Tencent, according to Guo.

Customised games by Tencent, sales from online application store and membership fees are expected to become major sources of income for FFalcon.

Due to the fundamental difference in format between smart TV, personal computers and mobile devices, Guo said it was unrealistic to migrate Tencent’s popular personal computer and mobile games, such as the Honour of Kings, to TV terminals directly.

Tencent invests US$66 million in leap from smartphone screen to the big screen

While Tencent claims TCL as a long-term partner, the Chinese technology giant that owns the popular social network WeChat only had a department head attend their cooperation's event in Shenzhen on Wednesday. This is in stark constrast with the TCL lineup, which included the chief executive and chief financial officer of TCL Multimedia and FFalcon’s chief executive.

Zhao Gang, the general manager of the living room products department at Tencent Video, said the company's TV series and variety shows have attracted a large amount of online viewership and believed the “marriage” with FFalcon will further boost coverage.

As a content producer, Zhao stressed that “Tencent will never step into hardware production”.

Tencent and TCL will also establish a joint operations team.

In another strategic investment last month, Tencent invested 300 million yuan for a 7.71 per cent stake in Coocaa, the smart TV unit of Chinese TV maker Skyworth Digital Holdings, in a deal that valued the company at 4 billion yuan.

Skyworth is one of TCL’s key competitors in the mainland's vast TV market.

Data from China Market Monitor indicated that TCL had a 13.6 per cent market share for liquid crystal display television sets in the first quarter of 2017, making the company the mainland's third-largest TV supplier behind Skyworth’s 14.5 per cent share.

Guo said FFalcon Technology was also open to cooperation with other internet companies.