Chinese company Tencent, the company behind League of Legends (LoL), generated $ 11 billion in revenue last quarter. The company is 7 times larger than the western gaming publisher Activision Blizzard (WoW, Overwatch, Call of Duty, Destiny). How does the company manage this?
What are these numbers? Chinese tech giant Tencent has disclosed its Q2 2018 figures. The numbers are shining:
- So the turnover is 11.135 billion US dollars. An increase of 30% compared to the second quarter of 2017.
- The profit is $ 2.808 billion.
- In addition, it has been possible to increase user loyalty, it says in a statement.
By comparison, Activision-Blizzard is one of the largest Western gaming corporations. They distributed games like Overwatch, World of Warcraft, Call of Duty or Destiny 2.
Activision-Blizzard has generated sales of $ 1.64 billion over the same period. As a result, Tencent’s revenue is 7 times greater than Activision-Blizzard.
The power of Tencent
Tencent is known for using “Western concepts” and offering them in the closed Chinese market. There is little competition there. The founder of the company, Huateng “Pony Ma” Ma, is considered the “king of the copying”. They have taken this concept to the extreme in recent years.
In the meantime, Tencent’s offerings have become a community of individual services that mesh with each other. From a Western point of view, Google, Facebook, Steam, Twitch, PayPal, and Activision are working together:
- Tencent has social platforms such as WeChat, Qzone or Weixin
- A messenger service QQ
- Own search engine “Soso”
- News feeds like QQ KanDian
- With WeGame as an alternative to Steam to a separate version of the streaming service Twitch
- Financial service providers similar to PayPal
- And you have an online advertising business on top
Since the Chinese market is huge, many of these services have high user numbers.
Meshwork of a system
All this leads to a kind of closed system in which Tencent gives its own games. They can push the games through its own social media channels. Honor of Kings is integrated into the popular messenger app “We Chat”. Users see when someone is playing near them and can start a new match.
On the platforms you can also display ads from other companies through their own advertising business and players pay for their own payment app.
Smart investments in the West
Tencent is using the money from the Chinese market to gain exposure to successful gaming companies in the West. For example, they owns Riot Games, the makers of LoL. In addition, the company owns a large share of Epic, the developers of Fortnite.
Western publishers are looking for closeness: companies like Ubisoft, which are looking to enter the Chinese market, are also seeking a partnership with Tencent. For them, it is important to get into the Chinese market. In addition, Tencent is known for letting the companies who buy them have a lot of freedom. This is just a glimpse of the power of Tencent.