While analysts projected a profit loss for Tencent due to the Chinese government's crackdown on big tech companies, the impact of these measures has been comparatively low. The tech firm still managed to generate $9.7 billion in profits this past Q3, a $100 million decline when compared to its second quarter. While earnings in the value-added services (VAS) sector, which encompasses everything from games to streaming and social media services, actually rose again, Tencent's side hustles seem to continue to stagnate.
As our chart shows, profits from online advertising and fintech ventures have been hovering at around a combined $3.5 billion over the past year, with VAS making up 64 percent of the company's total gross profit in the past quarter. A real evaluation of the subcategories of this rather obtusely named segment is difficult, since Tencent's only releasing the revenue numbers for a few selected divisions. Even though WeChat, the company's super app covering everything from communication to payments, has 1.2 billion monthly users according to company filings, most of the firm's earnings stem from gaming. Domestic games like Peacekeeper Elite generated $5.2 billion in revenue this past quarter, while international acquisitions like Clash of Clans contributed $1.7 billion to the revenue stream. Since the associated costs are not divvied up in Tencent's financial reports, it's hard to say which subsegment was the most lucrative for the company all things considered.
In the coming months, the Chinese tech giant's earnings will likely see a spike if the government doesn't instate preventative measures: From October onward, tech corporation Alibaba has started allowing payment via WeChat Pay in some of its apps. This decision is probably fueled by the looming breakup of payment service Alipay by Chinese regulators, which is a continuation of the People's Republic's efforts to quell the influence of big tech on its citizens.