Tencent is one of the Chinese tech companies which can find footing in the global marketplace. Started as a PC-based messaging software in 1999, it has evolved into an internet giant. With a market value of 461 billion U.S. dollars, Tencent ranked fifth among its global rivals. Within China, Tencent’s products have enjoyed a great popularity, such as instant messengers WeChat and QQ, social networking service Qzone, and mobile game Honor of Kings. As the conglomerate becomes more global, its revenue saw an exponential growth over the past decade. Clearly, Tencent’s remarkable achievement has inspired the global technology world how to build an ecosystem within the mobile phone.
A different business model
Tencent adopted a counter-intuitive approach in building its empire – increasing customer reach before app monetization. While Facebook’s business relied on advertising heavily, online advertising accounted for less than 20 percent in Tencent’s annual revenue. Unlike its West social network counterparts, the enterprise’s major earning came from value-added services, about a third of which was generated by online games. Other important revenue streams include digital content, membership subscriptions, and virtual goods sales.
Diversity is the king
Another clever move of Tencent was to diversify its products. The success formula of WeChat was its one-stop solution, making it indispensable in daily life in China. From hospital registration and taxi calling to movie ticket booking and holiday planning, it is the super app for everything. In fact, the age distribution of WeChat users spread quite evenly in China. Many Chinese consumers pay with WeChat by scanning QR codes in physical shopping. In the first half of 2021, the number of WeChat’s monthly active users surpassed 1.25 billion.
Apart from e-commerce business, the tech behemoth has made its foray into the world of online video, digital music, e-reading, and video games. With ownership stakes in Riot Games, Epic Games, and a few game developers and publishers, Tencent has climbed to the top of the ladder in gaming. Its partnership with Nintendo since 2019 has further extended Tencent's home entertainment offerings in the Chinese console market. Considering its thriving e-commerce and gaming business, Tencent would very likely keep its dominant position in China's internet industry.
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