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. Chiefly from smartphone and PC-based gaming, digital content and membership subscriptions, as well as 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, many Chinese consumers pay with WeChat by scanning QR codes in physical shopping. In 2019, WeChat’s monthly active user surpassed 1.15 billion. Apart from e-commerce business, the tech behemoth has expanded to the gaming market. Its multiplayer online battle arena (MOBA) Honor of Kings became one of the highest-grossing mobile games in 2018. Considering its thriving e-commerce and gaming business, Tencent would very likely keep its dominant position in the Chinese internet industry.