Tencents Difficult Times: New Business Bright Points, Shocked by New Opponents

 Tencents Difficult Times: New Business Bright Points, Shocked by New Opponents

Netease Technologies News August 25, according to foreign media reports, Tencents 20th anniversary in 2018, the day is not good, because its core game business is limited. This year, it has also been hit by younger, more flexible competitors, led by byte bounces.

The Chinese technology giants financial report last week was disappointing, with quarterly revenue of 88.82 billion yuan ($12.9 billion), lower than analystsexpectations of 93.41 billion yuan. In a less favourable macroeconomic environment, advertisers have been controlling budgets, but Tencents Wechat is also facing fierce competition in selling advertising space, with competitors including byte-bouncings fast-growing video application tremble.

At the earnings conference call, Tencent executives seem to be trying to plan a way to revitalize the companys performance. However, the company gives the impression that it is struggling with a variety of problems, including domestic market competition, but its weapons stockpile is seriously inadequate.

However, data from Bloomberg showed that although Tencents share price has fallen by more than 10% in the past three weeks, none of the 57 analysts who followed the stock suggested selling it. Elinor Leung, an analyst at CLSA, points out that the company is still dominant in the game market and that the Chinese government has resumed its domestic approval of game numbers.

Tencent President Liu Chiping put forward some ideas at the conference, including long and short videos, as well as the scope of synergies, such as adding character elements from games or novels (from Tencents Reading Group) to movies. But it has seen a similar situation before: in 2017, it will try to emulate YouTube by setting a cap on the content and investment that users and studios produce.

David Dai, an analyst at Bernstein Research, says Tencent itself needs a new story. If you are its investor, what are you investing in it? For the past five years, it has been a game of pitching. But if you buy Tencent today, youre not betting on its game.

Financial technology is a new area Tencent can try to surprise. For the first time in the previous quarter, the company made some breakthroughs in the field, claiming that both its subscribers and transactions were at the industrys leading level, despite less impressive revenue.

Again, regulators have tightened regulation of financial technology. Since January 1, Tencent and Alibabas Ant Golden Clothes have lost a considerable source of income because they can no longer invest with depositorsfunds.

The markets expectation of Tencents surplus is mainly the expected growth of enterprise services. In the second quarter, cloud computing generated revenue of $1.1 billion for Alibaba, up 66% year-on-year, while Tencents total revenue from financial technology and cloud computing increased by 37% to 22.88 billion yuan, mainly from commercial payments and cloud services.

Globally, most of the revenue of cloud computing companies comes from software services sold on cloud computing platforms. In this area, Chinese companies are still not as good as SAP in Germany or Salesforce.com in the United States.

Alibaba is ahead of Chinese companies and turned to collaboration to provide services earlier this year, most notably its partnership with Salesforce last month. This illustrates the difficulty of solo combat, and will now mean that players in this field need to share in the benefits. Competition in the Chinese market is also intensifying, especially in the field of cloud computing, Baidu and other companies hope to lay a foothold in the field of cloud computing.

Tencent also faces some other obstacles. The company needs to find new growth drivers in adversity. Like the millennials around the world, Tencent, 21, is struggling to grow. (Lebanon)

Source: Responsible Editor of Netease Science and Technology Report: Wang Fengzhi_NT2541