Left Menu
Development News Edition

UPDATE 4-China's Tencent wins on lockdown gaming boom

Reuters | Updated: 14-05-2020 08:55 IST | Created: 14-05-2020 08:55 IST
UPDATE 4-China's Tencent wins on lockdown gaming boom

High demand for video games during COVID-19 lockdowns buoyed Tencent Holdings' first-quarter revenue and profits, with blockbuster games PlayerUnknown's Battlegrounds Mobile and Honor of Kings helping it beat forecasts. The Chinese company's video games business, which generates more than a third of its revenue, saw growth of 31% to 37.30 billion yuan ($5.26 billion) as people sought entertainment at home and used online multiplayer games to spend virtual time with friends.

Its flagship games PlayerUnknown's Battlegrounds (PUBG) Mobile and Honor of Kings topped mobile games revenue globally in March, analytics firm Sensor Tower said, reinforcing Tencent's status as the world's largest gaming firm by sales. In-game spending on extras such as power-ups and object skins for PUBG Mobile alone surged to $232 million, more than three times the amount the title generated in March 2019.

Average revenue per user of China's mobile games jumped from 62.9 yuan in Q4 to 85.2 in Q1 as a result of limited offline entertainment options, Jason Zhou, an analyst with Guotai Junan Securities, calculated. However, Tencent's President Martin Lau said that in-game consumption was reverting to normal levels after the May 1 holiday as people began to return to work.

DUNGEON, FIGHTER MOBILE PROMISE GROWTH Tencent's stock has jumped nearly 14.38% this year, against a 15% decline in Hong Kong's broader Hang Seng index.

By contrast, shares in its U.S.-listed rival, which is focused on e-commerce rather than gaming, have dipped by almost 6% over the same period. Alex Liu, an analyst with China Renaissance, said the lockdown boost was unlikely to be sustained, but strong deferred revenue was likely for the rest of the year and new titles, including Dungeon and Fighter Mobile, would deliver robust growth.

"The pandemic expedited the digitalisation of people's way of life...Tencent is very mature in the monetisation of its current products," Liu said. James Mitchell, Chief Strategy Officer, said the coronavirus impact had heightened business awareness of the need to be online and the company would cater increasingly for that.

"This is the trend as Tencent swtiches gear to focus more on serving businesses," Zhou said. Tencent's overall revenue jumped 26% to 108.07 billion yuan ($15.24 billion), while net profit rose 6% to 28.90 billion yuan for the three months to the end of March, with both ahead of the average analysts estimate, Refinitiv data showed.

The company said its group online advertising revenue rose 32%, with gaming and education-related ads on WeChat and its other apps helping it to buck a broader advertising downturn as the global economy reels from the pandemic. Social media advertising revenue grew 47%, highlighting a shift in behaviour as people were confined to their homes. However lower revenues from its video and news platforms reduced its revenue from media ads by 10%.

($1 = 7.0930 Chinese yuan renminbi)


TRENDING

OPINION / BLOG / INTERVIEW

COVID-19 seems cooking biggest ever global scam

The increasing number of corruption cases on COVID-19 funds from throughout the world and involvement of high profile persons indicate that the countries cant ignore corruption in their pandemic response programs. This has generated the nee...

Health Management Information Systems lack holistic, integrated, and pandemic resilient character

Being a part of the United Nations system, the World Health Organization WHO deserves its share of rebuke for its alleged failure issue COVID-19 health emergency alerts on appropriate time. However, the pandemic has also exposed loopholes i...

Pride in the time of coronavirus: a welcome move online?

This year is different in many ways not least as celebrations are also taking place against the dramatic backdrop of a global health crisis and a resurgence in grassroots activism following the death of George Floyd in Minneapolis. ...

COVID-19: Weighing up the benefits and limitations of edtech platforms

Edtech companies shouldnt focus on merely pushing contents, but to provide an interactive, effective teaching and learning environment. ...

Videos

Latest News

West coast to receive less rainfall in next 24-48 hrs: IMD

The forecast by the India Meteorological Department IMD predicts that in the next 24-48 hours west coast would receive less rainfall. The forecast for the next 24-48 hours indicates reduced rainfall activity over the west coast intermittent...

TikTok to leave Hong Kong as security law raises worries

TikTok said Tuesday it will stop operations in Hong Kong after the city enacted a sweeping national security law last weekThe company said in a statement that it had decided to halt operations in light of recent events. TikToks departure fr...

Australia's 2nd largest city foils nation's pandemic success

Australia has been among the worlds most successful countries in containing its coronavirus outbreak with one exception. The southeastern state of Victoria had some of the nations toughest pandemic measures and was among the most reluctant...

WRAPUP 1-Red line of Hong Kong security law is not "doom and gloom," city leader says

Hong Kongs national security law does not spell doom and gloom, its leader said on Tuesday, as she tried to calm unease over legislation that critics say could mean the end of freedoms that have underpinned the citys success as a financial ...

Give Feedback