After all, Tencent is a Guangdong-based company. It is better to say that it will not lose.

After the Hong Kong stock market on August 14, Tencent Holdings announced the second quarter of 2019 as scheduled.Financial Report. The financial report shows that Tencent’s second quarter revenue was 88.821 billion yuan, up 21% year-on-year, up 4% quarter-on-quarter, lower than market expectations of 93.409 billion yuan; net profit was 24.136 billion yuan, up 35% year-on-year, down 11% from the market, higher than the market. The expected 21.1 billion yuan.

In general, this is a quarterly reduction and efficiency increase for Tencent. The revenue did not meet expectations, reflecting the off-season of the game, the sluggish macro advertising industry, the film and television drama and other content affected by the policy, the payment of user withdrawals and other issues; and the profit exceeded expectations, because it continued to cut the marketing market costs, reduce investment, etc. action.

As for the industry Internet that Tencent has been promoting since last year, Tencent’s financial report still does not separately disclose revenue from cloud and payment. The growth of Tencent Cloud is only a simple evaluation of President Liu Chiping’s “very good”. But even Alibaba Cloud, which has the largest share of China’s public cloud market, has not achieved breakeven. At least for a few years, Tencent can’t count on Tencent Cloud and other corporate service businesses to contribute profits. On the contrary, this still requires a large and long-term continuous investment.

Another obvious change is Tencent’s earnings report and subsequent Telephone Club is increasingly seeing bytebeat as a real opponent. Although there is no direct name, it can be seen in the lines. Whether in the advertising or game business, Zhang Yiming and his bytebeat are already major issues that Tencent executives can’t avoid for investors and analysts.

Ad revenue is waiting for dawn

This quarter, Tencent’s online advertising revenue was RMB 16.4 billion, a year-on-year increase of 16%. In the previous four quarters, the year-on-year growth rate of this business was 25% for 19Q1, 38% for 18Q4, 47% for 18Q3, and 39% for 18Q2. In addition to the challenges inherent in the current macro environment, the earnings report also highlighted the increase in the supply of advertising stock throughout the short video industry.

In the case of a slump in the overall advertising industry, short videosThe more advertisers you attract, the fewer customers you get from other media formats. However, at the short video track, Tencent is still at a big disadvantage. The DAU of the fast-paced and byte-hopping products are at the level of two or three hundred thousand. The main video products of Tencent’s short video are less than ten million. Although Microvision started commercialization earlier, too little inventory is still difficult to contribute to the group, but it may hurt the user experience because it is too early commercialization.

By the way, the ads and social media revenues were 12 billion, up 28% year-on-year. This achievement can only be said to be qualified. However, seasonally more obvious media advertising revenue was only 4.4 billion yuan, down 7% year-on-year. These two items are also the worst growth rate in a year. The explanation given in the financial report is that they were affected by the World Cup last year, so the income is high. This year, they have been hit by the “limit orders” and other video policies, resulting in income. It has slipped. But in fact, Q2 should have been the peak season for advertising. It is also mentioned in the earnings report. Every June, there are retail advertisements brought by e-commerce, and this year, the online education industry has been fierce before the summer. Advertising Wars.

In the case of advertising, Tencent not only has less revenue, but its external spending is also gradually tightening.

This financial report shows that Tencent’s sales and marketing expenses were RMB 4.718 billion, compared with 6.36 billion in the same period last year, a drop of nearly 1/4. In fact, Tencent’s tightening of the belts began in the fourth quarter of 2018, but it’s not as big as the sales cost in 2019, Tencent’s sales and marketing expenses for the quarter fell slightly from 6.02 billion in the same period in 2017 to 5.73 billion. This financial report is Tencent’s third consecutive year of lowering this expenditure .

One of the reasons is still the suspension of the game version in 2018, which has led to a sharp decline in new products. Even though the regulators restarted the game version at the end of last year, there are so many backlogs, and there are no particularly hot products in Tencent’s new or commercial games. There is no reason to launch large-scale marketing and marketing. Activities.

Tencent CFO Luo Shuo said, “Compared with the same period last year and the first quarter, the company more strictly controlled marketing expenses, in order to improve marketing efficiency, if not met our requirements The entire marketing campaign will be cut off… In the future, the company will continue to strictly control marketing expenses…”

It’s pessimistic that, as Tencent said in its earnings report, “We expect the negative impact of the current business environment to be 20Continued in the second half of 19th.

Tencent’s chief strategy officer James Mitchell’s explanation at the conference further reduced analysts’ and investors’ expectations: “This situation may continue next year, and thus for the company’s Advertising revenue has an impact, especially for automotive, real estate and financial services advertisers on the media platform.We have no way to control the overall macroeconomics and industry advertising supply, but we can control the company’s own advertising inventory growth. Providing customers with new advertising tools and precise marketing. These can help the company’s advertising business achieve healthy and sustainable under the current macroeconomic conditions, but may not grow very fast.”

Even so, Tencent’s president, Liu Chiping, still sees the social and performance advertising business and the financial technology business with no reserve interest income as the main driving force for the company’s growth in the future, and these two businesses are currently Liu Chiping personally manages the business group CDG.

Is the Tencent game really warming up?

As the leader of game companies in China and around the world, the changes in Tencent’s game business can best reflect the rise and fall of the entire industry.

This quarter, Tencent’s online game revenue increased by 8% year-on-year to RMB 27.3 billion, of which mobile game revenue increased by 26% year-on-year to RMB 22.2 billion (this includes smartphone game revenue attributable to social networking business). ), end-game revenue fell 9% year-on-year to 11.7 billion yuan. Tencent’s game users continue the trend of 2018, and continue to migrate the PC-side game time to the mobile side, which also leads to continuous changes in revenue.

Game revenue has long contributed the most to Tencent’s total revenue. After the Chinese game has undergone the approval of the 2018 version for 9 months, it has entered a new era of strict supervision. So the question now is, the version number has been restored, and the Chinese game market and Tencent games have also picked up?

Gamma Data Released “2019 China Game Industry Semi-annual Report” Display: 2019 In the first half of the year, the actual sales revenue of the Chinese game market was 116.31 billion yuan, a year-on-year increase of 10.8%. Although this growth rate has rebounded compared to the worst game industry in 2018, it must be pointed out that this year’s game market is affected by the backlog of product inventory last year. 卯eat寅foodThe phenomenon of means that part of this year’s income should have belonged to last year.

And returning to Tencent Games, we can see that in the first quarter of 2019, Tencent’s online game revenue decreased by 1% year-on-year to 28.5 billion yuan, and the second quarter revenue increased by 8% to 27.3 billion yuan. In the first half of 2019, the revenue was 55.8 billion yuan, still occupying half of the Chinese game market, but the growth rate did not catch up with the industry.

Therefore, in an industry with an annual growth rate of only about 10% (and possibly even moisture), it is also very reluctant to say that Tencent games are getting warmer.

In addition, the flow of upstart, has become a small giant’s byte beating in the game field is also under the Tencent City, from the game advertising to the game release intermodal, and now the self-developed game business has long been no secret. Although Tencent won a lot of game titles under the limited approval speed in the second quarter, it has released ten new games. However, whether it is the industry growth rate or the opponents, it is a real problem that Tencent cannot avoid.

Liu Chiping also responded to the call at the conference, saying that Tencent is welcome to expand the new model of the game business through short videos, because this will help the game industry grow. But the advantage that Tencent is unique and not available to other companies is a strong social network. This factor is very important for large games. Therefore, in the case that the social network advantage is still difficult to shake, Tencent will not worry about the emergence of more and more competitors in the game Red Sea.

In addition, Liu Chiping added that if a company’s game advertising revenue is too large, it may lose the motivation to develop games. Game advertisers have always been the biggest customers of today’s headlines and vibrato.

However, there is no good news. Due to the deferred account period, the tactical competitive mobile game “Peace Elite”, which has just started commercialization in the Chinese market in mid-May, has limited contribution to the second quarterly report, and its absorbing ability will be in the future especially The third quarter of the summer broke out.