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Image Source: Financial Reporting Company Chart
This quarter, Tencent’s value-added services revenue increased 15% year-on-year to 50.629 billion yuan, of which online games accounted for a maximum of 29%. Tencent’s main business continued to maintain a warming trend, with revenue up 11% year-on-year to 28.6 billion yuan, mobile game revenue up 25% year-on-year, and PC games down 7% year-on-year and 2% quarter-on-quarter.
At the end of last year, the haze that was disturbed by the game version gradually dissipated. It gradually recovered in the first half of this year. The game version began to open in the second half of the year. In the third quarter, Tencent had a total of 13 games approved, including 9 mobile games.
The commercialization of the “eat chicken” game “Peace Elite” is still confirming the initial stage of deferred income, and the harvest has not yet fully been shown in the earnings report. But for Tencent, the new national-level game is still not born. The 11th anniversary of the “Dungeon and Warriors” revenue declines, paying users are gradually losing, as the end-game is also in recession, Tencent game revenue will be increasing in the future. The trend of slowing down.
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In the third quarter, online advertising revenue increased 13% year-on-year to 18.4 billion yuan, accounting for 19%. Benefiting from the increase in advertising inventory and exposure of WeChat’s circle of friends, Tencent’s social and other advertising revenue increased by 32% year-on-year to RMB 14.716 billion.
But in the third quarter, media advertising revenue dropped significantly, with revenues of 3.65 billion yuan, a drop of 28%. Tencent explained that the media platform, including Tencent Video, is mainly affected by the macro environment and the uncertainty of the broadcast of major TV dramas. In fact, in recent years, influenced by macro factors and the rise of headlines, companies with advertising revenues represented by Baidu generally perform poorly.
In addition to the three major business segments, the number of combined monthly accounts of WeChat and WeChat is 1.151 billion. Year-on-year growth of 6.3%,The chain’s user data is not so optimistic. QQ’s monthly active account number decreased by 8.9% to 731 million, and QQ smart terminal monthly active account number was 653 million, down 6% year-on-year.
Financial Technology and Enterprise Services Become a New Engine
Before, due to the small income of the financial technology and corporate services business, it was included in other income. From the first quarter of 2019, the financial report began to include separate disclosures, with revenue of 21.8 billion yuan, a year-on-year increase of 44%, mainly benefiting from the increase in commercial payments and cloud service revenue.
After September 30, a year ago, Tencent announced the launch of a strategic upgrade and the establishment of the Cloud and Smart Industry Group (CSIG). Using Tencent’s C-side accumulation, it chose the C2B strategy and invested heavily in the industrial Internet, which grew rapidly in one year.
Financial technology and corporate services revenue for the quarter was 26.8 billion yuan, up 36% year-on-year, and this proportion of revenue to total revenue has gradually increased to 27.6%, an increase of 4 percentage points over the same period of the previous year, and became Tencent. The second largest revenue share business.
This means that Tencent’s revenue structure is still changing, and financial technology and corporate services may become a new growth imagination space for its future.
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In the third quarter of 2019, Tencent’s cloud service revenue increased 80% year-on-year to 4.7 billion yuan. In 2018, Tencent’s cloud service revenue for the whole year was 9.1 billion yuan. In the single quarter, it achieved half of the previous year’s performance. Tencent said that in terms of cloud revenue, it is mainly due to the increased usage of existing customers and the expansion of the customer base of education, finance, people’s livelihood services and retail.
On the other hand, the gap between Tencent Cloud and Alibaba Cloud is also gradually decreasing. According to Alibaba’s latest financial report, Alibaba’s revenue in the third quarter of 2019 was 9.291 billion yuan, which is Tencent’s single quarter revenue. 1.98 times, and that number was 2.46 times a year ago.
However, before there is Alibaba Cloud and Huawei Cloud, it is not easy for Tencent to achieve leadership in cloud services. According to industry data released by IDC, the overall market size of China’s public cloud services (IaaS/PaaS/SaaS) reached US$5.42 billion in the first half of 2019, of which IaaS market grew steadily, up 72.2% year-on-year, and the growth rate of PaaS market declined somewhat. The growth rate was 92.6%.
From the overall market share of IaaS and PaaS, Ali is still far ahead, with a share close to 50%, which is more than the total share of the second to fifth domestic manufacturers; in addition, in the second quarter of this year, Huawei Cloud IaaS+ PaaS The overall market growth exceeded 350%, the fastest growth among Top manufacturers.
Cloud computing opened in the second half, and the development of China’s digital economy is now on a new level. Liu Chiping said in a conference call after the earnings report, “At present, China’s 5G commercial is still in its infancy, the network speed is increasing, the demand for bandwidth services will increase, and many new applications will be stimulated, using real-time 5G networks, such as cloud games. The currently successful cloud games are small program games on WeChat. In the future, if the development of communication technology can ensure that huge amounts of data can be transmitted in a very short time, the experience of these cloud games will be very different.”
For companies such as Tencent, which have huge revenues, it is not easy to adjust the revenue structure. For example, after years of adjustment, Ali’s core business (e-commerce) still accounts for more than 80% of revenue. In the face of the bottleneck in the game industry, Tencent is able to establish new growth points, but whether it is in financial technology or cloud business, there will be more and more positive competition with Ali.
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