Third-quarter revenues grew by 13 per cent to RMB40.388 billion (US$5.951 billion) for China’s Tencent Holdings, an investment holding company whose subsidiaries provide media, entertainment, internet and mobile-phone value-added services, and online advertising.
Tencent revenues from value-added services business increased by 9 per cent to RMB27.975 billion for the quarter, while revenues from online games revenues rose by 6 per cent to RMB18.166 billion, mainly driven by positive seasonality for PC online games and by continued contributions from new smartphone games.
Social networks revenues went up by 15 per cent to RMB9.809 billion, reflecting growth from digital content subscription services, and to a lesser extent from virtual item sales.
Revenues from online advertising increased by 14 per cent to RMB7.449 billion, performance-based advertising revenues grew by 18 per cent to RMB4.368 billion, and brand display advertising revenues increased by 9 per cent to RMB3.081 billion, primarily driven by higher contributions from mobile platforms such as Tencent News and the positive impact of the Rio Olympic Games.
Profit attributable to equity holders of the company eased by 1 per cent to RMB10.646 billion for the quarter.
Strategy continues
Tencent Holdings continued its “Connection” strategy during the quarter by strengthening its social platforms and leveraging social traffic. More interactive social and performance advertising formats were added to drive user engagement, while advertiser tools were sharpened to improve performance measurement and deliver deeper data insight.
For digital content, the company’s CMC (China Music Corporation) and QQ Music management teams were integrated, and there was “aggressive” investment in content for its video platform, resulting in a substantial growth in subscriptions. Partly because of a healthier copyright control environment, more users paid for content on the company’s digital literature platform.
For payment-related services, the company says it made significant progress in driving merchant adoption. Nearly 700,000 merchants participated in its Weixin Pay “Cash-free Day” promotion in August – an increase of more than seven times year-on-year. A Weixin Checkout feature was introduced for merchants to simplify onboarding procedures and minimise payment integration work.
Cloud services revenue more than tripled year-on-year as more enterprise accounts were opened and use by key accounts increased, particularly in sectors such as online games, online video and O2O services.
During the year the company strengthened its mobile security in such areas as virus scanning, phony base-station detection, anti-fraudulent phone-number library, phone memory optimisation and speed boosting.
More users
For its key platforms, the company says monthly active users (MAU) for QQ increased by 1 per cent to 647 million, with new features including SMshow, offering animated personal avatars.
During the Rio Olympics, more than 100 million QQ users participated in a virtual torch relay campaign by building augmented reality into phone-to-phone interactions.
For Qzone, smart-device MAU also grew by 1 per cent, to 584 million. For WeChat and Weixin together, MAU reached 846 million, representing year-on-year growth of 30 per cent.
Revenue growth was strong for the company’s social networks business through more game-related virtual items being generated, plus digital content sales.
There was an 87 per cent leap in revenue from smartphone games, to about RMB9.9 billion. This was mainly driven by portfolio expansion and strong performance by major titles. At the end of September, Honour of Kings surpassed a record 40 million daily active users.
Advertising saw robust expansion, with Weixin and the mobile news app being the key contributors to year-on-year growth. Initiatives featuring the Rio Olympics attracted about 700 million unique visitors across the news and video platforms.