Chinese social media and gaming giant posted its slowest ever growth since going public in 2004. The company grew just 8 percent in the fourth quarter. This is reflecting regulatory scrutiny which has affected has hurt its gaming and advertising sales.
China has frozen game approvals since August last year and curtailed gaming time for under-18s, part of Beijing’s move to strengthen control over its society and industries including technology, after years of unbridled growth.
This has also led to a slowdown in advertising as businesses have cut spending.
Tencent Holdings, which gets much of its revenue from gaming and develops games such as ‘Honour of Kings’ and ‘Call of Duty Mobile’, said domestic gaming sales grew 1% in the quarter ended Dec. 31.
The restrictions on minors were effective as the total time spent by minors on its games sank 88%, Tencent said, adding that the impact of this factor on revenue growth would ease later in the year.
“As we move into the latter half of 2022 it should cease to impact the revenue growth rate,” Chief Strategy Officer James Mitchell told reporters on a call on Wednesday, referring to the minor-protection measures.
Tencent President Martin Lau said regulators were still supportive of the gaming industry, adding that the company had a ready pipeline of games for when approvals resumed.
The company, which also posted its slowest ever annual revenue growth at 16%, said revenue in its online advertising business fell 13% in the fourth quarter.
It expects its ad business to resume growth in late 2022 after companies adjust to regulatory requirements.
Total revenue rose to 144.2 billion yuan ($22.63 billion) in the quarter, below an average of 147.6 billion yuan expected by 17 analysts, Refinitiv data showed.
