Tencent reported to consolidate 3 content business groups

Tencent is consolidating three content business groups to form one unit, as well as create a new unit for cloud and smart industries, according to multiple media reports including Reuters, Nikkei Asian Review and the Wall Street Journal.

The company will also further explore the integration of social, content and technology that is “more suitable” for future trends. Media reports stated that the gaming and social media firm is also looking to promote the upgrade from consumer internet to industrial internet. A technology committee will be formed to strengthen Tencent’s research and development, as well as promote collaboration and innovation.

WSJ reported that online media and mobile internet are among the content business groups that will be consolidated, while video games will continue to operate under the interactive entertainment group.

The move is seen as a bid to boost its cloud-based data offering services for corporate clients, an area which is dominated by Alibaba Group in China. The restructure also aims to improve Tencent’s content offering for various services such as WeChat, games and music.

Tencent’s spokesperson confirmed to Marketing that there will be no layoffs.

The company posted a revenue of RMB73,675 million for the second quarter of its financial year ended 30 June 2018 (Q2 2018), representing a 30% year-on-year increase. This was driven primarily by payment-related services, digital content subscriptions and sales, social and others advertising, and smartphone games.

Its online advertising business saw a 39% increase to RMB14,110 million Q2 2018. Social and others advertising revenues increased by 55% to RMB9,380 million, due to its mobile advertising network and Weixin and QQ KanDian. Media advertising revenues grew by 16% to RMB4,730 million. The growth mainly reflected greater contributions from Tencent Video as a result of its content portfolio and advertisers’ sponsorship campaigns.

Meanwhile, social networks revenue increased by 30% to RMB16,867 million, driven by higher contributions from digital content services such as video streaming subscriptions and live broadcast services.

Revenue from Tencent’s value-added services business increased by 14% to RMB42,069 million for Q2 2018. Online games revenue increased by 6% to RMB25,202 million, due to growth in revenues from smartphone games such as Honour of Kings and QQ Speed Mobile.

Source: marketing-interactive.com; 1 Oct 2018

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