Tencent Holdings Limited is an investment holding company. The company was founded by Hua Teng Ma, Li Qing Zend, Yi Dan Chen, Chen Ye Xu, and Zhi Dong Zhang on the 11th of November in 1998. Its headquarters are in Shenzhen, China. It works through different segments, like value-added, Fintech, online advertising, and similar segments.
The value-added services segment has mobile and online games, community value-added services, and applications across multiple mobile and internet platforms. The FinTech and Business Services segment gives cloud and fintech services. It comprises of commissions from wealth management, payment, and other services.
The online advertising segment has performance-based and display-based advertisements. The other segments consist of software development services, trademark licensing, software sales, and other services.
Tencent Holdings—A Look at Their History
Tencent Holdings, a Chinese internet services provider, is based in Shenzhen, Guangdong province. There is tough competition between Tencent and Alibaba Group, the country’s largest e-commerce company. In China, Baidu, Alibaba, and Tencent are collectively known as BAT.
Ma Huateng, the CEO and Founder of Tencent Holdings, was a young entrepreneur from Shantou, the coastal eastern part of Guangdong Province. Many competent overseas Chinese comes from this region. He’s one of the major shareholders of Tencent, owning about 10% of the company.
The founders established Tencent in 1998. There was a spike in the interest of its social network service QQ, and the number of users of its smartphone chat app called WeChat surged drastically. The numbers reached 549 million by the end of March 2015.
WeChat started gaining popularity with the young Chinese. Most of the company’s revenue primarily comes from smartphones and PC as well as advertising. A spike in QQ and WeChat users resulted in higher earnings.
Tencent Holdings—An Overview
Tencent has a mission to enhance the quality of human life through Internet services. Tencent provides value-added internet, telecom, and mobile services and online advertising. It provides these services under the primary strategic goal of giving its users “one-stop online lifestyle services.”
Leading Internet Platform
- QQ (QQ Instant Messenger)
- QQ Games
These leading platforms have brought together the largest community of China to meet the needs of the users. It caters diverse demands of its audience such as information, communication, entertainment, e-commerce, and others.
Research and Development
Tencent’s development has profoundly influenced hundreds of millions of users, enabling them to communicate with one another. It brings possibilities of a broader range of applications to China’s internet market.
Tencent maintains its commitment to enhance its development and innovation abilities and strengthen its branding for long-term development. More than 50% of its employees are Research and Development staff. It has obtained patents related to technologies in various areas.
It includes instant messaging, e-commerce, online payment services, information security, gaming, etc. In 2007, Tencent invested more than RMB 100 million to set up the Tencent research institute, China’s first research institute.
It has campuses in Shanghai, Beijing, and Shenzhen. The institute concentrates on developing core internet technologies to pursue its innovation and development for the industry.
Tencent wants to fulfill corporate social responsibilities and promote civil Internet communities to become the most respected Internet enterprise. It has been participating in public charity programs as well.
Tencent started the Tencent Charity Fund in 2006. It is the first charity foundation opened by a Chinese internet enterprise. It also started the public charity website called gongyi.qq.com.
The website concentrates on youth education, support for the disadvantaged groups, disaster relief, and aid for impoverished communities. Tencent began multiple public charity projects across China. It strives to become a good corporate citizen and build a harmonious society.
Tencent Holdings—The Progress
Tencent has come up with different strategies to develop the company forward. Here are the main ones the company follows.
Tencent’s monetization strategy has been counter-intuitive to the traditional way of business. The company first creates a service or product and then seeks customers. In contrast, Tencent started a distribution platform, built its reach, and monetized its diverse applications.
Its main revenue source is value-added services, which consist of PC-based and smartphone gaming. Social networking (membership subscriptions, digital content subscriptions, and selling virtual goods) account for over 70% of the total revenue. The rest is from e-commerce and online advertising.
Gaming is Tencent’s core revenue stream. Mobile gaming has become one of the largest platforms for games, and Tencent has always been the leader of this race .
Since online gaming’s inception, Tencent meticulously worked to secure its position as the largest operator and developer of online games for desktop and personal computers. The company focused on mobile gaming in 2013, launching game centers in Mobile QQ and WeChat, giving it a user base for mobile games.
After that, it focused on the global gaming market, buying stakes, or making large acquisitions of international gaming companies. As a result, it became the world’s largest online gaming company, controlling a 13% market share. In 2016, its game revenues passed the $10 billion mark.
It’s not shocking that Tencent hasn’t felt the need to leverage the advertising potential of WeChat. It has numerous other profitable revenue streams to concentrate on. Advertising revenue has increased more than 50% year-on-year since 2013. It’s a growing revenue stream.
Tencent launched ads in its official WeChat accounts. The company claims to build “a whole advertising ecosystem” to provide data, content, tech, media, etc. It has vigilant control over the number of advertisements on feeds to avoid any drastic effect on user experience.
For example, WeChat limits native ads on a user’s feed to one per day.
According to reports, Tencent isn’t aggressive on advertising as it is working towards understanding its audience for better targeting. Its engine for growth can become targeted advertising in a few years. The company is growing immensely with its developments and initiatives, and it has a promising future ahead.