Tencent’s Q1 revenue jumps 26% as lockdowns spur video game spending

Photo: REUTERS/Jason Lee/File Photo

High demand for video games during COVID-19 lockdowns buoyed Tencent Holdings’ first-quarter revenue and profits, with blockbuster games PlayerUnknown’s Battlegrounds Mobile and Honor of Kings helping it beats forecasts.

The Chinese company’s video games business, which generates more than a third of its revenue, saw growth of 31% to 37.30 billion yuan ($5.26 billion) as people idled away the time in front of screens and used online multiplayer games to virtually hang out with friends.

Its flagship games PlayerUnknown’s Battlegrounds (PUBG) Mobile and Honor of Kings topped mobile games revenue globally in March, analytics firm Sensor Tower said, reinforcing Tencent’s status as the world’s largest gaming firm by sales.

In-game spending on things like power-ups, object skins and accessories on PUBG Mobile alone surged to $232 million, more than three times what the title generated in March 2019.

However Tencent, a gaming and social media giant, warned that it expected some of the business boosts it enjoyed during lockdowns to be temporary.

“We expect in-game consumption activities to largely normalise as people return to work, and we see some headwinds for the online advertising industry,” it said.

Online ad revenue leaps

Global spending on digital games surged to $10 billion in March, the highest monthly total ever, according to Nielsen’s game data arm SuperData.

Tencent’s stock has jumped nearly 14.38% this year, against a 15% decline in Hong Kong’s broader Hang Seng index. Meanwhile shares in its U.S.-listed rival, which is focused on e-commerce rather than gaming, have dipped by almost 6% over the same period.

Japanese rival Sony’s gaming business has also benefited from lockdowns; the division was a bright spot in otherwise bleak annual results, bringing in more money as consumers downloaded its gaming software.

Tencent’s overall revenue jumped 26% to 108.07 billion yuan ($15.24 billion), while net profit rose 6% to 28.90 billion yuan for the three months trough March, with both ahead of the average analyst estimate, Refinitiv data showed.

The company said its group online advertising revenue surged by 32%, with gaming and education-related ads on WeChat and its other apps helping it buck a broader advertising downturn as the global economy reels from the pandemic.

Social media advertising revenue grew 47%, highlighting a shift in behaviour as many people were confined to their homes. However its revenue from media ads fell 10% due to lower revenues from its video and news platforms.

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
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