Despite being a relatively unknown company in the gaming community, Chinese conglomerate Tencent is in fact the current reigning superpower. According to research data gathered by ForexSchoolOnline, the company’s gaming revenue for the final quarter of 2019 was $5.22 billion.
Sony followed at a distance with a total of $3.879 billion while Apple made $2.887 billion. During the same period, Microsoft made $2.831 billion and Nintendo, the company that once reigned supreme, made only $2.286 billion.
A major differentiating factor has to do with its approach. Take into consideration the fact that previous champs like Nintendo spent decades building characters and franchises from scratch. Tencent takes a vastly different approach, acquiring and investing in major names in the gaming sector.
For instance, it owns Riot Games, the powerhouse behind League of Legends creators. Moreover, it holds a 40% stake in Epic Games, which is responsible for Fortnite, and 84% in SuperCell, the company behind Clash of Clans. It also operates WeGame, China’s Steam and holds minority stakes in Assassin's Creed and Call of Duty.
It therefore comes as no surprise that Tencent was ranked as the top Chinese global mobile gaming brand builder in 2020 by BrandZ. A July 2020 report from this source awarded Tencent 454 Brand Power scores, putting it in first place ahead of competitors FunPlus (438 points) and Zenjoy (396 points).
China’s Online Video Market Enjoys Explosive Growth
Tencent’s rise to global fame is partly attributable to massive growth in China’s appetite for entertainment, particularly the online video industry.
In 2009, the online video market’s revenue was 2 billion yuan and barely a decade later, it shot up to 102.84 billion yuan. This figure is expected to surpass 170 billion yuan by 2022. Similarly, the ad spending of the online video industry in the country rose from 4 billion yuan in 2011 to 36.71 billion yuan in 2019.
At the onset, Tudou and Youku, once referred to as China’s YouTube, were the most popular video platforms in China. But that only lasted until others, including Tencent Video and Baidu’s iQiyi platform arrived on the scene in 2010. Youku and Tudou merged and were later acquired by Alibaba in 2015.
To date, these three, Baidu (iQiyi), Tencent (Tencent Video/QQ Video) and Alibaba (Youku Tudou) collectively known as BATs, dominate the online video market. In order to stay in the tough race, they have to find ways to one-up the competition.
For instance, Tencent has invested massively in gaming and eSports streaming platforms like Bilibili and Huya. But iQiyi, popularly referred to as China’s Netflix, holds the dominant position.
The remarkable market growth happened even though the market volume growth of the online video industry dropped significantly since 2015. In the period between 2015 and 2019, it went down from 57% all the way to 15.3%.
Leading The Pack Beyond Gaming
In addition to holding a dominant position in the online gaming market, Tencent also stands out in another regard. It is not just another video game company. Rather, it is a massive conglomerate whose founder Ma Huateng, popularly known as Pony Ma, has ventured into plenty of different sectors.
Besides holding investments in movies and tech, the company also operates the massively popular WeChat app and QQ, an instant messaging service. The latter two have upwards of 1 billion as their combined user base.
Tencent operates Sogou.com, a popular search engine in the country, and its performance is particularly impressive. In fact, Sogou.com is the second largest search engine in China after Baidu.com.
As of July 2020, the average time every visitor spends on Sogou.com daily is 28,250 seconds, or 38 minutes and 45 seconds. On the other hand, the average time spent on Google.com is 866 seconds, while Google.cn gets 584 seconds and Baidu.com, 540 seconds.
Sogou is integrated with WeChat to index search content exclusively and also works with Zhihu, the top Chinese Q&A platform, to provide search results.
The conglomerate is also popular for its Tencent Appstore, the most popular third-party app store for Android in China. On this platform, there are over 103,000 apps available for download, 97.4% of them being free of charge.
Of these, gaming apps take the lead, currently numbering over 25,000, followed by lifestyle apps, which number below 15,000. A majority of the apps here are rated 4.5 to 5 stars (out of 5 stars) by users.
Lastly, the Tencent Appstore has attracted over 61,247 publishers and has more than 200 million active users.