Strong games, music and media performances between April and June helped China’s Tencent deliver a robust quarterly financial performance through the depths of the coronavirus crisis.
Group revenue in the second quarter was up by 29% to RMB114 billion ($16.3 billion), with net profits climbing by 37% to RMB32.4 billion ($4.63 billion). For the first half of the year, January to June, revenues climbed by 28% to RMB223 billion ($31.9 billion) with profit of RMB61.9 billion ($8.82 billion) up 18%.
The company, which recently saw its massively successful WeChat super-app, as the target of an executive order by U.S. president Donald Trump, said it saw growing business from regular subscribers. At the end of the period, it claimed 203 million paying subscribers to its music, video and library services, with 114 million alone for its streaming video platform.
With China affected by COVID-19 earlier than many other economies there were contrasting trends in Tencent’s games business in the second quarter. In China, user time spent on smart phone games increased year-on-year but decreased quarter-on-quarter due to seasonality and back-to-office behavior. “Honour of Kings” was the star performer, with Supercell’s “Brawl Stars” ranked first in the iOS China download chart in June.
Internationally, usage shot up both year-on-year and quarter-on-quarter, due to new game launches and more user time spent during the stay-at-home period. Tencent released an immersive team-based action game for PC, “Valorant,” which was the most watched game globally on Twitch during the second quarter.
Fee-based value added service subscriptions increased 20% year-on-year to 203 million. Tencent says this was primarily due to growth in video and subscriptions. Video subscriptions were driven by self-commissioned Chinese anime and drama series, such as “The Land of Warriors” Season 3, “Candle in the Tomb: The Lost Caverns” and The Romance of Tiger and Rose.
Tencent reported that traffic for long-form video sites in China, including Tencent Video, declined as China went back to office-based work and as delayed releases of key variety shows and drama series dented its offering. But the company also said that traffic has increased again since the end of June helped by the arrival of new series “Nothing But Thirty.”
Revenues from subscriptions increased by 35% to RMB65.0 billion for the second quarter of 2020 on a year-on-year basis. Online games revenues grew by 40% to RMB38.3 billion.
Also contributing to the subscription revenue growth was contributions from digital content services including the e-sports live broadcast activities of New York Stock Exchange-listed Huya, which Tencent consolidated as a subsidiary from April 2020.
This week Tencent proposed a merger of Huya with its rival the NASDAQ-listed DouYu, in which it also holds a large minority stake. A merger, if it happens, would create a giant in live streaming and e-sports with over 300 million monthly users (before overlaps) and would also give Tencent further leverage in the gaming field.
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August 12, 2020 at 05:07PM
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Games and Media Lift China’s Tencent to 30% Profit Increase - Variety
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