Tencent has faced a number of obstacles in 2022, including a Covid-19 slowdown in the Chinese economy and a tougher gaming market.
Bobby Diep | Reuters
Tencent said it will launch new cloud computing products aimed at overseas markets as it looks for new growth paths amid a slowdown in its core online video game business.
On Thursday, Tencent will hold a dedicated cloud product launch event for markets outside of China, including a suite of cloud-based video and audio products.
The move marks a realization that Tencent needs to find new sources of growth abroad as China’s economy slows. Besides the continued pressure from the Covid outbreak, Chinese tech companies also face a tougher regulatory environment at home.
In particular, Tencent has been affected by stricter regulations for online games. Last year, Beijing rule introduction cut the amount of time under-18s can play online games to a maximum of three hours a week. The management agency also freeze game approvals for several monthswhich means companies like Tencent and rival NetEase cannot launch and monetize new titles.
While there are signs that the gaming crackdown may end now, Tencent has felt the impact. Domestic online game revenue fell 7% in the third quarter from a year ago.
Tencent’s second-biggest revenue driver is online games, so a slowdown in this segment will hamper overall growth.
The Shenzhen-based company sees cloud computing as an area where it can solve problems. Tencent’s fintech and business services division, which includes its cloud computing division, grew 4% year-over-year in the third quarter.
The Chinese tech giants are not only looking for new business divisions to grow, but also new revenue streams abroad. E-commercial company alibaba used my AliExpress and Lazada brands to overseas expansionfor example, while Tencent has enjoyed great success with its online games.
Now, Tencent is trading in the cloud. Products released Wednesday focus on audio and visual products such as live streaming for e-commerce or online meetings.
These products are aimed at companies that want such services but do not necessarily want to maintain such infrastructure or servers or build such features themselves.
Tencent’s strategy may focus on trying to register global companies with a presence in China as well as Chinese companies expanding overseas. Currently, companies like BMW are already using some of Tencent’s cloud products.
As the Chinese company expands overseas, it will enter a very competitive cloud computing market dominated by US giants. Amazon and Microsoft. Tencent’s international push with cloud computing is relatively late compared to rival Alibaba, which has expanded outside of China over the past few years. Now, Alibaba is one of the five largest cloud computing companies in the world.
Tencent’s focus on audio and video products plays to its strengths as one of the world’s largest game companies and the owner of WeChatChina’s most popular messaging app with over 1 billion users.
