How Tencent has it all and is still going for more
A quick search online about Tencent can be quite intimidating. These guys have some serious sway in the industry, like SERIOUS serious. To be brief, Tencent is the world’s largest video game company, one of the world’s most financially powerful companies, one of the world’s largest social media companies, and one of the world’s largest venture capital firms and investment corporations.
This includes social networks, music, web portals, e-commerce, mobile games, internet services, payment systems, smartphones, and multiplayer online games. You name it, they’ve got it covered. It’s a model that SuperOne has been watching for years.
It’s the biggest Chinese online video platform by daily average users (DAU) by a significant margin. In 2018, it averaged nearly 33% more daily users than second-place iQiyi and almost 70% more than third-place Youku.
Its user base is nearly three times that of Spotify and at the end of 2018, it announced that it had reached nearly 89 million paying subscribers. Tencent has its fingers in a lot of lucrative pies globally too. When the BBC shot the remarkably popular documentary Blue Planet in 2017, it was at the time the UK’s most-watched TV program.
No prizes for guessing who co-produced it. The thing is, in the West, unless you work in the tech industry, the name may not be familiar. Whether or not Tencent flies under the radar it’s quietly succeeded in establishing a nearly unparalleled global business footprint. They’ve taken stakes in household names such as Tesla, Uber, Lyft, and Snapchat, as well as Spotify, Reddit, Ubisoft, Activision Blizzard, and own 100% of Riot Games.
They’ve been able to build this empire due to the increase in smartphone users, declines in the price of mobile data, the widening range of mobile games to attract more diverse users, and the rise of mobile esports. What’s more, the total ubiquity of their messaging app named WeChat (a Chinese version of WhatsApp) has allowed Tencent to gain a 40% market share of China’s $4.7 trillion mobile payment market.
Where there’s a success there’s controversy though. Donald Trump says that the spread in the US of mobile apps developed and owned by Chinese firms “threaten the national security, foreign policy, and economy of the United States”. The US government says both TikTok and WeChat “capture vast swaths of information from its users” and that this form of data collection threatens to allow the Chinese to access Americans’ personal and proprietary information.
However, according to Alan Woodward, a cyber security expert from Surrey University, WeChat data sits on servers outside China for its international users, meaning that in theory, it’s more protected from state scrutiny. Tencent is the world’s fifth-largest tech company by market capitalization, overtaking Facebook and sitting behind only Apple, Alphabet, Microsoft, and Amazon.
This is an attack on established money markets all over the world and the long-term growth rate is currently an impressive 20%, suggesting pretty good prospects for the long haul.