Author: Riccardo Hu
Tencent Holding Ltd, also known as Tencent, was founded in 1988 and is a Chinese multinational technology and entertainment conglomerate and holding company. It is the 12th largest company worldwide by market cap with a value of $483.20 Billion, providing various Internet-related services and products, ranging from social networks, music, e-commerce and online gaming. It is mostly known for owning WeChat, qq.com and Tencent Games.
With “Tencent Games“, Tencent’s subsidiary in the gaming industry, the company has become the largest video game vendor. Among the most famous games created are PUBG and Honor of Kings (the most played video game in China). Tencent has also been investing in various foreign companies, such as Riot Games and Epic Games, respectively, the developers of League of Legends and Fortnite.
The subsidiary has been one of the major focuses of the holding company in recent years as its importance has been increasing with the growth of the gaming industry. Indeed, with the Covid-19 pandemic, a surge in the users turning to video games during the first lockdown has led to the boom in the gaming industry. Furthermore, Tencent’s gaming sector has made up a major portion of its total profits in 2020: video games alone accounted for a third of its revenues, with an increase of 40% year on year.
Since early 2021, China has started new regulations and laws on the tech and gaming industry with the aim to combat internet addiction. For example, on August 30, China introduced a limit to the time minors can spend gaming online. The restriction has taken a toll on Tencent, whose share price has rapidly dropped. Despite that, Tencent’s President Martin Lau said the company will embrace changes to align to the new industry paradigm, with key elements of sustainability and healthy growth.