Tencent profits up as gamers stay home but WeChat ban looms

Marco Green
August 13, 2020

Chinese gaming and social media giant Tencent Holdings said second-quarter net profit rose 37 per cent, beating market estimates, on higher demand for its video games as coronavirus put a dent in other entertainment options.

Social networks, fintech and company products and services, and social promoting revenues all grew by nearly 30%.

Tencent on Wednesday announced its financial results for the second quarter of 2020, one of the fastest revenue-growing quarters in two years.

Tencent tried to reassure investors that U.S. President Donald Trump's ban on its WeChat messaging service may apply only to its overseas operations, suggesting the impact on the world's largest gaming corporation should be modest.

Its social network revenue increased by 29 percent to over 26.71 billion yuan.

"During this challenging time, we utilised our platforms and technologies to help users adapt to the new normal via online tools, to support enterprises in conducting digital upgrades, and to broadly contribute to economic recovery", it said in a statement.

At the beginning of August 2020, USA president Donald Trump signed an executive order addressing Chinese owned and developed apps Wechat (Tencent owned) and TikTok (Bytedance owned), for what he deemed as threats to "national security, foreign policy, and economy of the United States".

The expectation has been that Trump's order would result in WeChat getting pulled from Apple and Google's app stores, where the vast majority of smartphone owners get their applications. "This data collection threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information". US companies like Starbucks Corp. and Walmart Inc. collaborate with Tencent in China and generate advertising and e-commerce revenue for the company. Its game investments range from full ownership of games developer Riot Games to minor stakes in Activision Blizzard and Epic Games.

The combined monthly active users of Weixin and WeChat had exceeded 1.2 billion by June 30, up by 6.5 percent year on year.

Other reports by Click Lancashire

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