Tencent! One of the top tech giants in China. Although it started with instant messaging, three of China’s top social media networks, including WeChat, are currently under Tencent. Tencent is also the creator of popular games like Pubg Mobile, League of Legends, Call of Duty Mobile. As a result, the company is also China’s top game developer and publisher in terms of revenue.
In addition to social media and gaming, the company is involved in everything from payment and financial services, e-commerce, media and entertainment to cloud services, advertising and the real estate business. According to Market Capital, the company has overtaken US social media giant Facebook twice in 2016 and 2020, but with a market cap of over 700 billion dollar, the company ranks sixth among the world’s tech giants, right after Facebook. Alibaba and Tesla are right behind Tencent.
According to an article in Quartz, Tencent has invested more in Unicorn than Softbank as an investment hoarding corporation. The company has more than 800 companies in its investment portfolio.
History of Tencent
Ma Huateng, the founder of Tencent, was born in October 1971 in Chaoyang, Guangdong, China. Ma Huateng is better known worldwide by his nickname Pony Ma. After graduating in computer science from Shenzhen University in 1993, he started working as a supplier in China Motion Telecom Development. He was also in charge of China Pagers’ software development team.
In November 1998, Pony Ma founded Tencent INC with four other friends. Tencent’s first product was OICQ, an instant messaging software that was launched in February 1999. OICQ is basically a copy of the Internet-based instant messaging service ICQ and the company changed the name of the software to QQ when American AOL threatened trademark violations against Tencent.
In February 2001, QQ Messenger surpassed the milestone of 1 million users. In 2003, the company established a gaming division called Tencent Games. The company was listed on the Hong Kong Stock Exchange in June 2004. In 2005, Tencent launched Tenpay, a C2C Auctions Site, along with paipai.com, to provide B2B, B2C and C2C payment services.
In March 2010, the number of QQ users exceeded 100 million. In April, the company launched a microblogging service called tencent Weibo. In January 2011, Tencent launched Weixin, a social media app known worldwide as WeChat. Tencent launched the WeChat Mini program in January 2017 and began developing the WeChat platform as a super app.
At present, Tencent is conducting business activities in a total of 6 divisions. Tencent’s business divisions are Communication and Social Network, Gaming and Interactive Entertainment, Payment and Financial Services, Media Entertainment and Digital Content, Cloud and Business Services, Utilities etc.
The company is also conducting research and innovation in the field of Artificial Intelligence, Machine Learning, Natural Language Processing, Computer Vision, Speech Recognition, Robotics and Quantum Computing. Tencent has offices in 9 locations around the world, including China, Taiwan, South Korea, the US and Japan. According to a Statista source, the total number of employees of the company in 2020 was about 86 thousand.
How Big is Tencent?
As an investment holding corporation in addition to gaming, social media and cloud business, Tencent has so far invested in more than 800 companies. Tencent has more than 160 unicorns in its investment portfolio and 70 companies have been publicly listed so far. But how big is Tencent to invest in so many companies?
Talking about how big Tencent is, the company’s various social media and communication applications come to the fore. Tencent is at the top of communication and social media in China and the company has several platforms like Facebook. With over 1.22 billion active users per month, WeChat is China’s number one social media. WeChat ranks sixth among global platforms, right after Instagram.
Tencent’s instant messaging app QQ is ranked eighth globally in terms of number of monthly active users. According to Statista, QQ ranks third in China with 617 million monthly active users.
Tencent also has 543 million monthly active users in another social media queue zone. According to Tencent’s annual report, the company has been able to generate about 23 percent or 17 billion in revenue from communications and social media networks in 2020.
Payment and Financial Service
Talking about the enormity of Tencent, the company’s payment and financial services ecosystem and WeChat mini program ecosystem will come along with social media. Tencent’s Fintech Ecosystem includes platforms such as WeChat Pay, QQ Wallet, Likaitong, Weilidai and We Sure. The Likaitung, Weilidai and Wee Sure platforms are originally supported by WeBank, China’s first digital bank.
Meanwhile, Tencent Wee Bank is the sole highest shareholder with about 30 percent ownership. As of December 2019, WeChatPay is the 9th largest fintech company in China with 800 million active users. The company is also ahead of Ali Pay, which ranks second in terms of number of daily active users.
In 2019, the company crossed the milestone of 1 billion commercial transactions per day. The company has more than 1 billion monthly active users in its entire financial ecosystem.
On the other hand, according to a report by Statista, the number of daily active users of WeChat Mini program was 440 million as of June 2020 and the number of monthly active users stood at 863 million at the end of that year. In addition, in 2019, the total transaction value of the WeChat Mini program exceeded 800 billion RMB.
While the company dominates China through social media, Fintech and WeChat mini-programs, Tencent’s global reach is dominated by the gaming division. Tencent Games is China’s top gaming company in the mobile and PC segments in terms of number of monthly active users. According to an article by TechCrunch, the Honor of Kings game, created by Tencent Games subsidiary Timi Studios, is the first game in the world to cross the milestone of 100 million daily users.
The company also owns 100 percent of Riot Games, the creator of League of Legends and Valorant, one of the world’s most popular games. In addition, Tencent owns 74.3 percent of the Swedish game developer Supercell. Clash of Clans, Clash Royale and Brawl Stars are the popular games of Supercell.
Peace Keeper Elite is also the second most popular game in China in terms of number of monthly active users. Peace Keeper Elite is basically the Chinese version of the popular game Pubg Mobile from South Korea game developer Blue Hole. The PC version of Pubg was originally developed by Pubg Corporation, but Tencent Games is the developer of Pubg Mobile and China’s Peace keeper elite. Activison Blizzard, the maker of Call of Duty, has a 5 percent stake in Tencent and has also developed a mobile version of Call of Duty for Timi Studios, Android and iOS platforms.
Tencent owns 5 percent of assassin’s creed maker Ubisoft and 40 percent of Fortnite maker epic games. Meanwhile, Tencent is also Nintendo’s console distribution partner in China. Tencent has more than 140 game titles in its portfolio, and according to Statista, Tencent Games is the world’s top gaming company, surpassing Sony and Nintendo in terms of revenue. The company’s revenue is higher than the combined revenue of Activision Blizzard, EA, and Take 2 Interactive, the maker of Grand Theft Auto.
Media, Entertainment and Digital Content
Tencent also holds the top spot in media, entertainment and digital content in China. Tencent has its own longfarm video platform Tencent Video as well as the short video platform Weshi. According to Tencent’s annual earnings report, the total number of paid subscribers on both platforms is 123 million. Tencent Pictures is also involved in Hollywood movie production besides China.
One of Tencent Pictures’ most famous movies is Wonder Woman, Venom, Kong, Skull Island. Tencent is also involved in the production of the upcoming movie Top Gun Maverick, Venom late bear the carnuch.
Let’s look at the dominance of Tencent in the music industry. Tencent Music Entertainment Group is the largest music company in the country with a 60% local market share and about 67 million paid subscribers and 845 million active users. According to Statista, Tencent has an 11 percent market share of the world’s music streaming services.
In addition, Tencent owns 8.7 percent of the popular music streaming service Spotify. Tencent also has a partnership deal with the music industry’s Big 3 record level company. Tencent controls about 2 percent of Warner Music Group and 20 percent of Universal Music Group, the world’s largest record level company. The company has a total of more than 60 million licensed tracks. China Literature, China’s top digital content library and publishing platform with 213.5 million monthly active users, is the same organization of Tencent. Apart from this, Tencent is also involved in comics, animation and e-sports business.
Cloud Service provider
Tencent has a number of businesses targeting consumers as well as businesses. While Alibaba tops the Chinese cloud services industry with a market share of 46.4 percent, Tencent Cloud is the second largest cloud service provider in the country with a market share of 18 percent. Tencent Marketing Solutions is also China’s top big data marketing platform.
Browser & Utilities
In addition, QQ Browser ranks fifth in the Chinese browser market with a market share of 8.05 percent, according to Stat Counter. In addition to browsers, the company is also providing services like Map, Mail, PC Manager.
Investment in many Companies
As well as being a holding company, Tencent has invested in many companies worldwide. Tencent owns 5% of American-Based electric car manufacturer Tesla, 12% of Snapchat, 12% of Chinese e-Commerce JD.com, 10% of Pindoudou, 22% of Chinese electric car manufacturer Nio and a total of 80 companies, including Reddit and Discord.
Although it started out as an instant messaging and social media company, it is now a holding corporation. However, Tencent’s strategy is quite different. Other companies integrate rival companies into their own ecosystems.
There, Tencent has enriched its investment portfolio through acquisitions as well as strategic partnerships. In this way, Tencent is increasing its reach worldwide.