Tencent has confronted quite a lot of headwinds in 2022 together with a Covid-induced slowdown within the Chinese economic system and a more durable marketplace for gaming.
Bobby Yip | Reuters
Tencent stated it should launch new cloud computing merchandise geared toward abroad markets because it searches for brand new avenues for progress amid a slowdown in its core on-line video video games business.
On Thursday, Tencent will host a launch occasion for cloud merchandise particularly geared toward markets exterior of China, together with a set of cloud-based audio and video merchandise.
The transfer marks a realization that Tencent wants to seek out new sources of progress overseas as China’s economic system slows. Besides continued strain from Covid outbreaks, Chinese tech firms additionally face a more durable regulatory setting at house.
Tencent, particularly, has been damage by stricter regulation on on-line video games. Last 12 months, Beijing introduced guidelines that reduce the period of time folks beneath 18 might play on-line video games to a most of three hours every week. Regulators additionally froze recreation approvals for a number of months, which means firms like Tencent and rival NetEase couldn’t launch and monetize new titles.
While there are indicators that the gaming crackdown might now be over, Tencent has felt the influence. Domestic on-line recreation income fell 7% within the third quarter in contrast with a 12 months in the past.
Tencent’s second-biggest income driver is on-line gaming, so a slowdown on this section is a drag on total progress.
The Shenzhen-headquartered firm views cloud computing as an space that might choose up the slack. Tencent’s fintech and business companies division, which incorporates its cloud computing division, grew 4% year-on-year within the third quarter.
Chinese tech giants should not solely trying to new business divisions for progress, they’re additionally in search of new income streams abroad. E-commerce firm Alibaba has used its AliExpress and Lazada model to broaden overseas, for instance, whereas Tencent has discovered huge success with its on-line video games.
Now, Tencent is banking on cloud computing. The merchandise launched Wednesday deal with audio and visible merchandise similar to reside streaming for e-commerce or on-line conferences.
The merchandise are geared toward firms that need such companies however do not essentially wish to keep the infrastructure, such a servers, or construct these options themselves.
Tencent’s technique might deal with making an attempt to enroll world corporations with a presence in China in addition to Chinese firms increasing overseas. Already, firms similar to BMW use a few of Tencent’s cloud merchandise.
As the Chinese agency expands abroad, it should enter a really aggressive cloud computing market dominated by U.S. giants Amazon and Microsoft. Tencent’s worldwide push with cloud computing is comparatively late in contrast with that of rival Alibaba, which expanded exterior China in the previous few years. Now, Alibaba is among the many 5 largest cloud computing corporations on the planet.
Tencent’s deal with audio and video merchandise performs to its strengths as one of many world’s largest gaming firms and the proprietor of WeChat, China’s hottest messaging app with over 1 billion customers.