TECH

Tencent sees isolation boost video game revenue

The high demand for video games during outbreaks caused by the pandemic, boosted Tencent Holdings' first quarter revenue and profit, with the highly successful "PlayerUnknown's Battlegrounds (PUBG) Mobile" and "Honor of Kings" games, helping to overcome the predictions.
The Chinese company's video game business, which generates more than a third of its revenue, grew by 31% to 37.3 billion yuan (5.26 billion dollars) as people spent more time in the in front of the screens and used online games as a substitute for going out with friends.
Tencent's top games, PUBG Mobile and Honor of Kings, had the highest global mobile game revenue in March, said analytics firm Sensor Tower, reinforcing the company's status as the world's largest gaming company in sales.
In-game purchases on items like power-ups, skins and accessories on PUBG Mobile totaled $ 232 million, more than three times what the title generated in March 2019.
However, Tencent, a gaming and social media giant, has warned that it expects some of the benefits it sees during the quarantine period to be temporary.
"We expect consumer activity within games to largely normalize as people return to work, and we see some headwinds for the online advertising industry," he said.
Global spending on digital games rose to $ 10 billion in March, the highest monthly figure ever recorded, according to SuperData, Nielsen's video game arm.
Tencent's shares were up almost 14.38% this year, against a 15% decline in Hong Kong's Hang Seng index. Meanwhile, the shares of US-listed rival Alibaba, focused on e-commerce rather than games, fell nearly 6% in the same period.
Alex Liu, an analyst at China Renaissance, said the company is unlikely to be able to sustain the explosive momentum in the gaming business, but strong deferred revenue is likely to be fueled throughout the year and a set of large-scale releases, including Dungeon & Fighter Mobile, will bring robust growth.
Tencent's total revenue increased 26% to 108.07 billion yuan ($ 15.24 billion), while net profit grew 6% to 28.90 billion yuan in the three months through March, with both above the average estimate of analysts, according to data from Refinitiv.
The company said the group's online advertising revenue increased 32%, with ads related to video games and education on WeChat and its other apps helping it to cope with a broader industry downturn.

Pei Li and Brenda Goh