Chinese gaming and social media giant Tencent Holdings reported virtually no revenue growth in the first quarter, its worst performance ever, and also missed market estimates as China’s economic slowdown and a freeze on new gaming licenses weighed on its business.
Revenue for the quarter ended March was CNY 135.5 billion (roughly Rs. 1,55,804 crore) compared to CNY 135.3 billion (roughly Rs. 1,55,655 crore) for the same quarter last year and below the median estimate of 141 billion CNY (roughly Rs.1,55,655 crore). Rs. 1,62,200 crore) by 16 analysts, according to Refinitiv.
Tencent, which makes much of its money developing games like Honor of Kings and Call of Duty Mobile, said the company’s profit attributable to shareholders for the quarter also fell 51 percent. According to data from Refinitiv, this is the biggest drop in earnings since the company went public in 2004.
The slowdown in growth follows two previous quarters of declining sales. Tencent — China’s most valuable company — has seen expansion opportunities curtailed by a regulatory crackdown by Beijing to curb the influence of big internet firms.
The Shenzhen-based tech giant has been hurt by the normalization of user spending on games after a surge over the past two years. Meanwhile, a resurgence of COVID-19 in China has also dampened payment activity.
Last month, Tencent said it would shut down a service that allowed Chinese gamers to access foreign platforms to play unauthorized foreign games in a sign of tightening compliance as Chinese regulators scrutinize the industry.
The country’s largest social and gaming company announced that it will update its mobile and desktop games speed-boosting apps on May 31 to new versions that only support games operated in China. The new versions will no longer allow users to access foreign games.
© Thomson Reuters 2022