Tencent, which notably owns the popular WeChat application, posted net profit last year down 39% to 115.2 billion yuan (AFP/Jade GAO)
Chinese Internet and video games giant Tencent announced on Wednesday its net profit for 2023 at its lowest level in four years, despite a relative recovery of the economy in China last year after the lifting of restrictions. draconian restrictions against Covid.
Its net profit fell 39%, falling to 115.2 billion yuan (14.7 billion euros) from 188.2 billion yuan in 2022.
The group, which notably owns the popular WeChat application, however achieved an annual turnover up 10% in 2023, to 609.1 billion yuan (78 billion euros).
While the Chinese economy is now under pressure with sluggish consumption and high youth unemployment, this figure seems to indicate that Chinese consumers, despite this gloomy economic context, have remained inclined to spend on video games and entertainment.
Despite this situation, “we have made breakthroughs,” Tencent said, arguing that the time spent by its users on its video services has, for example, doubled.
Its revenues in China for video games increased last year by 2% compared to 2022.
The sector is thus regaining color after several years of turbulence, which had weighed on its profitability.
Technology companies, which had benefited from years of meteoric growth in the Chinese market, one of the most dynamic and connected in the world, experienced a sudden takeover from 2020 to regulate them further.
Tencent had not been spared: to reduce video game addiction among young people, in 2021 the Chinese authorities imposed a drastic weekly limit of three hours for online games for under 18s.
– Weight of politics –
World number one in the sector, Tencent recorded in 2022 the first decline in 18 years in its quarterly turnover.
The Chinese authorities are now showing themselves to be more lenient towards a key sector, at a time when the markets remain concerned about the health of the country’s economy.
Nevertheless, “the weight of politics and restrictions remains significant”, analyst Li Chengdong, of the specialist firm Dolphin in Beijing, told AFP.
Tencent, which works on new games, its core business, therefore has “no guarantee of being able to distribute them”, underlines Mr. Li.
In China, a license is required to market a game. The authorities froze them for nine months in 2021.
Licensing has since resumed, but Tencent’s business in China is “suffering” from this regulation, according to Mr. Li.
Looking for other opportunities, Tencent is now eyeing the very promising artificial intelligence (AI) market, like other Chinese tech giants (Baidu, Huawei, Alibaba, etc.).
– Caution on AI –
Last September, Tencent unveiled Hunyuan, its in-house conversational robot intended to compete with the American ChatGPT, whose services are not accessible in China.
“The main source of income for Tencent remains games (…) in the short term there is little hope that artificial intelligence” will take over, judges Mr. Li.
Especially since the group has a “more cautious” approach than its competitors in this area, points out Kevin Zhou, another Chinese tech expert, also based in Beijing.
Tencent, which is “slower to invest” in AI, risks being “one to two years behind” its rivals, warns Mr. Zhou.
The group, whose headquarters is in Shenzhen (south of China), is therefore strengthening its position in video games by acquiring stakes in emblematic studios, particularly in Europe.
It is a key player in tech in China due to the omnipresence of its WeChat application (messaging, online payment, social network). Present on almost all phones in the country, it serves as a daily means of payment for hundreds of millions of Chinese, who now use cash very little for their purchases.
Tencent also announced on Wednesday that it wanted to more than double its share buyback program.
© 2024 AFP
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