Tencent’s headquarters in Shenzhen on July 10, 2022. (AFP/Archives/Jade GAO)
Global video game giant Tencent announced on Wednesday a sharp decline in its net profit in 2022, as Chinese digital companies have been subject to regulatory tightening which has weighed on their profitability.
After years of meteoric growth in one of the most dynamic and connected markets in the world, Chinese internet companies have been under pressure since 2020.
The authorities are particularly meticulous about issues of competition and personal data.
The main players in tech have thus been pinned down after years of relative laxity, which has destabilized the sector.
Tencent had not been spared: to limit addiction to video games among the youngest, the authorities have imposed since 2021 a drastic weekly limit of three hours for online games for those under 18.
In this context, the world number one in video games recorded a 16% drop in net profit for 2022, to 188.2 billion yuan (25.3 billion euros).
It was 224.8 billion yuan in 2021 and had increased by 41% year on year.
– Ambitions abroad –
Its turnover for 2022 is down 1% year on year, to 554.5 billion yuan (74.7 billion euros).
Restrictions on the tech sector had weighed heavily on Tencent in the first half of 2022: the world number one in the sector had recorded in August the first decline in its quarterly turnover since 2004.
Its relations with power now seem to have calmed down: after a year and a half of hiatus, the group has again been regularly obtaining video game licenses in China since November.
This sesame is mandatory to market a game on the largest market in the world.
To bounce back, the group is now looking for other outlets, particularly in Europe where the firm is strengthening itself through equity investments in emblematic studios.
Last year, Tencent had formalized an increase in the capital of the French giant Ubisoft.
Abroad now represents 33% of the turnover of the video game branch of the Chinese group (against 28% a year earlier).
– ChatGPT –
This video game activity abroad allowed Tencent to see its sales start to rise again in the fourth quarter (+3% compared to the previous quarter).
Tencent is a key tech player in China due to the omnipresence of its WeChat application (messaging, online payment, social network).
It is present on almost all phones in the country and is used as a means of payment daily for hundreds of millions of Chinese, who now use cash very little for their purchases.
On Wednesday, Tencent said nothing in its statement about its progress in designing a Chinese equivalent to ChatGPT, the American artificial intelligence-enhanced chatbot whose prowess is being passionately followed.
Its competitor, the Chinese internet giant Baidu, unveiled its own last week in Beijing. But no general public launch date has yet been announced for “Ernie Bot”, which works in Mandarin and is only aimed at the Chinese market.
© 2023 AFP
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