Tencent Holdings Gains Profit from Online Games, Advertising Revenue

China’s Tencent Holdings Ltd. reported a significant increase in profit during the fourth quarter of 2015 thanks to its online games and advertising revenue.

The Internet giant popularly known for operating the instant messaging app WeChat revealed that they earned 7.16 billion yuan ($1.10 billion) worth of net profit by the end of Dec. 2015, up 22 percent from 2014's 5.86 billion yuan.

According to The Wall Street Journal, Tencent's profit boost can be attributed to the growth in its online gaming business, which took home 15.97 billion yuan, about 33 percent of their previous earnings.

This, said the outlet, can be because of the sudden rise in the demand in mobile games due to the consistent rise of the smartphone era.

However, online gaming cannot take all the credit for the Shenzhen-based company's success since its advertising revenue saw a staggering 45-percent increase.

According to AFP as posted in Yahoo News, Tencent is a major contender in both fields and is almost equal to the likes of China's Alibaba and U.S. tech giant Apple.

Tencent continues to operate the popular mobile instant messaging app WeChat known in China as "Weixin" and retained an older but similar kind of app known as QQ.

"Our QQ and Weixin social platforms continued to improve and innovate, reinforcing their positions as China's most-used mobile applications," Pony Ma, Tencent's chief executive and chairman, said in a statement. "We created new social advertising formats and technology to help advertisers reach consumers online."

Back in 2011, Tencent kept WeChat ad-free until they started putting up some banner ads two years ago.

News about increase in profit may be significant but is still short of what was expected of the company, considering that it is being called China's current second largest mobile and online payments provider with 17-percent share, trailing behind Alibaba with three-quarters of the country's market share.