Tencent's overall revenue for 2015's first quarter sees a slowdown. (Photo : Reuters)
China's Internet giant Tencent Holdings Ltd. has posted a net profit slowdown for this year's first quarter after only raising year-on-year increase of 6.6 percent compared with 2014 Q4's 50 percent, the firm said on Wednesday.
The results have also shown that its revenue from advertising is making progress, while online and mobile games remain Tencent's main source of income.
The firm's online advertising revenue rose to more than double, from the first quarter of 2014's 1.17 billion yuan to this year's first quarter's 2.72 billion yuan. Now accounting to 12 percent of Tencent's revenue, bulk of this portion comes from mobile ads.
Tencent has also been eyeing and allotting much effort to make its WeChat messaging app akin to Facebook's advertisement feature. Earlier this year, WeChat Moments have started running sponsored posts from advertisers.
The Internet giant is also tapping China's booming mobile advertising sector. According to China Internet Network Information Center, the country has 557 million mobile Internet users as of Dec. 2014.
iResearch also revealed that the emerging mobile ads market has reached a nearly 30 billion yuan revenue last year. For this year, the statistic is predicted to double and grow seven more times by 2018.
However, Tencent's advertising business faces heavy competition from other Chinese Internet giants, Alibaba and Baidu, which have a 22-percent and 34-percent market share, respectively. Tencent's share only reached 5.3 percent, iResearch reported.
Meanwhile, industry analysts expect that Tencent will be able to expand and raise the figure as more Web-based advertising dollars are now turning to mobile platforms.
Jefferies analyst Cynthia Meng said that "Tencent has all the ingredients," citing its 549-million user base.
"The question is how fast it will happen," she remarked.
Vey-Sern Ling, a BNP Paribas analyst, predicted that Tencent's advertising revenue will double this year, reaching 16.24 billion yuan that will account to 16.2 percent of the firm's total revenue.
