Tencent is expected to earn billions from its smartphone games for WeChat and QQ users, as well as the free streaming of HBO’s "Game of Thrones" and NBA Games. (Photo : www.thestar.com.my)
Chinese tech giant Tencent has found a way to maintain its growth amid the slowing economy by providing cheap entertainment to people, according to Bloomberg.
The report said that Tencent Holdings Ltd. is expected to bring a 28-percent surge in sales from smartphone games for the billion users of WeChat and QQ messaging applications as well as from the free streaming of HBO's "Game of Thrones" and NBA Games. That's four times faster than the rate of domestic economic expansion as China grows at the slowest pace in 25 years.
According to the report, the company has expanded the services of WeChat, which was once used only for instant messages, to become part of everyday life for millions by adding the features of a microblog, social network and e-commerce platform.
The report said that Tencent's move was made to lure Internet users and compete with Alibaba Group Holding Ltd. and Baidu Inc.
"The mobile gaming sector has been an area of fast growth," said Michelle Ma, an analyst at Bloomberg Intelligence in Hong Kong. "Games are low-cost entertainment, so even in recessions people will continue to spend money on this sector."
The report said that Tencent shares in the Hong Kong trade dropped 1.6 percent to HK$152. As the company's stock rose 35 percent this year, Alibaba's shares slumped 20 percent while Baidu's dropped by 12 percent.
In September, Tencent surpassed Alibaba to become Asia's biggest Internet company by market value, but fell back to second place last month.
While Tencent has its shares traded in Asia, Baidu and Alibaba are listed in New York, the report said.
Analysts expect Tencent to post revenue of 25.4 billion yuan ($4 billion) in the three months ended September. The projected leap is faster than a year earlier, which would make Tencent as the only one of the country's three Internet giants to attain such rapid growth in the quarter.
Analysts estimated Tencent's net income to jump 32 percent to 7.5 billion yuan, as it continues to invest in more games to build strength in the industry.
