Tech,  Wealth

Tencent Soars in 2023: Cloud, Video Accounts Fuel Growth Despite Gaming Hiccup

On the 20th of March, Tencent Holdings unveiled its annual financial report for 2023. The report revealed that the revenue for the fourth quarter of 2023 amounted to 155.2 billion yuan, marking a year-on-year surge of 7%; the adjusted net profit stood at 42.7 billion yuan. Notably, online advertising revenue in the fourth quarter reached 29.79 billion yuan, while game revenue in the international market reached 13.9 billion yuan.

Throughout 2023, Tencent Holdings’ revenue soared to 609 billion yuan, reflecting a notable year-on-year increase of 10%; correspondingly, the full-year NON-IFRS net profit surged to 157.69 billion yuan, marking an impressive year-on-year growth of 36%.

Tencent Holdings unveiled its intention to distribute a dividend of HK$3.40 per share for the fiscal year concluding on December 31, 2023 (approximately HK$32 billion), showcasing a substantial 42% increment. Moreover, the company announced plans to at least double the magnitude of share repurchases from 49 billion in 2023, thereby foreseeing an escalation of the Hong Kong dollar to over HK$100 billion by 2024.

Video accounts and mini-games exhibited commendable performance, as emphasized by Tencent Holdings in its financial report. Notably, the total user time for video accounts is poised to double in 2023, bolstered by enhancements in advertising AI models for more precise delivery. Furthermore, the share of international market games in game revenue is projected to reach an unprecedented high of 30%. Additionally, Tencent Hunyuan has evolved into a premier foundational model, demonstrating exceptional proficiency in mathematical derivation, logical reasoning, and multi-round dialogue.

The turnover of mini-games has surged by over 50%, consolidating its position as China’s preeminent casual game platform. The tally of paid members for Tencent Video has soared to 117 million, while Tencent Music boasts 107 million paid members.

The roster of “key popular games” in the local market is set to expand from 6 in 2022 to 8 in 2023.

Tencent Holdings disclosed, for the first time in its financial report, that Tencent Hunyuan has adopted a hybrid expert model structure, scaling up to trillions of parameters. Presently, Tencent’s Hunyuan large model has the capability to generate images and videos, with over 400 business and scenario connections within Tencent already integrated into its hybrid testing. Notably, enterprise WeChat, Tencent Conference, and Tencent Documents have integrated generative AI functionalities. Moreover, Tencent Cloud has collaborated with ecological partners to fuse large model technology across more than 20 industries, furnishing solutions for over 50 industries.

Game revenue in the domestic market witnessed a 3% decline to 27 billion yuan in the fourth quarter of 2023. Conversely, game revenue in the international market is anticipated to surge by 14% to RMB 53.2 billion in 2023, reflecting an 8% increase after accounting for exchange rate fluctuations. Concurrently, game revenue in the local market is projected to ascend by 2% to RMB 126.7 billion.

In the fourth quarter of 2023, revenue from the value-added services business saw a 2% year-on-year dip to RMB 69.1 billion. Game revenue in the international market experienced a marginal 1% increase to RMB 13.9 billion, a 1% decrease after excluding exchange rate fluctuations. Similarly, game revenue in the local market decreased by 3% to RMB 27 billion. The downturn in social network revenue, decreasing by 2% to RMB 28.2 billion, was attributable to reduced revenue from music live streaming and game live streaming services, albeit partially offset by an uptick in revenue from paid music memberships and mini-game platform service fees.

Everbright Securities’ research report, issued on the 19th, dissected Tencent’s game business and pondered on Tencent’s prospects post-“Yuanmeng.” Notably, the report highlighted the abundance of untapped potential in new products within the industry. Among these, “DNF Mobile Game” and “Delta Operation” were underscored for their promising trajectories.

Anticipations run high as the issuance of version numbers surpasses expectations. “DNF Mobile Game” is poised to contribute consistent profits, with NEXON client games estimated to rake in approximately RMB 4.5 billion in revenue in 2023. The commercial outlook for mobile games remains sanguine, particularly with “DNF” ranking fifth on the hot list of Internet cafe games, alongside sustained fervor from fans. Horizontal action mobile games, characterized by modest visual requirements, continue to harbor significant potential. It’s estimated that the first-month revenue of the analogous mobile game “Crystal Core” will surpass 700 million yuan.

Collaboration with Ubisoft to develop the mobile rendition of the iconic IP “Assassin’s Creed Jade” is eagerly anticipated for its online performance. Noteworthy ventures include “Operation Delta,” exploring the realm of 3A tactical shooting mobile games, and “Dawn of the Stars,” which boasts the regal IP and refined combat gameplay.

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