Tencent, the ability to make money is disappearing

Tencent, which has money, mainly relies on games to win the world.

If the game is prosperous, Tencent will be prosperous.

And in the current boom, Tencent also has its own concerns.

On the 14th, Tencent announced its results for the second quarter of 2024.

According to the financial report, Tencent Games' revenue in both domestic and international markets increased by 9% year-on-year in the second quarter.

Affected by seasonal and other factors, the actual sales revenue of the domestic game market declined in the second quarter of this year.

According to the "Report on China's Game Industry from January to June 2024" released by the Game Working Committee (GPC) of the China Audio and Digital Association and the Game Special Committee of the China Audio and Digital Association, the actual sales revenue of the domestic game market in the second quarter of this year was 74.629 billion yuan, a decrease of 2.125 billion yuan or about 2.7% from the same period last year.

However, Tencent Games' revenue in the domestic market increased by 9% year-on-year in the second quarter, a record high in recent years.

According to the "2024H1 Global Mobile Game Market Data Report" released by Diandian Data, in the first half of this year, Tencent's games accounted for 6 of the top 10 revenue of China Mobile's (600941) Game App Store.

According to the Goldman Sachs report, the turnover of Tencent's evergreen games, including "Honor of Kings" and "Peace Elite", increased by 27% year-on-year in the second quarter, higher than the 11% growth rate in the first quarter of this year, reflecting the accelerated recovery momentum of Tencent's evergreen games.

Under Tencent's performance against the market, Tencent executives are very worried.

Tencent's management said in the earnings call that the company's gaming business did perform strongly in the second quarter, but it could not ignore the extremely challenging business environment faced by the gaming industry in the past few years.

At the meeting, Tencent's management said that, firstly, it is becoming more and more difficult for the gaming industry to launch new and highly successful games, because games must have extremely high quality or differentiated gameplay to meet the expectations of players; Second, if a company wants to make its existing franchise sustainable, it must continue to provide innovative products to its users.

Tencent's management stressed that the gaming industry still has a lot of potential, but there is a cyclical nature, and the industry may fall into a downturn when there is not enough innovation or new supply.

Earlier, it was reported that Apple forced WeChat to plug the payment loophole because it was believed that the creators of the platform would use these "loopholes" to import users into external payment systems to circumvent the 30% commission charged by Apple, including Tencent's mini games.

It was mentioned in the financial report for the second quarter of this year that in the second quarter, the total turnover of mini games increased by more than 30% year-on-year. Gross profit increased by 21% year-on-year to RMB85.9 billion, driven by growth in high-margin revenue sources such as game revenue, Channels advertising revenue, mini game platform service fees and Channels merchant technical service fees in the domestic market.

In addition, Tencent said in response to the 30% Apple tax that it is negotiating with Apple in the hope of achieving a win-win situation.

Previously, Tencent's "DNF" mobile game was also launched bypassing some Android channels.

Is Tencent worried?

Tencent Games, will it encounter a cold winter on Apple mobile phones?

How long can "Glory of Kings" and "Peace Elite" be popular?

How should we recognize the current game market environment and Tencent's competitiveness?

In this regard, China Business Daily reporter Zhao Yiru, Daily Economic News reporter Zhang Zitong and Shule had an exchange, this monkey thought:

In the current game market environment, the most unfriendly point for Tencent is that the ability to make money is failing.

Previously, Tencent carried out mergers and acquisitions and integration of game resources around the world through buying, buying, buy

Its game performance is mainly supported by "Glory of Kings" and "Peace Elite", and the new hits that have taken over have not appeared.

The highly anticipated "Dream Star" only "borrowed" the gameplay of NetEase's "Egg Boy Party", but there was little innovation.

In addition, the impact from miHoYo from "Genshin Impact" has made Tencent's throne no longer stable.

Under the pressure of the aging of its own super hits and the continuous emergence of new super hits from NetEase and miHoYo, Tencent's current competitiveness is "unable to play" and "eating the old book".

As for the issue of the Apple tax, it is actually not a big problem.

Although it seems feasible to use the loophole of mini games to share profits, it is just a drizzle for Tencent.

WeChat's support for mini games is the general trend, and it should not be hard to resist Apple, which accounts for half of smartphones and has a higher concentration of mid-to-high-end users.

As for "DNF" bypassing some Android channels, it is a way for major game manufacturers to be very confident in their own games.

Genshin Impact has adopted such a strategy before.

But at the moment, it seems that DNF's performance is not enough to justify a full bypass.

In the future, after user growth hits the ceiling, we may restart the old way of omni-channel publicity and online channel services to expand incremental users, even if the revenue and channels are half open.

As for how long "Glory of Kings" and "Peace Elite" can be popular, I foolishly think:

These two games, as long as there are no similar disruptive competitors, it is not a problem to continue to prosper for five to ten years, which is also the practice of esports games once they are successful, such as Warcraft and Dota.

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