Tencent's dim report blamed on China's government changes
Aug 18 2018
"In China, DAU for our smartphone games grew at a double-digit rate year-on-year, but monetization per user declined as users shifted time to non-monetized tactical tournament games", Tencent said in a filing.
"We don't have visibility on when exactly the official approval will start yet", said Tencent President Martin Lau on a conference call with investors, according to Bloomberg (paywall).
Tencent, the country's gaming and social media goliath, has shed more than US$150 billion (S$207 billion) in market value since its January peak, while smaller players complain that they are struggling to survive without new titles.
Chinese digital giant Tencent booked $6.22 billion in profit during the first half of 2018, but revenues from its signature games unit have been hit by delayed releases and changing user patterns. Although gaming revenue made up 40 percent of the revenue, it is also the business line that is causing the financial woes.
Its gaming title, Monster Hunter: World, was pulled off earlier this month for failing to receive approval from the General Administration of Press and Publication Administration and it's still waiting for the green light from the gaming watchdog to relaunch the game.
But there's a big problem we are only now learning about: the Chinese government has stopped approving new game licenses, and it hasn't done so for months.
Meanwhile, the freeze has sent shockwaves throughout the industry, as Tencent distribute games in China for some of the world's biggest publishers, including Activision Blizzard and EA. "For new game approvals, there will continue to be a drag", she said. Tencent hasn't been able to cash in on the world's most popular games, including Fortnite and PlayerUnknown's Battlegrounds. It's looking like the reason behind China's games license freeze is similar.
Lau said the company was working diligently to get the approvals.
Hirokazu Koreeda's Shoplifters is reported to have extended its theatrical run in China to October 2. Monthly active users climbed nearly 10 per cent to 1.06 billion in the June quarter - a massive population of consumers not just for games and ads but also fledgling services from video to financial services.
Trading in its shares has been volatile this year. In Q2, Tencent Video's paying members reached 74 million, a striking 121% jump compared to the same period previous year.
Alibaba Group Holding, which competes with Tencent across a number of businesses, is the parent company of the Post.