Tencent's first quarter revenue: games have been sidelined, non-games account fo

For a long time, many people believed that Tencent only had three businesses: WeChat, QQ, and games. Since WeChat and QQ are free, it is naturally assumed that Tencent's revenue mainly comes from gaming. However, during this past summer vacation, I noticed that Tencent's games did not make a significant impact in the summer market; it was entirely other manufacturers like NetEase and miHoYo that took the stage, and the data also showed that the revenue from minors in Tencent's games was negligible.

So, what does Tencent rely on for income if not games? I took a look at Tencent's financial report for the first quarter and found that it has long had new sources of revenue.

In the first quarter of 2024, Tencent's total revenue was 159.5 billion yuan, mainly from non-gaming businesses, accounting for as much as 70%, with financial technology and corporate services becoming the largest source of income.

As for the much-anticipated gaming sector, its proportion of Tencent's total revenue has also been declining year after year. In the first quarter of this year, domestic games accounted for only 21% of Tencent's total revenue.

1. Non-gaming revenue is the mainstay of Tencent, accounting for 70%

Upon reviewing Tencent's financial report, it was found that non-gaming businesses are the main source of its revenue. In the first quarter, Tencent's non-gaming revenue reached 111.4 billion yuan, accounting for 70% of the total revenue.

Specifically, financial technology and corporate services (digital and real business) revenue was 52.3 billion yuan, accounting for 33% of the total revenue, making it Tencent's largest source of income. With just this item, non-gaming revenue has far exceeded gaming revenue.

In fact, financial technology and corporate services are mainly aimed at merchants or enterprises. Services like cloud computing, WeChat for Work, Tencent Meeting, and Tencent Docs are all aimed at businesses.

As for financial technology, it includes segments such as mobile payments, wealth management, and public services. Many people use Tencent's products for wealth management and payment collection, all of which are counted in financial technology.

In addition to financial technology and corporate services, Tencent has many other sources of income.In the first quarter, social network revenue was 30.5 billion yuan, and online advertising revenue was 26.5 billion yuan, accounting for 19.1% and 17% of Tencent's total revenue, respectively. These are important sources of income for Tencent. In addition, Tencent has other revenues of 2.064 billion yuan.

Overall, non-gaming business revenue accounts for 70% of Tencent's total revenue, far exceeding the proportion of gaming business. It is evident that the main source of Tencent's income is no longer gaming.

2. Domestic gaming accounts for only 21% of Tencent's total revenue, and the revenue from minors is negligible.

In the first quarter of this year, Tencent's domestic market gaming revenue was 34.5 billion yuan, accounting for only 21% of the total revenue. At the same time, the proportion of revenue from minors in Tencent's gaming is extremely low.

Taking the first quarter of 2023 as an example, the gaming time of minors accounted for 0.4% of the total gaming time in Tencent's domestic market, and the revenue from minors accounted for 0.7% of the total revenue, which is almost negligible.

Over the years, our country has introduced a series of notices and regulations, forming what can be considered the strictest protection measures for minors in the world. Currently, the gaming industry in our country has built the most advanced and efficient anti-addiction system globally. Major gaming companies have responded, and Tencent has taken the lead, adopting identity verification methods stricter than industry regulations. Minors who want to play games freely during the summer vacation and use their parents' identity information will only sigh when they encounter financial-level facial recognition.

3. International market gaming revenue is 13.6 billion yuan, accounting for 8.5% of the total revenue.

In addition to the domestic market, Tencent's gaming also has revenue in the international market. In recent years, Tencent's gaming has shifted its development direction to the international market, and its revenue in the international market has been increasing year by year.

In the first quarter of this year, Tencent's gaming revenue in the international market was 13.6 billion yuan, accounting for 8.5% of the total revenue, equivalent to 40% of domestic gaming revenue.

In 2020, 2021, 2022, and 2023, Tencent's gaming revenue in the international market was 33.7 billion yuan, 45.5 billion yuan, 46.8 billion yuan, and 53.2 billion yuan, respectively. Over the span of four years, Tencent has earned a total of 192.8 billion yuan from overseas markets.On the foundation of earning money from foreigners, Tencent has also acquired top global gaming companies such as Supercell, Ubisoft, and Riot Games, which is a testament to its strength. Back in the day, when Riot Games was not yet the star of tomorrow and was short of funds, Tencent stepped in, bringing investment and pioneering an acquisition model that involved buying but not merging, and importantly, not interfering with the creative process of the teams, laying the groundwork for long-term cooperation. Just from this story, one can see Tencent's prowess; they met when the other was still small, but were able to collaborate constructively and systematically advance. No wonder they have a wide range of money-making avenues; who can compare with their foresight and the degree of autonomy they allow?

This past summer, Assassin's Creed, developed by Ubisoft, made a special appearance at the Paris Olympics, showcasing the company's keen eye for selecting partners.

4. Gaming revenue continues to decline, from a dominant position to 30%

From the above analysis, we can see that in the first quarter of this year, the revenue from domestic games accounted for only 21.5% of Tencent's total revenue. Even when including international gaming market revenue, this proportion is only 30%.

Many people might be surprised by this. In fact, overall, since 2009, the proportion of gaming in Tencent's revenue gradually increased, reaching its peak at 57% in 2014.

However, after that, the proportion of gaming in Tencent's total revenue has been continuously decreasing, down to the current 30%. Following the current trend, in the future, the proportion of gaming in Tencent's total revenue will become even lower.

In summary:

It is not difficult to find from the above analysis that Tencent no longer relies on gaming for profit, and the proportion of gaming in Tencent's total revenue is also quite low.

Over the years, Tencent has clearly been consciously reducing its dependence on gaming, especially when it comes to minors, and compared to other major gaming companies, it has been implementing the strictest protective measures.

It seems that there are still wise people within Tencent, with a truly sharp strategic vision. While contemporary companies are still clinging to their established territories, Tencent is like an old tree sprouting new buds.Over the 26 years since its establishment, Tencent has not only tinkered with its core business but also developed a multitude of services. Currently, Tencent has a wide range of businesses including QQ, WeChat, video, gaming, financial technology, cloud computing, big data, AI, and more.

With such a diverse array of services, it's no surprise that Tencent's revenue streams are also very diversified, which is the main reason why gaming is no longer the primary source of its income.