China's Tencent reaps revenue of lockdown gaming boom
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[May 13, 2020] By
Pei Li and Brenda Goh
HONG KONG (Reuters) - High demand for video
games during COVID-19 lockdowns buoyed Tencent Holdings' first-quarter
revenue and profits, with blockbuster games PlayerUnknown's
Battlegrounds Mobile and Honor of Kings helping it beats forecasts.
The Chinese company's video games business, which generates more than a
third of its revenue, saw growth of 31% to 37.30 billion yuan ($5.26
billion) as people idled away the time in front of screens and used
online multiplayer games to virtually hang out with friends.
Its flagship games PlayerUnknown's Battlegrounds (PUBG) Mobile and Honor
of Kings topped mobile games revenue globally in March, analytics firm
Sensor Tower said, reinforcing Tencent's status as the world's largest
gaming firm by sales.
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In-game spending on things like power-ups, object skins and accessories
on PUBG Mobile alone surged to $232 million, more than three times what
the title generated in March 2019.
However Tencent, a gaming and social media giant, warned that it
expected some of the business boosts it enjoyed during lockdowns to be
temporary.
"We expect in-game consumption activities to largely normalise as people
return to work, and we see some headwinds for the online advertising
industry," it said.
ONLINE AD REVENUE LEAPS
Global spending on digital games surged to $10 billion in March, the
highest monthly total ever, according to Nielsen's game data arm
SuperData.
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Logo of Tencent is displayed at a news conference in Hong Kong,
China March 22, 2017. REUTERS/Tyrone Siu
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Tencent's stock has jumped nearly 14.38% this year, against a 15% decline in
Hong Kong's broader Hang Seng index. Meanwhile shares in its U.S.-listed rival,
which is focused on e-commerce rather than gaming, have dipped by almost 6% over
the same period.
Japanese rival Sony's gaming business has also benefited from lockdowns; the
division was a bright spot in otherwise bleak annual results, bringing in more
money as consumers downloaded its gaming software.
Tencent's overall revenue jumped 26% to 108.07 billion yuan ($15.24 billion),
while net profit rose 6% to 28.90 billion yuan for the three months trough
March, with both ahead of the average analyst estimate, Refinitiv data showed.
The company said its group online advertising revenue surged by 32%, with gaming
and education-related ads on WeChat and its other apps helping it buck a broader
advertising downturn as the global economy reels from the pandemic.
Social media advertising revenue grew 47%, highlighting a shift in behaviour as
many people were confined to their homes. However its revenue from media ads
fell 10% due to lower revenues from its video and news platforms.
(Reporting by Pei Li and Brenda Goh; Editing by Alexander Smith and Pravin Char)
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