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Tencent reports £1 billion in second quarter profit, online advertising booming

Tencent Holdings has reported a £1 billion profit in its second quarter earnings, with a surge in online advertising to shadow the online gaming slowdown. Revenue for the second quarter reached £2.34 billion, a 19 per cent increase year-on-year.

Online advertising rose by 97 per cent to £400 million, accounting for seven per cent more revenue overall than the previous quarter. This growth helps overshadow the 17 per cent growth in the gaming industry, an 11 per cent slowdown compared to last quarter.

Tencent pushes games on WeChat and QQ, its two main social services. QQ is still the major network, with over 850 million active monthly users—the mobile version surpassed 600 million this month. WeChat hit 550 million active monthly users in the same period, showing strong growth in South-East Asia.

Even though saturation levels are close to being hit in China, Tencent plans to branch out into other South-East Asian countries. It will find trouble winning in some of these countries, where LINE and KakaoTalk have already gained a strong foothold. KakaoTalk even acquired US-based Path a few months ago, to gain market share in Indonesia.

Tencent also made headway in the payments industry with TenPay, even though AliPay is the dominant payments service in the country. Tencent intends to make strides with WeBank, launching later this year, but Alibaba is also launching a private banking app at the same time.

Tencent did not discuss Riot Games’ revenue. The creator of the most played game in the world, League of Legends, apparently made over £600 million in microtransactions in 2014. Tencent owns 94 per cent of LoL and advertises it in China, alongside paying for the Chinese esports league ‘LPL’, where 12 teams compete for a chance to go to Worlds.