Gaming

Tencent relies on the cloud to make up for its video game activity slowdown

While Tencent’s core business is struggling, the Chinese giant is trying to find a second wind by betting on the cloud. New products destined for overseas markets will be launched in the coming months.

Tencent hosts the package in the cloud

On Thursday, December 1, Tencent held an event to announce the launch of new cloud products. An opportunity for Tencent to also introduce a new set of cloud-based audio and video products. The company is facing a significant slowdown in its video game activity. This initiative shows that the Chinese giant has realized the need to look for new sources of growth abroad.

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Like most Chinese tech companies, Tencent faces several headwinds: a zero-spread Covid-19 policy imposed by Beijing and an increasingly stringent regulatory environment imposed by the government. The owner of WeChat has been hit particularly hard by government restrictions on gaming. Last year, Beijing introduced rules that limit the amount of time people under 18 can spend playing video games to three hours a week.

Regulators also “frozen game approvals” for several months, meaning that companies like Tencent or NetEase (a direct competitor) could not launch or monetize new games. However, there are some signs that the government may ease pressure on the video game market. That hasn’t stopped Tencent from feeling the effects. In China, gaming revenue fell 7% in the third quarter compared to last year.

This market represents the second source of income for Tencent. Thus, the current slowdown poses a real threat to the Chinese giant. Therefore, the Shenzhen-based company sees the cloud as a new path to growth. A way to find new sources of income abroad. An Alibaba-approved model that has used its AliExpress and Lazada brands to develop overseas. Companies like BMW are already working with some of Tencent’s cloud products.

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