Tencent bets on cloud computing development overseas amid gaming slowdown

Tencent has confronted numerous headwinds in 2022 together with a Covid-induced slowdown within the Chinese language financial system and a more durable marketplace for gaming.

Bobby Yip | Reuters

Tencent stated it’ll launch new cloud computing merchandise aimed toward abroad markets because it searches for brand spanking new avenues for development amid a slowdown in its core on-line video video games enterprise.

On Thursday, Tencent will host a launch occasion for cloud merchandise particularly aimed toward markets exterior of China, together with a collection of cloud-based audio and video merchandise.

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The transfer marks a realization that Tencent wants to search out new sources of development overseas as China’s financial system slows. Apart from continued stress from Covid outbreaks, Chinese language tech firms additionally face a more durable regulatory surroundings at house.

Tencent, particularly, has been harm by stricter regulation on on-line video games. Final yr, Beijing launched guidelines that reduce the period of time individuals below 18 might play on-line video games to a most of three hours per week. Regulators additionally froze recreation approvals for a number of months, which means firms like Tencent and rival NetEase couldn’t launch and monetize new titles.

Whereas there are indicators that the gaming crackdown might now be over, Tencent has felt the affect. Home on-line recreation income fell 7% within the third quarter in contrast with a yr in the past.

Tencent’s second-biggest income driver is on-line gaming, so a slowdown on this phase is a drag on total development.

The Shenzhen-headquartered firm views cloud computing as an space that would decide up the slack. Tencent’s fintech and enterprise companies division, which incorporates its cloud computing division, grew 4% year-on-year within the third quarter.

Chinese language tech giants should not solely seeking to new enterprise divisions for development, they’re additionally searching for new income streams abroad. E-commerce firm Alibaba has used its AliExpress and Lazada model to develop overseas, for instance, whereas Tencent has discovered massive success with its on-line video games.

Now, Tencent is banking on cloud computing. The merchandise launched Wednesday concentrate on audio and visible merchandise resembling stay streaming for e-commerce or on-line conferences.

The merchandise are aimed toward firms that need such companies however do not essentially need to keep the infrastructure, such a servers, or construct these options themselves.

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Tencent’s technique might concentrate on making an attempt to enroll world companies with a presence in China in addition to Chinese language firms increasing overseas. Already, firms resembling BMW use a few of Tencent’s cloud merchandise.

Because the Chinese language agency expands abroad, it’ll enter a really aggressive cloud computing market dominated by U.S. giants Amazon and Microsoft. Tencent’s worldwide push with cloud computing is comparatively late in contrast with that of rival Alibaba, which expanded exterior China in the previous few years. Now, Alibaba is among the many 5 largest cloud computing companies on the planet.

Tencent’s concentrate on audio and video merchandise performs to its strengths as one of many world’s largest gaming firms and the proprietor of WeChat, China’s hottest messaging app with over 1 billion customers.


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