Tencent Targets TikTok Way To Drive Growth, Intensifying Rivalry With The Short Video Specialist

  • Chinese gaming giant Tencent Holding Ltd TCEHY saw advertising in its nascent short video platform becoming a potential revenue driver, CNBC reports.
  • The new focus puts it in direct competition with China's leading short video players, ByteDance's Douyin, the Chinese cousin of TikTok and Kuaishou Technology KUASF.
  • Tencent's foray into a short video is relatively new and looked to step up the challenge to Douyin and Kuaishou.
  • Also Read: Amazon Succumbs To TikTok Fever After Meta, YouTube
  • Revenue from short-form video accounts for around 39% of China's total digital ad revenue, marking the most significant single ad revenue category ahead of categories like social networking and news.
  • Tencent reported its first ever year-on-year quarterly revenue decline due to gaming business headwinds. 
  • China's sweeping tech crackdown, Covid's resurgence, and the subsequent economic weakness has weighed on the company.
  • Tencent and the other leading gaming giants failed to make it to China's final cut for gaming licensing. As a result, it explored alternative avenues like overseas expansion, electric vehicles, and metaverse to drive growth.
  • Tencent devoted a significant part of the earnings call explaining the potential of video ads and their importance to the revenue stream.
  • Tencent saw video ads eventually grow into a substantial revenue source over time.
  • Tencent acknowledged e-commerce live streaming as an "opportunity," but it "will take some time."
  • Tencent aims to build awareness of the video product, then onboard merchants and advertisers.
  • Price Action: TCEHY shares closed higher by 3.89% at $39.80 on Wednesday.

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