Tencent bets on cloud computing development overseas amid gaming slowdown



Tencent has confronted quite a few headwinds in 2022 together with a Covid-induced slowdown within the Chinese language economic system and a harder marketplace for gaming.

Bobby Yip | Reuters

Tencent mentioned it can launch new cloud computing merchandise aimed toward abroad markets because it searches for brand 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 set of cloud-based audio and video merchandise.

The transfer marks a realization that Tencent wants to seek out new sources of development overseas as China’s economic system slows. Moreover continued strain from Covid outbreaks, Chinese language tech firms additionally face a harder regulatory setting at dwelling.

Tencent, particularly, has been damage by stricter regulation on on-line video games. Final 12 months, Beijing launched guidelines that minimize the period of time individuals underneath 18 may play on-line video games to a most of three hours per week. Regulators additionally froze sport 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 may now be over, Tencent has felt the influence. Home on-line sport income fell 7% within the third quarter in contrast with a 12 months in the past.

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

The Shenzhen-headquartered firm views cloud computing as an space that might 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 are usually not solely seeking to new enterprise divisions for development, they’re additionally on the lookout for new income streams abroad. E-commerce firm Alibaba has used its AliExpress and Lazada model to broaden 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 reminiscent of stay streaming for e-commerce or on-line conferences.

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

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

Because the Chinese language agency expands abroad, it can 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 couple of years. Now, Alibaba is among the many 5 largest cloud computing companies on this 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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