Tencent: Strategy and Change



Details on Tencent's Reduction of Investments in 2023

Tencent Holdings, one of the largest technology conglomerates in China, significantly reduced its external investments in 2023. The total number of investment deals by Tencent, Alibaba, and Baidu decreased by almost 40%.

Tencent itself concluded 39 investment agreements with 37 companies. In 2023, the conglomerate primarily focused on sectors such as video games, healthcare, and business services, with seven investments in AI startups.

• MiniMax
  Tencent invested 40 million US dollars in MiniMax, a company that has developed a data-driven end-to-end system solution and is used by top companies. The investment raised MiniMax's valuation to over 1.2 billion US dollars.
  
• DeepLang AI
  In partnership with TAL Education Group, Tencent supported DeepLang AI, a Chinese developer of AI models, valued at 100 million US dollars.
  
• RaysightMed (睿心智能医疗)
  A Chinese healthcare company utilizing AI and big data technology to provide diagnosis and treatment recommendations for healthcare providers.
  
• Silicon Intelligence (硅基智能)
  A technology company specializing in the development of advanced hardware and software solutions for AI and machine learning.
  
• Mininglamp Technology (明略科技)
  A Chinese company offering big data analytics and AI solutions for various industries.
  
• Zhipu AI (智谱AI)
  A government-backed startup that received B-4 round funding from Tencent and Alibaba. Incubated by Tsinghua University, the company specializes in generative AI.
  
• Light Year
  A startup founded in February by Wang Huiwen, co-founder and former director of Chinese food delivery service Meituan, which raised more than 1.6 billion yuan in June from investors, including Source Code Capital and Tencent.
  

Tencent in the Gaming Segment

Despite the reduction in investments and acquisitions, Tencent's influence in the gaming industry remains significant. Notable investments included the new UK studio Lighthouse Games and the majority stake in Techland S.A., the developer of "Dying Light," of which Techland now holds over 67% majority stakes.

Tencent Acquisitions

• Riot Games: Acquired by Tencent in 2011
  
• Sharkmob AB: Acquired by Tencent in 2019
  
• 10 Chambers AB: Acquired by Tencent in 2020
  
• Fulqrum Publishing, Ltd.: Acquired by Tencent in 2022
  
• Funcom: Acquired by Tencent in 2020
  
• Splash Damage and Digital Extremes (via Leyou): Acquired by Tencent in 2020
  
• Stunlock Studios AB: Acquired by Tencent in 2021
  
• Sumo Group: Acquired by Tencent in 2022. The Sumo Group includes Sumo Digital, Secret Mode Ltd., Atomhawk, The Chinese Room, Red Kite Games, lab42, PixelAnt Games, Midoki, Auroch Digital
  

Tencent Investments and Shares

• Lighthouse Games
  
• Miniclip
  
• Supercells
  
• Yager Development
  
• Klei Entertainment
  
• Turtle Rock Studios
  
• Epic Games, Inc.
  
• Don't Nod
  
• FromSoftware, Inc.
  
• Ubisoft Entertainment S.A.
  
• Frontier Developments plc.
  
• Remedy Entertainment
  
• Digital Confectioners
  

Domestic Market Gains in 2023

In the "Domestic Games" segment, Tencent saw an increase in monthly and daily active users of its mobile and PC games.

Notably, new game releases in recent years such as "Naruto Mobile" and "DnF", as well as PC games "VALORANT" and "Lost Ark" in China, strengthened Tencent's market position.

International Position

Tencent's international gaming sector also experienced significant growth. Revenues increased by 19% to 12.7 billion RMB, partly due to the successful launch of games like "VALORANT Triple Match 3D" and "Goddess of Victory: NIKKE". The eSports titles like "Arena Breakout" and "Fight of the Golden Spatula" also contributed to the positive development.

Outlook

In addition to gaming, Tencent also recorded growth in the social network sector. Revenues here rose by 2% to 29.7 billion RMB. This growth was driven by increased revenues from mini-games and music subscription services, although there was a decline in revenues from music and game-related live streaming services.

Overall, these developments reflect Tencent's ability to adapt to constantly changing market conditions while strengthening its core business areas. While the investment adjustments in 2023 represent a strategic realignment, the positive developments in various sectors of the gaming industry indicate potential for further growth and innovation in the future.