The Chinese giant Tencent registered, for the first time, a

The Chinese giant Tencent registered, for the first time, a

Currently, Tencent Holdings, the Chinese technology giant, has experienced a decline in its revenue for the first time since its establishment. This decline clearly shows how much the Chinese economy is suffering. Revenues decreased by more than three percent.

The Chinese giant Tencent recorded the first decline in its history

In that regard, Tencent Holdings posted its first-ever quarterly revenue decline, becoming the latest victim of China’s worsening economy.

Specifically, revenue fell more than 3 percent to 134 billion yuan, versus an average projection of 135.6 billion yuan. Net income fell more than 56 percent to 18.6 billion yuan, compared with an estimated 25 billion yuan.

China’s social media and gaming giant faces a deepening recession in the world’s second-largest economy, fueled by a housing crisis and ad hoc coronavirus shutdowns in Shanghai in Shenzhen. Uncertainty wreaks havoc on businesses from advertising to cloud computing and gaming. Alibaba Group this month reported its first-ever quarterly revenue decline, although results beat expectations.

Even before the macroeconomic turmoil, China’s Internet industry giant had resigned itself to a new era of moderate growth after a decade of freewheeling expansion. Companies like Tencent are focusing on profitability rather than the market grabs of years past after a sweeping government crackdown wiped more than $1 trillion off their combined market value in 2021.

Beijing remains a headache for Tencent

Although regulators resumed approving games in April after a months-long hiatus aimed at reducing addiction, the Chinese first-tier developer has yet to win approval for any titles this year. For now, it’s relying on aging cash cows like Honor of Kings to fuel its most profitable business while battling newer hits like Genshin Impact and Diablo Immortal.

In the financial context, the company, which once relied on an investment network spanning hundreds of firms to create opportunities and new markets, signaled as early as last year that it would begin selling stakes in major Chinese Internet companies, from the giant of e-commerce at Meituan.

Given the new realities, Tencent executives said international games, cloud software and WeChat video will be their top strategic priorities. The TikTok-like stream inside Tencent’s super app is the company’s latest hope to counter ByteDance, which is attracting more and more users.

And the fintech and business services segment – ​​which includes cloud computing – is now Tencent’s fastest growing engine. But cloud revenue suffered a slight decline after the company trimmed loss-making contracts and ventured into services beyond infrastructure, executives said in May.

Tencent is betting on a possible future of the virtual realm of the metaverse

In future plans, like Mark Zuckerberg’s Meta Platforms, the company Tencent claims a possible future of the virtual realm of the metaverse. The Chinese company has upgraded its old social app QQ with customizable 3D avatars and Unreal Engine graphics, and is hiring developers to create open-world titles.

But such efforts, along with a steady pace of investment in overseas game studios, could put pressure on margins before they materialize, writes Tech Central citing Bloomberg.