Chinese Tech giant Tencent has released its quarterly report. It marks a decrease in quarterly revenue for the first time since the company was first listed in 2004.
Total revenue for the quarter sat at approximately $19.7 billion – a 3 per cent decline from the $20.4 billion of Q2 2021, and a decline of 1.1 per cent compared to the $19.9 billion reported in Q1.
Gross profit also fell from $9.25 billion to $8.5 billion year-on-year. However, this is an increase from the $8.4 billion in profit reported for the first quarter of 2022.
Some of the company’s biggest hits – such as PUBG Mobile, Honour of Kings, and League of Legends – saw declining revenue this quarter, although the company saw a robust performance from Valorant and incremental revenues from recently launched titles like League of Legends: Wild Rift, Return to Empire, and V Rising.
An industry trend
Part of the decline can be attributed to the strict new regulations in China which have negatively affected the company’s stock price and its ability to release new games. The East Asian country last year imposed a hiatus on new video game licenses and Tencent has yet to receive any new licenses despite licensing resuming in April.
Another factor in this year-on-year decline could be the normalisation of the mobile gaming market following the easing of pandemic restrictions worldwide. Multiple companies have likewise posted year-on-year declines in revenue in the latest round of quarterly reports.
Although Tencent’s stock price has fallen a further seven dollars per share since the end of the quarter, the company has reasons to be optimistic about its future. It remains the world’s most profitable video game company, and recently announced that it’s developing a handheld cloud gaming console. Furthermore, it was reported earlier in the month that the company is seeking a larger share in French developer Ubisoft.
We listed Tencent as one of the top fifty mobile game makers of 2021. Don't miss our 2022 list coming later this month.