While most people in the West still aren’t familiar with Tencent, the Chinese digital media and telecom conglomerate has quickly become one of the biggest players on the internet. Just last week, Tencent’s market cap valuation of $US530 billion ($697 billion) propelled it past Facebook and into the fifth spot among the largest corporations in the world.
How it got started
Founded in 1998, Tencent got its start with its OICQ messenger, which was later renamed to QQ due to rumours of possible legal action from fellow chat app dev ICQ (remember freaking ICQ?). From there, despite rapid growth of QQ, Tencent remained unprofitable for the next three years. During the mid 2000s, Tencent started to branch out into other areas, including search with Soso, while also licensing games such as CrossFire and Dungeon Fighter Online. Things really started taking off in 2011 with the release of WeChat and Tencent’s acquisition of Riot Games.
It owns social (and more) in China
At home in China, Tencent is responsible for some of the biggest social media and messaging apps, including QQ, WeChat and Qzone. Tencent even has its own digital assistant, named Xiaowei, which can answer questions about the weather or traffic just like Alexa or Facebook’s M. Really, the number of Tencent apps and web services in China is seemingly endless, spanning things such as the TenPay mobile payment system, the Weiyun cloud storage service, and even its new movie studio, Tencent Pictures.
Gaming and Western expansion
Here in the West, you’re more likely to use one of Tencent’s products while playing games. It owns companies such as Riot Games (maker of League of Legends) and Supercell (maker of Clash of Clans), and has heavy investments into major companies such as Epic Games (maker of Gears of War) and Activision Blizzard (maker of Overwatch and Destiny).
More recently, Tencent has begun diversifying even more, with investments into Frontier Developments, the makers of Elite: Dangerous and Planet Coaster, a 12 per cent stake in Snapchat, and even rumours that the company plans to gobble up Angry Birds creator Rovio.
How Tencent got so big
Tencent has a huge number of users – WeChat hit 938 million monthly users back in May – and the Chinese government has played a huge role in Tencent’s growth. Not only are companies such as Google and Facebook banned, e-commerce was also a big part of the Communist Party’s five-year plan spanning from 2011 to 2015. Combine that with a huge population that embraces tech more readily than many Western markets, and you get a company that has become China’s first half-trillion dollar company.
Where things are going
Over the past year, Tencent has seen its stock price double from $HK200 to $HK400 ($34 to $67), which now has people projecting that the company could challenge Google, Facebook and Alibaba for online ad sales, something that currently only generates 17 per cent of Tencent’s revenue, as opposed to 97 per cent for Facebook. This could be the start of a big shift in the internet power rankings, as Google and Facebook combined are estimated to account for up to 60 per cent of all US digital advertising, and more than 50 per cent worldwide.