A different business modelTencent adopted a counter-intuitive approach in building its empire – increasing customer reach before app monetization. While Facebook’s business relied on advertising heavily, online advertising accounted for less than 20 percent in Tencent’s annual revenue. Unlike its West social network counterparts, the enterprise’s major earning came from value-added services, about a third of which was generated by online games. Other important revenue streams include digital content, membership subscriptions, and virtual goods sales.
Diversity is the kingAnother clever move of Tencent was to diversify its products. The success formula of WeChat was its one-stop solution, making it indispensable in daily life in China. From hospital registration and taxi calling to movie ticket booking and holiday planning, it is the super app for everything. In fact, the age distribution of WeChat users spread quite evenly in China. Many Chinese consumers pay with WeChat by scanning QR codes in physical shopping. In the first half of 2021, the number of WeChat’s monthly active users surpassed 1.25 billion.
Apart from e-commerce business, the tech behemoth has made its foray into the world of online video, digital music, e-reading, and video games. With ownership stakes in Riot Games, Epic Games, and a few game developers and publishers, Tencent has climbed to the top of the ladder in gaming. Its partnership with Nintendo since 2019 has further extended Tencent's home entertainment offerings in the Chinese console market. Considering its thriving e-commerce and gaming business, Tencent would very likely keep its dominant position in China's internet industry.