Tencent Holdings Ltd. locked up one of the most valuable entertainment properties a year after it charged $1.5 billion for NBA teams for five years of exclusive streaming rights. All that was altered by a single tweet.
Now, the Chinese social media giant may have to postpone the screening of those games- which last year gained half a billion fans- since Houston Rockets General Manager Daryl Morey sparked a media blackout in China by voicing aid for pro-democracy demonstrations in Hong Kong.
Tencent is now involved in billions of dollars in advertising and subscription revenue, along with its strategy of becoming a go-to online entertainment destination beyond gaming.
The company was supposed to hit this year's comeback trail after a nine-month freeze on game approvals wiped out his most profitable business in 2018. But a rapid economic slowdown in China, pressure for internet traffic and ads from up-and-coming ByteDance Inc., and now complicated political considerations are snarling the recovery.
That's a key reason the stock's archrival Alibaba Group Holding Ltd. has consistently underperformed this year, creating a gap of more than $90 billion in its market value.
Tencent's stock rose 2.3 percent Tuesday after information from Sensor Tower revealed the company's gaming sales increased 14 percent during the week of Oct. 28, led by Peacekeeper Elite.
Nevertheless, confusion is also covering up the division. State media reported earlier this month that the nation's publishing watchdog would limit online gameplay time at 1.5 hours per day for children, a significant market for Tencent's mobile games.
Since its April peak, the WeChat operator has lost a market value of $86 billion and tested a key level of support in October- which would have precipitated a sharp, long-term downtrend. Trading floors were abuzz then with speculations of generally souring trade sentiment in China, as well as concern that Tencent's decision to resume live streaming NBA games might backfire.
ByteDance came out of nowhere in 2017 to humiliate the king of social media, banking on the short-video craze that gave birth to its Douyin and TikTok applications and pushing Tencent to emulate their far smaller competitor.
ByteDance is now flooding the market with ad stock, suppressing dominant rates such as Tencent and Baidu Inc. This is significant because Tencent views ads as a possible opportunity for success, despite its lower ad load compared to its competitors- and ByteDance has shown that the Chinese company can not anticipate either pattern or potential rival.
