Following the release of its lower-than-expected earnings for the third quarter on Wednesday, Chinese tech giant Tencent Holdings vowed to step up its expansion efforts to boost its bottom line. The internet giant announced plans to focus on its growing video games empire and to take advantage of the rollout of the latest ultra-fast 5G mobile internet service around the globe.
Tencent's video game business is currently the world's largest in terms of overall revenue. The company plans to further extend its lead by boosting its presence in international markets. During a conference call with analyst, the company's president, Martin Lau Chi-ping, stated that part of its plan will be to build new partnerships with international intellectual property owners and to develop new ideas that are suitable for each particular market it enters.
Apart from developing international products catering to each market, Tencent also revealed that it will be placing some focus on the localization of its video games for regional markets in China. Lau stated that he believes that international markets will only represent a small portion of its video games business for now. For this reason, the company will first try to develop its brand recognition in its immediate vicinity.
On Wednesday, Tencent reported net profits of 20.4 billion yuan for its latest quarter ending on September 30, way below analysts' expectations of 23.5 billion yuan for the quarter. This was also a significant 2.9 billion yuan drop from its net profits during the same period last year. Tencent attributed the drop in its profits to the weak performance of its media advertising and desktop gaming business.
Tencent did report a 21 percent increase in total revenues to 97.2 billion yuan for the quarter. However, the figure was still below analysts' expectation of 99 billion yuan. Tencent's CEO Pony Ma Huateng assured its shareholders that the company was still experiencing sustained health growth rates given the performance of its other businesses. Ma stated that its Fintech, business services, and its advertising units are still seeing double-digit percentage growth.
Over the past quarters, Tencent's video game business had taken a hit following the Chinese government's regulatory crackdown on internet content and gaming addiction. Tencent expects to fully recover from the blow thanks to a number of big titles it is planning to rollout.
Tencent is currently seeing a lot of success with its latest title Call of Duty Mobile, which had been downloaded more than 148 million times in its first month of release. This made the game the second most downloaded game globally, right behind Pokémon Go. Tencent is also set to launch a new hit game called Peacekeeper Elite. The company expects to rake in more than $1 billion with the release of the new mobile title.
