Tencent bets on cloud computing growth abroad amid gaming slowdown

Tencent has confronted a amount of headwinds in 2022 which include a Covid-induced slowdown in the Chinese economic climate and a tougher market for gaming.

Bobby Yip | Reuters

Tencent said it will launch new cloud computing products and solutions aimed at abroad marketplaces as it searches for new avenues for advancement amid a slowdown in its core on the web movie games business enterprise.

On Thursday, Tencent will host a start occasion for cloud products and solutions particularly aimed at marketplaces exterior of China, which include a suite of cloud-dependent audio and video items.

The shift marks a realization that Tencent demands to discover new resources of growth abroad as China’s economic climate slows. In addition to continued pressure from Covid outbreaks, Chinese tech providers also face a more durable regulatory ecosystem at residence.

Tencent, in certain, has been harm by stricter regulation on on the net game titles. Past year, Beijing launched rules that minimize the sum of time people today beneath 18 could play on-line video games to a optimum of 3 several hours a 7 days. Regulators also froze game approvals for several months, indicating organizations like Tencent and rival NetEase could not launch and monetize new titles.

While there are signs that the gaming crackdown could now be in excess of, Tencent has felt the impact. Domestic on the web video game revenue fell 7% in the 3rd quarter in contrast with a yr in the past.

Tencent’s second-most significant earnings driver is on the net gaming, so a slowdown in this segment is a drag on all round expansion.

The Shenzhen-headquartered business sights cloud computing as an location that could decide on up the slack. Tencent’s fintech and small business products and services division, which consists of its cloud computing division, grew 4% 12 months-on-calendar year in the 3rd quarter.

Chinese tech giants are not only hunting to new organization divisions for advancement, they are also wanting for new profits streams abroad. E-commerce company Alibaba has utilised its AliExpress and Lazada model to grow overseas, for example, while Tencent has discovered huge success with its on the net video games.

Now, Tencent is banking on cloud computing. The merchandise produced Wednesday focus on audio and visual solutions these types of as live streaming for e-commerce or on the internet meetings.

The goods are aimed at companies that want these types of providers but don’t necessarily want to maintain the infrastructure, this kind of a servers, or make these characteristics themselves.

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Tencent’s tactic could aim on trying to indication up worldwide companies with a presence in China as very well as Chinese companies increasing abroad. Presently, companies this kind of as BMW use some of Tencent’s cloud products and solutions.

As the Chinese business expands abroad, it will enter a pretty competitive cloud computing marketplace dominated by U.S. giants Amazon and Microsoft. Tencent’s global drive with cloud computing is relatively late in contrast with that of rival Alibaba, which expanded outside China in the final number of yrs. Now, Alibaba is among the 5 premier cloud computing corporations in the world.

Tencent’s target on audio and online video products plays to its strengths as just one of the world’s most significant gaming businesses and the operator of WeChat, China’s most popular messaging application with more than 1 billion buyers.