According to Tencent's reports, this company's shareholders' profit in the third quarter of 2024, with a 47 percent year-on-year increase, reached 53.2 billion yuan (7.4 billion dollars). This achievement was thanks to strong performance in media businesses, especially video games. In fact, Tencent's film and television segment revenue has been far lower than the games segment. Revenue from advertising and related services in Tencent's films and series grew only 17 percent compared with last year, a figure that is very modest against the 43 percent jump in profitability from video games. Also, production and marketing costs of cinematic works are higher than those of video games. Revenue from films and series is mainly through ticket sales, advertising, and their digital distribution, which has less diversity and scale than video games.
Tencent's annual revenue in the final days of 2024 reached 643.01 billion yuan, showing growth of 7.39 percent compared with 2023. The role of video game profitability relative to other segments is undeniable. Tencent's video marketing segment revenue, with 20 percent growth, reached 30 billion yuan late in the year; this level of profitability is the result of advertisers' spending on user accounts, applications, and the WeChat search engine segment. In addition, related advertising around the Paris Olympics also contributed greatly to this financial growth. But once again the video games segment, with a 33 percent year-on-year increase and profit of 59.8 billion yuan (8.29 billion dollars) in the last three months of the year, had a noticeable impact relative to other segments.
Why does Tencent prefer investing in games over other segments?
Tencent's revenue, after a decline in 2022 (82.5 billion dollars) caused by government restrictions and economic conditions, recovered in 2023 and in 2024 has also maintained its upward trend. Focus on international services, cost reduction, and expanding investment in artificial intelligence and e-commerce are the main reasons for this success. For example, fintech segment revenue, with a 2 percent increase, reached 53.1 billion yuan in the third quarter of 2024. Also, advertising profitability from platforms such as Weixin Mini Programs and Video Accounts increased by about 17 percent and reached 30 billion yuan in 2024.
Despite good figures in Tencent's various segments, the video games segment in 2024 was able to constitute this company's most important source of revenue. In the first quarter of 2024, Tencent's revenue from games reached 48.1 billion yuan (equivalent to 6.66 billion dollars). This amount had a slight decline of 0.41 percent compared with last year, but compared with the previous quarter, it recorded significant growth of 17.6 percent.
In 2024, Tencent's revenue from games in China's domestic market reached 34.5 billion yuan (4.77 billion dollars), accompanied by a 2 percent decline compared with last year. This relative decline occurred under the influence of delays in revenues as well as weakness in game content. Nevertheless, some of China's domestic games such as Dungeon & Fighter Mobile performed well and recorded 270 million dollars in sales in the first month of release alone. In the international games segment, Tencent's revenue, with 3 percent growth, reached 13.6 billion yuan (1.88 billion dollars). Games such as PUBG Mobile and Supercell titles such as Brawl Stars and Clash Royale achieved considerable successes in global markets and constituted a large share of Tencent's overseas game sales revenue.
When video game profitability in China leads to the creation of successful titles
In the second quarter of 2024, Tencent's overall games segment revenue grew 14 percent, and this company's domestic games market grew 9 percent. This growth was mostly due to the steady performance of games such as Valorant and Peacekeeper Elite. These figures on Tencent's profitability prompted Chinese game companies to bring more serious and innovative titles to the market. A process that had begun in 2022 and led to one of the most well-made China-produced games in the world. The game Black Myth: Wukong in 2024 became one of the most successful video games made by China's video game industry and set unprecedented records. This work achieved remarkable success not only in China but also globally.
The game Black Myth: Wukong, in less than one month from release, sold more than 20 million copies and earned about 961 million dollars. This game's pre-order sales alone were 53 million dollars, setting an extraordinary record for a Chinese game in this area. On the Steam platform, this game reached 2.2 million concurrent players in less than 24 hours, the second-highest concurrent player count in Steam's history. Also, Black Myth: Wukong became the best-selling single-player game in this platform's history. This artistic masterpiece was developed over four years with a budget of 42 million dollars. The production quality of Black Myth: Wukong, especially in graphics and storytelling, attracted the attention and praise of game-industry experts and became one of the candidates for best game of 2024.
Conclusion
The growing success of video games in China has caused a considerable rise in the share prices of Chinese game companies and increased this country's popularity in the global game industry. Analysts believe that increased sales and good marketing of games in China and global markets will be an incentive for more investment in large, competitive projects by Chinese developers. Projects that can be put to use in preserving a country's cultural heritage and draw on the capacity of digital capabilities. Like Tencent's role in the Microcosm project, which demonstrates this company's commitment to using technologies such as big data, cloud computing, and game technologies to support the preservation of China's ancient heritage and increase public participation in cultural projects.
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Machine-translated from Persian by Namafar; the Persian original is authoritative. Read the original in Persian