Tencent Holdings Ltd. has attracted millions of new gamers during the global outbreak of the coronavirus, but the surge of popularity of mobile games can be slow as the world economy No. 2 will return to normal operation.
the Need for entertainment among those who were in the forced confinement of the house in connection with the epidemic in China has become a powerful impetus for the development of games Tencent — Honor of Kings and Peacekeeper Elite. By early March the market value of Chinese IT giant increased by $25 billion.
Now it is expected that the company that owns WeChat will report the fastest revenue growth from 2018 on Wednesday, when they announced the quarterly results. Investors also will look for the leaders is the guarantee that the company will be able to sustain this pace to continue.
But the forecast for the March quarter may be less clear than expected. While Peacekeeper Elite showed strong revenue growth for February, sales of other big games consistently decreased, and total revenue actually fell according to Sensor Tower.
Divisions Tencent engaged in social media and video advertising are also expected to take the hit this quarter, as sellers and brands have cut their budgets. And any blow to the Chinese economy, of course, will confuse the consumer and marketing expense, which is based on Tencent.
According to analysts Bloomberg Wei-Chamois Ling and Tiffany Tang long new year holiday in China and the increase in time spent at home, unable to raise the sales of Tencent and NetEase in February, as the gamers went back to work in the middle of the month. Sales of Tencent fell by 14%, and NetEase — 21%. Key games in both companies was weak. Download increased, as casual gamers back online.
of Course, Tencent may to some extent rely on the cash cows of the type Honor of Kings and shooter in the style of “Royal battle" Peacekeeper Elite to mitigate any economic shocks, while awaiting government approval for the release of the hit Call of Duty Mobile throughout the country. Investors also hope that many of new users who are addicted to games Tencent during the outbreak of the virus will remain and after the pandemic subsides.
Tencent Shares began to rise in February, while other companies, such as Alibaba, whose business is based on products of the material world, struggled to contain the downturn.
Since the end of January the number of active users of the game Honor of Kings grew by 7% to 2 million players on the Chinese iOS devices, and the number of users of super-APPA WeChat, according to Apptopia, increased by 1.4 million. Unexpected hits become easy Tencent casual games like Mahjong and poker, which has replaced the real versions that people played with friends and families.
the Pandemic may have also strengthened the emerging cloud division of Tencent, which is narrowing the gap with Alibaba’s income. Two office applications Tencent — Tencent WeChat Conference and Work — are among the most downloaded free apps on iOS in China, closely following DingTalk from Alibaba.
In the long term, a bigger problem may be ByteDance Inc. The world’s largest startup luring users and advertisers to your apps, such as Toutiao news aggregator and platform Douyin, Chinese twin TikTok. Now ByteDance is trying to diversify its income in areas such as pay music services and video games, presenting a potential threat to Empire online content Tencent.
an Outbreak of coronavirus led to a rise in sales of games and educational apps at $150 billion. According to the research company AppAnnie, the global gaming industry and other online applications has increased due to a record number of downloads to Chinese users, more than 220 million downloads viathe Internet Apple store. Average weekly download applications during the first ten days of February jumped by 40% compared to the average figure for the whole of 2019.
Income from gaming applications in China grew by 12% compared to the previous year. People spend more time playing, and it gives new opportunities for monetization. It is not only the gaming industry, but the field of online learning.
Download educational apps in February rebounded sharply, due to the fact that schools in many major Chinese cities remain closed. Shares of New Oriental Education, which is engaged in online education in China for two months this year rose in price by 17%.