If you're not familiar with the Chinese company known as Tencent by now, you will be soon enough. The country's leader in online gaming currently has a hand in titles like Honour of Kings, Fortnite, and Player Unknown's Battlegrounds (PUBG) made an announcement in 2018 to begin restructuring their company – but how is it holding up?
The First Two Years
Tencent Holdings officially announced their reorganization strategy all the way back in October 2018. With a six-year timeline in place, the company expeditiously set out to switch their focus from online gaming and social media to other areas – namely healthcare, smart cars, cloud computing, and data analytics.
According to some of the earliest rumors, it was suggested that Tencent was planning to launch a cloud-based gaming service, similar to that of Google Stadia, but the company made it clear that it would take some time to accomplish – if they do it at all.
James Mitchell, Tencent's chief strategy officer, addressed the rumor by saying: "It’s something we are naturally very excited about, it’s something we’re looking into, but it will take a few years to fully materialize. At first it may support single player games and then gradually upgrade to multiplayer, which is the bigger revenue opportunity.”
As of 2020, we have yet to see any hint of a cloud-based video gaming service from Tencent. Based on the failings of Google Stadia thus far, we might never see it come to fruition.
A History of Changes
This isn't the first time we've seen Tencent reorganize their entire business model. It first occurred in 2005 and again in 2012. However, they were a much smaller company then – and they didn't play such a major role in the public eye.
One of its most successful technological contributions up until now has been the WeChat messenger app. Although it's not perfect, and it's been known to take up massive amounts of storage space when used on certain mobile devices, it's been incredibly popular amongst China's mobile-centric culture.
Tencent plans to keep updating the WeChat app. In fact, they're retaining all four of their current business units, including a department that is devoted solely to WeChat, while adding two new divisions: "Platform & Content" as well as "Cloud & Smart Industries."
A Costly Evolution
It's clear that Tencent is making the switch in order to provide greater data protection, network scalability, and service continuity that is aimed specifically at enterprise-level customers. However, this appears to be coming at great cost.
As of 2019, Tencent saw their fourth-quarter profits drop by 32% -- an unprecedented figure, even during their previous reorganization efforts. However, company leaders insist that this is a long-term effort that might even last for decades to come.
Pony Ma, CEO of Tencent, stated: "This initiative is a new starting point for Tencent’s next 20 years. It is a very important strategic upgrade. The second half of the internet belongs to the industrial Internet. In the first half, Tencent provided users with high-quality services by connecting people. In the second half building from this foundation, we will support industries and consumers to form more openly connected ecosystems."
For more information on Tencent, please visit their official website at www.tencent.com.
Chinese-based Tencent to Switch Focus to Enterprise Services
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