Tencent is China's largest internet company by revenue. In 2008, Tencent's revenue exceeded $1 billion with over 40% net margins. Over 90% of Tencent's revenue came from its users, though active users only represented around 8% of total registered users. Tencent leverages virtual currencies and goods across its services which include social networking, games, mobile, and e-commerce to generate revenue. Experts believe Tencent's business models could be successful outside of China by offering appealing virtual goods and services to users.
Memorándum de Entendimiento (MoU) entre Codelco y SQM
Inside Tencent Presentation
1. Inside Tencent | 2009 Edition
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8 Questions & Answers on the World’s
Most Successful Online Community
+8* | Plus Eight Star Ltd | 2009.08
2. The Times Are A-Changing
“The World’s Most Lucrative Social Network?
China’s Tencent Beats $1 Billion Revenue Mark”
(March 2009)
“For Chinese IM Portal Tencent, The Money Is In
Micro-Transactions” (March 2009)
“Tencent Reaches New Heights in Virtual Goods
Sales” (March 2009)
“It was a trip 5 years ago to China where I met with
Tencent when they were private that led me to
come back and invest into Second Life. So one of
the reasons we’re ahead of the crowd from a digital
item type business model is because we were over
there paying attention.”
-- Bill Gurley, General Partner (June 2008)
4. About Tencent
• Tencent is China’s largest Internet company by
revenue and profits.
• It is centered around an IM service named
QQ. It also offers games, mobile, search, etc.
• This Q&A based on our “Inside Tencent”
report highlights some key points of its
success.
8. Over US$1 Billion & 40% Net Margin
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Operating Profit Margin
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Revenue (US$ million)
Note: Mixi, Gree and DeNA are Japanese social networks. Both Gree and DeNA are purely mobile.
11. US$1 Billion From <10% Users
892 mln registered IM accounts (2008).
298 mln Internet users in China.
Avg. 3 QQ accounts per Internet user.
377 mln are active accounts.
Revenue
14.7 mln paying mobile users
31.4 mln paying web users
About 8% of QQ’s active accounts bring revenue
13. US$26 Billion (August 2009)
• Tencent is listed in Hong Kong since 2004
• DeNA, Gree and Mixi in Japan are all listed for
over 1 billion USD
• Facebook’s valuation varies between US$3
and US$15 billion
14. Q4.
How Does Tencent Compare to
Leading Internet Companies in China?
15. Revenue 2008 of Leading Companies
US$ Million
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0 Kongzhong Si a
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et Bai u
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Mobile Web IM Portal + Online Search Online Only B2B
content Portal Games games engine games e-commerce part
17. Value-Added Services Dominate
• Year 2008 US$1,047 million Ads
11%
– Internet VAS 719 million Mobile
VAS
– Mobile VAS 205 million 20%
Internet
VAS
– Ads 121 million 69%
– Net Profit 412 million (39.4%)
• 1H2009 US$788 million Ads
Mobile 7%
– Internet VAS 594 million VAS
17%
– Mobile VAS 133 million
Internet
– Ads 57 million VAS
76%
– Net Profit 330 million (41.9%)
18. Game Revenue in 2008
US$340 million (#3 in China)
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Profit margin 2008 (mln USD)
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Game Revenue 2008 (mln USD)
Note: The size of the bubble represents the game revenue.
The profit Margin for Tencent game and NetEase is taken as the one of the whole company.
20. Most of Internet’s Money-Makers
• Social networking • Search engine
– Instant Messaging
– Blogs (200 mln reg.) • Mobile services
– Social network – Mobile portal (#1)
– “Twitter” service – Mobile client
– Mobile browser
• Games
– Casual games • E-commerce
– MMO – E-commerce platform
– Virtual pet (#5 revenue – Payment system
maker for Tencent)
21. From IM to Internet Giant
Internet services Wireless services
Q Zone
Internet Portal QQ Search
Super QQ QQ Notice
QQ Pet
QQ Show QQ Online Storage
QQ Mobile WAP Mobile
QQ Email
E-commerce services
QQ Games QQ Album
QQ IM
QQ Love
Tenpay
QQ Dating QQ Membership
C2C service
QQ Live QQ Music
In addition to mass market services, QQ activities cover online advertising
27. Could Tencent’s Model Work Outside China?
Pretty sure it works.
Virtual goods already For sure in Asia, and the gap is
started with Playfish, not so large with the West.
Zynga, etc. Habbo in Offer something appealing and
Finland uses the same people are always willing to
avatar model. Former Project Manager
Olivier GLAUSER pay small amounts for it. Tencent
Managing Director Western SNS are already
Steamboat Ventures learning but not fully exploiting
the potential.
The idea comes from
Korea so not entirely
Chinese. And yes, I
believe it will spread. It is not new in Asia. Korea and
Japan are earlier than QQ. The
Jim LEE concept is even more advanced
General Manager in mobile than in Internet. Ring
EA Mobile Back Tone (RBT) can be
regarded as a precursor for the
Yes, people need avatar on Internet, as the Yong LV
differentiation and self- fundamental is the same: self- Investment Director
expression. It is the expression! SK Telecom, China
same in China and the
West.
Leon HUANG
Product Manager
Jiapu.com
28. Other Experts Interviewed In our Research
2009
Olivier GLAUSER Gang LU Xing WANG Dirk HE Zili REN Gang WANG
Managing Director Founder Founder Senior Manager Founder Vice President
Steamboat Ventures Mobinode Xiaonei, Hainei, Fanfou Huawei Appleap Sina
Former Project Manager
Tencent
Leo WANG Jim LEE Brian RU Leon HUANG Yong LV Project Manager
Founder General Manager Senior Analyst Product Manager Investment Director
China Mobile
2008 Mobile 2.0 Forum EA Mobile Matrix Partners Jiapu.com SK Telecom, China
Catherine CHAN Tangos CHAN Kaiser KUO Alex LIANG Dr. Song LI Buddy YE Wayne SHIONG
IR General Manager Editor Digital Strategy Director CEO CEO CEO Partner
Tencent China Web 2.0 Review Ogilvy China Pica.com Digu, Zhenai Wangyou Media WI Harper
30. Get The Full Report!
• Complete report
– Company-wide license | US$5,000
– PDF, 284 pages
– info@plus8star.com
• Not sure yet? Check the free sample!
– www.plus8star.com
• Selection of clients of the 2008 edition
31. About Us
• Innovation Arbitrage
There are more ideas
– +8* | Plus Eight Star is the outside of your country
than inside.
leading cross-market
consultancy on web & mobile Tom Kelley
Author, The Art of Innovation
in China, Japan and Korea.
• Our clients
– We work with large companies, SMEs, investment
firms and governments worldwide to bring them
strategic advice and the best practices from
advanced Asian markets.
32. Contacts
www.plus8star.com
+81 | Japan
info@plus8star.com
+82 | Korea
http://twitter.com/plus8star +86 | China
Telecom & Internet
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