Tencent Holdings Earnings Call Insights: Game Revenue Outlook and Reacceleration or Slowdown in 2013

Tencent Holdings (TCEHY) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Game Revenue Outlook

Dick Wei – JPMorgan: I have a question on the games side of the business. Can you give more color on a dynamics for the game revenue for 2013? Maybe some of the current trend for the larger games such as DNF, Cross Fire, the pipeline for this year? Also maybe some of the casual game impacts on mobile transition?

Chi Ping Lau – President: If you look at the games that we have, we actually have a pretty healthy portfolio of games I would say. In the sense that we have very strong casual game platform, which has diversified into that game platform and that has been quite successful. We have been able to make League of Legends a very successful game in the advanced casual game category while Cross Fire as a very large FPS platform continues to register growth in terms of revenue. And on the MMOG side the D&F acquisition is quite strong, but at the same time we also have been able to complement that with our self-developed game YuLong, the Legend of YuLong as well as the Legend of Xuanyuan. So, these are two in-house developed games which achieved quite good results. So, we continue to say in the gaming sector and especially (so that you know) in this PC gaming sector we are actually well-positioned. We have been to build a very diversified portfolio that consists of ACG, MMOG casual games as well as web games. And looking into the future without – the important thing is actually for us to be able to capture the emergence genres in this market and that’s why we have been quite active in terms of signing up big titles and very clearly you can see it played in, so quite a few of the online. These are in our portfolio and we are also going to introduce our self-developed MMOGs in the course of next two years. So, I think that’s sort of on the client game side. Now, in terms of mobile gaming, I think this is an area of opportunity. I think as we look into the future, as everybody is going to basically carry a smartphone that’s to some extent equivalent to a game console alongside with them walking everywhere. That’s actually a good opportunity for us to get on to. Now, of course, I think this market takes time to emerge and we need to actually build both the platform as well as develop the capability to develop games as well as build an ecosystem of game developer partners, who will work with us both on the open platform, as well as on the license model. So, there’s a lot of work to be done, but I think as we look into the mobile gaming as a new opportunity, we fell that there are opportunities that we ought to be getting on.