Focus analysis Tencent may not need to worry about the battle of user time

After the Hong Kong stock market on August 12, Tencent holdings released the second quarter financial report of 2020 as scheduled. In terms of major financial indicators, revenue was 114.883 billion yuan, up 29% year-on-year, and net profit was 30.153 billion yuan, up 28% year-on-year. < p > < p > this financial report proves that Tencent’s advantage is that its most profitable businesses still have very flexible adjustable space. For example, when Tencent needs to improve its cash flow efficiency, it does not have to launch more content products, but as long as it does a few marketing activities such as “May 5 black Festival” in Heli, the profit margin of the whole group can be significantly increased. Of course, the real situation is not as simple as we say. However, Tencent has been able to get through this chain because it has been operating in multiplayer online games for many years. It has a profound understanding of what kind of marketing activities can make money and not hurt user experience. On the contrary, it can make some inconvenient virtual digital products widely welcomed by users. From the perspective of revenue structure, the fastest growing business segment in this quarter is the value-added services of the game, with a year-on-year increase of 35% to RMB 65.02 billion, which is also the largest revenue share of Tencent. Among them, the online game revenue has achieved a 40% rapid growth, reaching 38.288 billion yuan, which not only exceeds the growth rate of value-added services, but also exceeds the growth rate of all other business sectors, of course, the growth rate of Tencent’s whole market. This is very surprising. < p > < p > Q2 is the traditional game off-season. Due to the special epidemic situation this year, it is considered that Q2 has contributed a lot of active users to the game. However, according to what Tencent has always said, minors are not the main contributor to Tencent’s game income, accounting for a small proportion of Tencent’s game income. In the past three years, Tencent has taken a lot of technical and institutional measures to limit the length of playing games for minors. In addition, Chinese Schools have opened schools in Q2. In fact, the user hours are declining month on month, so the epidemic is not Second quarter Tencent game popular main factors. In addition to Google’s $6.8 billion in the first quarter, Tencent’s total revenue of $6.7 billion was lower than that of Google’s $6.7 billion and Android’s. < p > < p > Tencent’s financial report explained that during the “May 5th black Festival”, Tencent released a number of top-level skin products, which improved user activity. In the first anniversary celebration, the new content and game mode have enhanced the competitive game experience of players. However, in the second half of this year, mobile games, mobile games and mobile games may be added to the Tencent civil war. < / P > < p > although Tencent’s cloud, payment, social advertising and other new sharp businesses are also growing at a high speed, the proportion of online game revenue and its value-added services sector in the group’s revenue increased to 33% and 57% respectively in this quarter, which is the largest and fastest revenue growth engine of Tencent. < / P > < p > according to questmobile data, as of June 2020, the share of Tencent app users in the whole network decreased from 43.8% in June 2019 to 39.5%, although it still ranked first among all the giant companies, the peak of this number was 54.3% in 2017. In contrast, the growth of Kwai and fast lines is still very obvious. < / P > < p > this means that Tencent’s other content products have not made satisfactory progress in the competitive consumer Internet market. < p > < p > according to Tencent’s financial report, on the one hand, games and value-added services grew rapidly in the second quarter, and the proportion of revenue rose; on the other hand, the performance of online media advertising was unsatisfactory. < p > < p > in the second quarter, the revenue of online media advertising business increased only 13% to RMB 18.552 billion, of which social and other advertising revenue still maintained a 27% growth rate, but the media advertising revenue, which was originally small, further decreased by 25% to RMB 3.290 billion. According to the financial report, the main factors are the weak demand for brand advertising caused by the macro environment and the delay of Tencent’s video content production and broadcast. < p > < p > what the financial report didn’t say was that due to the global epidemic in the second quarter, all sports events including NBA were suspended. However, the content copyright cost brought to Tencent was very high. < / P > < p > if these are industry wide challenges, Tencent does not have many solutions; however, for other content businesses, the industry has developed, but Tencent has not. < / P > < p > in the second quarter’s financial report, Tencent’s high expectations of micro vision only appeared once, which is still in the part of revenue and cost. “In the second quarter of 2020, the sales and marketing expenses of copper coin increased by 64% to RMB 7.756 billion, which was mainly due to the increase of marketing expenses in online games, micro vision, cloud and enterprise services…” < / P > < p > as a comparison, in the financial report of Q1 in 2020, in addition to appearing in the income cost, “… Micro vision increased its marketing activities during the Spring Festival At the same time, it also appears in the business review and prospect, “… We have strengthened the short video content, which has improved the user traffic and short video browsing volume of micro video, news information flow platform and small program…”. < / P > < p > and in the financial report of Q4 in 2019, micro vision has obtained the opportunity to directly show data achievements, “… The number of daily active users of short video application micro vision has increased by 80% month on month, and the average daily video upload volume has increased by 70%…” < / P > < p > short video has already become one of the most important content products in the global market, occupying more and more user hours and evolving rapidly A mature business model. However, Tencent, which regards content strategy as its core, is still unable to support an affordable short video product, no matter in terms of organizational reform or investment of resources, which makes people feel confused. < / P > < p > what is gratifying is that since the first half of the year, wechat’s product video numbers have become more and more intensive, and more and more new functions have been launched, showing a different enterprising attitude than usual, and may also be able to bear the short video responsibility of Tencent’s content strategy. < / P > < p > according to questmobile data, in June 2020, the time spent on the Internet by Chinese Internet users has dropped from 7.3 hours in March to 6.1 hours per day, which means that it has returned to the normal level before the epidemic. < / P > < p > of course, Chinese users need to solve the demand of large amount of content consumption online during the epidemic period, but they also need Internet products to help users return to normal life. Tencent is trying to make wechat applets carry a lot of work. < p > < p > fan Yijin, vice president of Tencent’s smart retail sales, previously said that wechat apps have grown into a business ecosystem with 400 million daily living users. According to wechat data, in 2019, the transaction volume of wechat applet has reached 800 billion, up 160% year-on-year. < / P > < p > with the launch of wechat “small stores”, more and more small and medium-sized long tail businesses will be able to carry out transactions on wechat ecology, while Tencent will continue to supplement the capabilities required by order management, after-sales service, live broadcast and other businesses’ online sales. < / P > < p > you should know that pinduoduo, an e-commerce upstart regarded as an important threat to Alibaba, has a Gmv of 471.6 billion yuan in 2018 and 1006.6 billion yuan in 2019. Although there are overlapping parts, the market of wechat small programs has indeed approached the level of pinduoduo and is still growing at a high speed. This is the super app wechat that Zhang Xiaolong hatched from QQ email. In the history of the Internet in China, there has never been such an independent product, which has the largest number of users and can meet the most extensive needs of users at the same time.

in March this year, Alipay upgraded and upgraded from payment tools and financial platform to a wider life service platform. WeChat, like WeChat, is also rapidly promoting the construction of its own small program ecosystem. The revised Alipay and WeChat are competing at an increasing number of businesses. Unlike three years ago, Alipay, which had long abandoned the social networking route, was no longer short on its own. Instead, it chose to focus on serving the B side businesses and to reach C users through businesses. This is different from wechat, which adds tools and capabilities based on user needs. < / P > < p > under the background of normal epidemic prevention and control and intensified market competition, wechat is also about to usher in an important milestone — in January 2021, the app, which has brought earth shaking changes to China’s Internet, will be born for the 10th anniversary. < / P > < p > it can be predicted that in less than half a year, wechat will inevitably reinterpret its positioning and look forward to the next decade. Before that, there may be a lot of work that wechat needs to work overtime. Continue ReadingYueshang group has become the third social e-commerce service platform listed in China after being gathered in pinduoduo

Author: zmhuaxia