LoL owner Tencent reports 65% rise in Q1 profits despite dropping share price

Source: KrAsia

 

Tencent released their quarterly report Thursday, detailing their financial results for the first half of 2021 against a global background of uncertainly and risk. The company, which has a dominating presence in esports, reported a 65% rise in quarterly profits, once again confounding expectations against a backdrop of potentially controversial issues and a dropping share price.

 

The company generated over $20B in Q1 of 2021 alone, for a profit of more than $7B, in a time that is traditionally difficult for esports and gaming (Q1). Their Weixin and WeChat services combined have more than 1.2B active users, but games still represent the majority of Tencent’s interests, accounting for 32% of revenue, ahead of FinTech at 29%, with the company’s revenue from online gaming increasing by 17%.

Domestic and foreign pressure onto Tencent grows

The news comes against a backdrop of issues in more than one region for the firm, with reports emerging that the Chinese government is ordering the company to pay a 10bn yuan fine, give up exclusive music rights, and even sell assets from the Tencent Music service, which is controlled by Tencent Holdings. The company is yet to comment on this case, while concerns that they could be forced out of the American market over security issues continue to circulate.

 

In response to the concerns from both west and east, the company has said they are “actively co-operating” with all parties and are committed to complying with all laws “including those related to anti-trust”.

 

Tencent President Martin Lau said the company is focused on compliance and risk management, in a quote given to Reuters: "When we look into internal review, and when we look... to make sure that we are compliant with the spirit of regulators, it's actually relatively manageable."

Tencent's esports influence still unmatched

Tencent’s influence on esports is unmatched, with the company outright owners of League of Legends as well as holding a 40% stake in Epic, publishers of Fortnite and Rocket League, as well as having a stake in PUBG among other titles. Tencent subsidiary TiMi Studios is also the developer of Activision's Call of Duty: Mobile which has surpassed 35 million downloads and over $2 million in revenue since 2019.

 

They have controlling stakes in mobile gaming too, with firms like King Gaming and Supercell under their hand, and even minority stakes in Activision Blizzard and Ubisoft (5% each). The scale of their influence is almost hard to overstate at this point, and it’s fair to say the future of League of Legends esports is directly connected to Tencent’s health, with Riot Games the only tier 1 publisher to successfully run LANs during the COVID pandemic.

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