Last week, Facebook announced it would allow businesses to privately communicate with customers through its Messenger app. As the company begins to tweak this service, all eyes should be on China’s all-in-one messaging app, WeChat, as an indicator for where Facebook may take Messenger in the future. “We are cautiously optimistic”, he said. The app, known as Weixin in China, is Tencent’s main platform for social media, gaming and advertising.
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Online advertising accounted for 17% of Tencent’s overall revenue in the second quarter, compared with 10% a year earlier.
Sales from smartphone and tablet games climbed 11% on a gross-to-gross basis. “And advertising is a key area”, said Daiwa Securities analyst John Choi.
While mobile advertising is expected to be the engine for Tencent’s growth over the next few years, mobile payments is another area where Tencent is placing its bets. With vertical expansion, particularly in O2O, becoming a common strategy amongst the larger Chinese Internet companies, we prefer Tencent’s “strategic partnership” approach. Moreover, a user is treated to a consortium of services that in most other countries would require standalone apps to be downloaded. The company is adding card and action games to try and attract more paying users. It has also offered to buy eLong, a major Chinese online travel portal, as part of its drive into the traditional economy, according to Bloomberg News.
WeChat hit the 600 million user mark at the end of June, representing a 9.2 percent increase from the previous quarter.
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The most surprising aspect of the service is the fact it has grown from 500 million active users to 549 million active users in about eight months.
