Chinese digital giant Tencent booked $6.22 billion in profit during the first half of 2018, but revenues from its important games unit have been hit by delayed releases and changing user patterns.
In the second quarter ending in June, Tencent registered $3.3 billion in profit, a 26% increase from the same period last year. Total revenue for the quarter was up by 30% to $11.1 billion, fueling a 39% increase across the first half of the year to $22.2 billion.
The company said that smartphone games revenues were up 19% in the second quarter year-on-year, but they dropped by 19% compared to the first quarter of the year. PC games were down 5% year-on-year, and 8% compared to the previous quarter.
Tencent’s gaming woes increased this week when its WeGame platform was ordered by Chinese regulators Monday to withdraw its newly released title “Monster Hunter: World.” The move worsened already-negative investor sentiment against tech stocks and against Chinese companies in the past couple of months. Tencent shares, which are listed in Hong Kong, have fallen 19% from HK$411.8 three months ago to HK$336 at the close of business Wednesday.
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There was better performance by the company’s digital content activities, which span music distribution, video streaming and online books. Total fee-based subscriptions increased by 30% year-on-year to 154 million, primarily driven by online video. There was a 121% increase in subscriptions, to 74 million, for online video, though it was not clear whether this was all from generalist platform Tencent Video.
Subscriptions were driven by original content offerings, including variety show “Produce 101” and drama series “Legend of Fuyao.” The latter was derived from IP hatched at China Literature. That trend may go some way to explaining why earlier this week China Literature announced plans to acquire film and TV producer New Classics Media in an expensive $2.25 billion deal.
Monthly average users at its powerhouse social media and messaging service WeChat/Weixin increased by 10% to 1.06 billion.
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