Tencent reported $19.77 billion in second-quarter revenue, a 3% decrease from the same period last year — the company’s first-ever year-over-year revenue decline.
In the Chinese tech conglomerate’s gaming division, revenue for domestic and international games both fell 1% year-over-year to a respective $4.7 billion and $1.6 billion, accounting for just under a third of Tencent’s total revenue.
Domestic games experienced “a smaller digestion period due to transitional issues,” according to Tencent, which include fewer game releases, lower user spending, and gaming regulations for minors.
- In 2021, Chinese regulators created a rule to limit the amount of time minors could play video games to just three hours per week.
- Between July 2021 and April 2022, regulators would not grant approval of new games — Tencent launched only three mobile games during Q2.
Meanwhile, international games are being affected by “a post-pandemic digestion period,” with gamers spending less time online as countries open back up.
Tencent owns or has stakes in Riot Games, Wake Up Interactive, Epic Games, Activision Blizzard, Roblox, and Discord, among others. Popular games including “League of Legends,” “PUBG,” and “Moonlight Blade Mobile” also experienced revenue declines during the quarter.
Matter of Time
While gaming regulations have slowed Tencent’s momentum, it shouldn’t be for long.
Tencent president Martin Lau said the regulatory environment in the country is “progressing from rectification to normalization,” and the company expects to receive game licenses from regulators soon.
