Tencent is betting on the expansion of cloud computing abroad amid a gaming slowdown

Tencent has confronted a number of issues in 2022 together with a Covid-induced slowdown within the Chinese language financial system and a tougher marketplace for video games.

Bobby Yip | Reuters

Tencent stated it would launch new cloud computing merchandise geared toward abroad markets because it seems to be for brand spanking new avenues for development amid a slowdown in its core on-line online game enterprise.

On Thursday, Tencent will host a launch occasion for cloud merchandise aimed particularly at markets outdoors of China, together with a set of cloud-based audio and video merchandise.

The transfer alerts a realization that Tencent wants to search out new sources of development abroad as China’s financial system slows. Along with continued stress from the Covid outbreak, Chinese language tech corporations are additionally dealing with a more durable regulatory atmosphere at residence.

Tencent, specifically, has been affected by stricter laws on on-line gaming. Final yr, Beijing launched guidelines that lower the period of time under-18s can play on-line video games to a most of three hours every week. Regulators additionally froze sport approvals for a number of months, which means corporations like Tencent and rival NetEase could not launch and monetize new titles.

Whereas there are indicators that the gaming crackdown might now be over, Tencent is already feeling the results. Home on-line gaming income fell 7% within the third quarter in comparison with a yr in the past.

Tencent’s second largest income driver is on-line playing, so a slowdown on this phase is a drag on total development.

The Shenzhen-headquartered firm sees cloud computing as an space that may overcome that weak spot. Tencent’s fintech and enterprise companies division, which incorporates its cloud computing division, grew 4% year-over-year within the third quarter.

Chinese language tech giants are usually not solely on the lookout for new enterprise segments for development, they’re additionally on the lookout for new income streams abroad. e-commerce firm Ali Baba has used the AliExpress and Lazada manufacturers to develop abroad, for instance, whereas Tencent has discovered nice success with its on-line video games.

Now, Tencent makes use of cloud computing. The merchandise launched on Wednesday deal with audio and visible merchandise resembling reside streaming for e-commerce or on-line conferences.

This product is geared toward corporations that need such companies however don’t essentially wish to preserve such infrastructure, servers, or construct such options themselves.

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Tencent’s technique may deal with signing up international corporations with a presence in China in addition to Chinese language corporations increasing abroad. Already, corporations like BMW use a few of Tencent’s cloud merchandise.

As Chinese language corporations develop abroad, they may enter the extremely aggressive cloud computing market dominated by US giants Amazon and Microsoft. Tencent’s worldwide push with cloud computing has been comparatively late in comparison with rival Alibaba, which has expanded outdoors of China lately. At present, Alibaba is among the many 5 largest cloud computing corporations on this planet.

Tencent’s deal with audio and video merchandise performs to its strengths as one of many world’s largest gaming corporations and the proprietor of WeChat, China’s hottest messaging app with greater than 1 billion customers.

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