However, in its earnings report for Q1 2018 released earlier today, Tencent laid all those fears to rest, smashing analyst expectations to post some of its highest ever revenue and profit increases, buoyed by a skyrocketing mobile games market.
The company reported a net profit of 23.29 billion CNY ($3.7 billion) on revenue of 73.53 billion yuan ($11.5 billion) - beating a Thomson Reuters estimate of 71.04 billion CNY revenue. The company secured the rights to distribute both "battle royale" games in China and beyond and said it is just beginning to monetize them. Fortnite has been developed by video game developer Epic Games who Tencent has a stake in - the game is now unavailable in China, but there are plans to launch the game in the region in the coming months.
Tencent's investors had become used to its shares going up and up, until recent months. That represented a quarter-on-quarter rise of 12 per cent. The owner of the giant WeChat messaging platform opened its wallet to sustain growth as PC gaming slows, investing in cloud computing, entertainment and physical retail to lock horns with Alibaba Group Holding Ltd.
Smartphone games revenue, the largest revenue contributor, jumped 68 per cent to 21.7bn yuan while revenue from the more lucrative category of PC games was flat at 14.1bn yuan.
Tencent has been on a shopping spree, expanding into different sectors including e-commerce and automobiles.
Shares of Tencent, run by China's richest man, Ma Huateng (aka Pony Ma), rose more than 6% Wednesday thanks to the solid results.
Honour of Kings continues to be a core source of earnings. Not only is it increasing spent heavily on original content creation, it has invested in other streaming platforms.
Tencent's shares have fluctuated sharply this year.
That game has gone viral with more than 40 million active users monthly across consoles and PCs.
Another title - Honour of Kings - was the world's highest-grossing mobile game a year ago thanks to its China-based users and Tencent has been pushing it to worldwide audiences. The following month it led an investment of 617 million yuan in Pear Video, an online short video platform, that counts the listed unit of People's Daily as a shareholder. Epic is a company in which Tencent has a large stake. In retail and e-commerce - traditionally viewed as rival Alibaba Group's turf - it has splashed out billions since 2017 on deals at home and overseas. Tencent attributed the increase to growth in digital content services such as live broadcast, video streaming and in-game virtual item sales, and its Karaoke app WeSing.
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