Chinese social media and gaming giant Tencent reported $6 billion in total revenue for Q3 2016, up 52% year-over-year (YoY).
Growth was driven largely by the massive success of Tencent’s WeChat messaging app and its mobile gaming business.
WeChat’s success translated to a boost in advertising revenue for the company: Total online advertising revenue increased 51% compared with Q3 2015, rising to $1.09 billion.
Tencent attributed that rise to increased ad revenues from WeChat’s timeline, brand accounts within WeChat, and Tencent’s mobile news app. Overall, WeChat, China’s most popular messaging app, now counts 846 million active monthly users (MAU), up 40 million from the previous quarter.
WeChat is also starting to provide another revenue source for Tencent through its WePay mobile payments service, which resides within the WeChat app. Tencent didn’t break out specific revenue numbers for WePay, but said that it was a major contributor to the growth of its “other” businesses, which gained $726 million in Q3, up 348% YoY.
Despite the increased revenue gained from WeChat, Tencent’s biggest revenue source remains its gaming business, which accounted for $2.65 billion in revenue for the quarter.Although desktop gaming is still a major contribute to that revenue, mobile gaming is fast outgrowing its desktop gaming business. Mobile gaming accounted for $1.4 billion in revenue for the quarter, an 87% YoY increase.
In contrast, desktop gaming revenue for the company only grew 10% YoY. To drive further growth in its mobile gaming business, Tencent announced in June that it would acquire SuperCell, the gaming studio responsible for the popular Clash of Clans game.
Other messaging apps may look to Tencent’s success with WeChat in figuring out how to monetize their own services. Facebook, for example, has yet to monetize its WhatsApp and Messenger apps, but announced recently that it will allow advertisers to send sponsored targeted ads to Messenger users. Facebook is also testing a development kit to help gaming studios build mobile games that users would play within the Messenger app, which Tencent has already enabled with WeChat.
As WeChat shows, messaging apps have evolved beyond simple text communication tools to include commerce, file sharing, artificial intelligence, and more. And that evolution is ongoing.
- Business Insider