Chinese Social Media Giant, Tencent Reports A 70 Percent Increase Of Profit; Starting AI Initiative

Tencent Holdings, the “Chinese Facebook” announced its quarterly result on Thursday, Aug. 17. The biggest gaming and social media firm in China posted its best result in the company’s history. The result was driven by the solid income from its smartphone games, payments, and online advertising. In its next step, Tencent has announced that they will enter the world of artificial intelligence.

According to Nikkei Asian Review, Tencent is able to generate $300 million in revenue despite the nearly saturated social media market in China. The company’s net profit upsurged to $273 million, higher than the analysts’ estimation, who predicted the $200 million profit. Following the result, Tencent has a market cap of $400 billion, which puts the Shenzen-based company as one of the eight largest companies in the world today.

Tencent made the most of its profit through the company’s video games and social media application. The company’s mobile game, Honour of Kings is regarded as the world’s biggest smartphone game with more than 200 million players. While its mobile application, WeChat, a combination of instant messaging, mobile commerce, and payment services is used by close to one billion users.

In the future, the company announced to jumpstart its artificial intelligence initiative. Tencent is the latecomer in the AI bandwagon, as other technology companies have already started theirs over the past two years. However, Tencent President, Martin Lau said that the company will take its AI research patiently and persistently, as AI is a long-term project.

“We believe it is a long-term initiative and we do not necessarily require our research to generate revenue directly in the short term.”

Tencent is one of the three Chinese companies, along with Baidu and Sina Weibo, that compete to conquer the biggest social media market in the world, China. They enjoyed an advantage when the government banned Facebook in China in 2009 after the Xinjiang Islamic terrorist network used Facebook as their mode of communication. Tencent capitalized the opportunity very well and the company now possesses similar capacity in technology with other U.S. technology giants. Therefore, Tencent decided to take a further step to enter artificial intelligence research.

Despite their best-ever quarterly result, Tencent also realizes that its growth will soon reach the peak. Since its user base is the Chinese citizen, in a nation with 1.3 billion people, the market will soon be saturated. Therefore, Tencent has taken two measures. The first one is to expand its service overseas, and the second measure is to add more services in the domestic market.

In July, Tencent has launched WeChat payments service in Europe, partnering with the Munich-based payments firm Wirecard, to enter the European market. With the partnership, the European retailers will be able to accept WeChat pay as a payment option. Tencent targeted Chinese tourists visiting Europe that spend more than $250 billion per year. While in the domestic market, Tencent has introduced new services to its users to generate more revenue from the existing users.

Following its massive success in this quarter, Tencent also faces the challenged to keep its growth and remain competitive. For that purpose, the company will start its artificial intelligence research. Tencent makes sure to maintain its position as one of the China’s most valuable technology company.

[Featured Image by Mark Schiefelbein/AP Image]