Tencent CEO says gaming business under stress, making strides in AI

Tencent’s (OTCPK:TCEHY) (OTCPK:TCTZF) Co-Founder and CEO Pony Ma said that the company’s video games business faces intense challenges from rivals, however it is catching up in artificial intelligence development, Reuters reported.

Ma, who speaking at Tencent’s annual meeting in Shenzhen on Monday, noted that tech giant was resting on its laurels in gaming while rivals have brought new hits. Video games generate over 30% in revenue for the Chinese company, the report added.

Ma’s comments underlines worries that whether the world’s largest gaming company — also owner of WeChat — can defend its status as China’s leading tech company amid stiff competition and new disruptive technologies.

“Gaming is our flagship business…But in the past year, we have faced significant challenges,” Ma noted. He added that “we have found ourselves at a loss, as our competitors continue to produce new products, leaving us feeling having achieved nothing.”

Ma’s speech comes amid a time when companies such as miHoYo and NetEase (NTES) have outdone Tencent with hit gaming titles such as ‘Genshin Impact’ and ‘Eggy Party.’ Meanwhile, Tencent’s recent titles have not met expectations, though past hits such as ‘Honor of Kings’ and ‘PUBG Mobile’ continue to show strong revenue, the report added.

On AI, Ma said that the company is not too far behind competitors. “We can finally follow the pace of the first-tier companies. We don’t count ourselves as the most leading but at least we are not too behind,” Ma noted.

Ma added that the company’s focus should be on integrating its AI model ‘Hunyuan’ AI model into different business aspects so as to expand efficiency rather than to swiftly turn AI into products.

Ma said that in the short term, within the next one or two years, there would not be a massive, AI-native application.

In addition, Ma’s focus was also on live-streaming e-commerce. Tencent has been trying to make WeChat more like ByteDance’s short video service Douyin, which has been which has been generating large revenue from live-streaming e-commerce.

“WeChat is our most robust platform regarding daily user amount and its ecosystem. But it is 12 years of age… Now how we can find new sprouts from the old tree that is WeChat is the big question for us,” added Ma.

Last week, NetEase (NTES) and Tencent (OTCPK:TCEHY) (OTCPK:TCTZF) were among the gaming stocks that surged after China’s gaming regulator removed proposed draft rules for the online gaming industry from its website. The draft rules for the online gaming industry, which were aimed at curbing the amount of money and time players spend playing the games, had led to a wipe out of about $80B in market value from the three China’s companies (NetEase, Bilibili (BILI), and Tencent) on the Hong Kong and China exchanges on Dec. 22, 2023 after the draft rules were unveiled.