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Tencent restructures with an eye on corporate clients as games business stutters

Tencent restructures with an eye on corporate clients as games business stutters

October 1, 2018 | By Chris Kerr

Chinese internet and video game outfit Tencent has undergone restructuring for the first time in six years, according to Reuters

The company, which owns League of Legends maker Riot Games and Clash of Clans creator Supercell, has endured a tough time of late due to tightening game regulations in China. 

A licensing freeze alongside other regulatory changes have put Tencent on the back foot, leaving it unable to monetize popular battle royale shooter PlayerUnknown's Battlegrounds and other titles on home soil.

After experiencing continuous growth since going public in 2004, Tencent has witnessed its market value tumble in recent weeks, with its share price on the Hong Kong exchange falling to HK$323.20 last week, compared to HK$406 at the end of 2017, while it also reported a decline in PC and mobile game revenue back in June.

With Tencent feeling the squeeze, management has decided to create a new group for cloud and smart industries by consolidating three of its content business groups under one banner. 

The move is seen as an attempt to claw back some ground from rival Alibaba -- which is currently dominating the cloud market in China -- by improving its ability to offer cloud services to corporate clients across a variety of services including the WeChat messaging app, music, and games. 

Tencent also intends to establish a new technology committee to enhance its research and development operations by promoting "collaboration and innovation." 

It's unclear how long the licensing freeze will continue to affect companies like Tencent. Some reports have suggested it could take another six months for the country to start re-approving games, while others claim the situation will be resolved sooner rather than later.

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