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Despite China's game freeze, mobile game revenue is still on the rise at Tencent

Despite China's game freeze, mobile game revenue is still on the rise at Tencent

November 15, 2018 | By Alissa McAloon

Tencent’s game business saw a rise in revenue from mobile games during the third quarter of the company’s fiscal year, though PC game revenue fell by 15 percent during that same period.

The company says that revenue from smartphone games alone increased by 7 percent year-over-year, coming in at RMB 19.5 billion (~$2.8 billion) for the quarter ending September 30. That increase notably happened while China, a major market for the company’s games business, has been stuck in a game licensing freeze while the government offices responsible for issuing those licenses undergo a restructure.

That means that, unless game makers were able to take advantage of a now-discontinued "green channel" approval program, any games currently releasing in China would have been evaluated and issued a license ahead of the freeze. While the government itself hasn't been vocal about the process, some game companies say that freeze has been ongoing since April 2018

Even still, Tencent says its mobile revenue was driven by new releases. The company saw 10 games hit mobile devices this quarter and notes that it currently has 15 unreleased games in development that have already received monetization approval.

Meanwhile, revenue from PC games fell to RMB 12.4 billion (~$1.8 billion), marking a decrease of 15 percent year-over-year and a decrease of 4 percent from just last quarter. In the report, Tencent chalks that decline up to more and more players choosing to swap from PC to mobile games. 

The company also says that, despite a decrease in revenue, sales before deducting deferrals actually increased year-over-year, led by new content hitting the Tencent-owned games of CrossFire and Dungeon & Fighter

The company as a whole saw its revenue increase by 24 percent year-over-year to RMB 80.6 billion (~$11.7 billion), with third-quarter profit rising by 30 percent year-over-year to RMB 23.4 billion (~$3.4 billion). The majority of the company’s revenue came from its advertising, digital content, payment, and cloud services this quarter as well.

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