2022 proved to be a turbulent year for the Chinese gaming market, and arguably no company saw as much trouble as Tencent. Between rounds of layoffs, its first quarterly loss since listing, and the loss of its status as China’s biggest company, Tencent managed to weather the storm, and now analysts are reporting that the company is due to resurge, reports the South China Morning Post.
The predicted resurgence is due to a number of factors, including the stabilisation of China’s macroeconomic climate and regulatory changes in the country.
“Tencent may finally stabilise in the fourth quarter, but a solid recovery in revenue growth will need to wait until 2023 when an improvement in the macro economy should boost its advertising andgaming businesses,” said Blue Lotus Capital deputy research head and managing director Shawn Yang.
A successful strategy?
Tencent scaled back its operations in 2022 in an attempt to become more efficient in the face of new restrictions on the industry. In a call with employees, CEO Pony Ma lambasted many corruption issues found within the company, and warned that China would continue to limit new game licenses in the long run. However, it’s worth noting that Tencent has already received several new licenses in a fresh wave of approvals, which may give the company reason to be more optimistic about its future prospects than it may have anticipated.
Pony Ma stated that there will be continued cost-cutting measures throughout the year, including a greater focus on the core business as opposed to peripheral areas. It appears that this is forecast to be successful, although if there’s one thing 2022 taught the industry it’s that even the world’s biggest mobile market isn’t immune to trouble. While it’s certainly possible that the forecast bounce back could occur, it’s also possible that unforeseen issues could hamper the company further.
Last year, we listed Tencent as one of 2022’s top 50 mobile game makers.