For fiscal year 2022 ending 12/31/22, Tencent saw revenue from games decline 2% to RMB 171 billion (about $25.9 billion).  This was a 2% decline from 2021 when game revenue was RMB 174 billion.  However, international game revenue was up 3% to RMB 46.9 billion (about $7.1 billion).  Domestic game revenue for 2022 declined 3.7%. to RMB 124 billion.

The decline was in mobile game revenue (including social network mobile games) which decreased 2.6% to RMB 161 billion (about $31 billion).  PC game revenue was actually up 3.8% to RMB 47 billion (about $7 billion).  This included an 8% increase year-to-year in PC game revenue and a 5% increase in international revenue in Q4 2022.

Analysis

Tencent is often cited as the leading global publisher of video games.  While this is true on a strict revenue basis it is misleading because most revenue comes from China and mobile games.  Tencent has struggled to become a true global player.

However, at $7 billion in international and PC game revenue, Tencent is clearly a significant presence.  Furthermore, this revenue came from investments, most notably the 2011 acquisition of U.S. PC game publisher Riot Games and the 2016 acquisition of Finnish mobile game developer Supercell.  Tencent studio TiMi developed Call of Duty mobile for Activision Blizzard.

Supercell has seen its fortunes decline since the Tencent acquisition, but Riot Games continues to be a leader in PC games with League of Legends and the 2020 multiplayer shooter Valorant which has seen solid growth. 

Tencent also has significant investments in leading Western publishers Epic Games and Ubisoft.  When looking at potential acquisitions in the video game space, Tencent is always seen as a potential purchaser.

The major takeaway is that Tencent is once again focused on international growth as the China market cools.  Some of this growth will be from helping companies like Activision bring IP to mobile, however, most of this growth will probably take the form of further acquisitions.

The acquisitions are likely to be in the PC and console game space, with a goal of expanding acquired franchises to mobile platforms.