Tencent shows the lowest dip in revenues since 2007; Game in-app purchases strengthen quarter for Line

wechat-lineChina’s Tencent and Tokyo based Line released their Q3 2013 earnings results recently. Both the companies are currently trying to increase their international presence and are also focusing on strategy to increase their mobile user base.

Financials: Tencent vs Line

The overall revenue for Tencent stood at 15.54 Bn yuan(USD 255 Mn approx.), with its social networks, including WeChat and QQ showing a growth of 3.7% Y-o-Y in the quarter, also earning a profit of 3.87 Bn yuan(USD 635.18 approx.), a 20% hike on the Y-o-Y basis.

However, despite of showing strong quarter results, analysts found that revenue growth in the third-quarter was 34.3% Y-o-Y, which is the slowest rate in the last six years. This fall in ratio could be attributed to the investment towards customer acquisition and marketing strategies of the company such as paid stickers and games on WeChat, other location based and payment services, etc.

On the other hand, for Line, the total revenues for the quarter were around 15.6 Bn JPY, largely contributed by an increase in LINE game in-app purchases at 60%. The company’s social messaging app Line showed a growth of 48% Y-o-Y , reaching to 19.1 Mn JPY in the last quarter.

WeChat vs Line app

-> Userbase: The Tencent’s social messaging app WeChat, for the last quarter, saw an increase of 124% Y-o-Y in number of active users in third quarter. As per the latest reports, the monthly active user base for WeChat have almost tripled from the 85 Mn of the year before, leading to 236 Mn.

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On the other hand, Line’s messaging app, registers a total 280 Mn active users for the quarter globally. Also, app crosses the 10 Mn mark in India recently and is looking forward to reach 20 mn users by the year end.

-> New features introduced: This quarter Line has introduced many new features including prepaid wallet, shared album, video call and snap movie. Also, it added a monetisation model where users can buy stickers and other content for its service on web via store.line.me.

WeChat, released a new 5.0 update in order to bring several interesting features like mobile payments, a game center and a sticker store. Also, Tencent is expected to launch its first game centre in Malaysia on the WeChat platform by this year’s end.

According to the reports, Tencent’s major revenue source is still PC based games, but the company seems positive on the increase in revenues from mobile channel as the global pc sales declines. Also, the company is looking forward for a public listing next year. WeChat, on the other hand, is monetizing on its growing user base and is marketing aggressively via TV, online ads and Ibibo, in which Tencent holds a significant stake.

Other than WeChat and Line, with rise of Internet and mobile penetration in India, multiple players have been attracted to Indian VoIP messaging app market including Whatsapp, Viber, BBM along with local players such as Hike, PlusTxt etc.

Where WhatsApp is a leading app with a user base of 350 Mn+ globally and 25 Mn+ in India, Viber is all set to cross this mark. As stated by Talmon Marco, Founder & CEO Viber, in an interview with ET, “The company has already signed up 15 million users in India and is gearing up to tap the market aggressively. I want all Indians to use Viber”.

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As for other instant messaging mobile apps, BBM is currently having 80 Mn users while Hike is somewhere around 5 Mn. Well, where will this local vs global war will lead the social messaging space in India?

To share your views, email at meha@wirefootindia.com

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