Tencent posts $19.5b profit in 2020, driven by video games, social media

Chinese internet giant Tencent said that it raked in 482.1 billion yuan (US$73.9 billion) of total revenues for the year ended December 31, 2020.

It also generated profits of 126.9 billion yuan (US$19.5 billion) in a non-IFRS (International Financial Reporting Standards) basis for fiscal year-end 2020, a year-on-year increase of 30%.

Photo credit: Tencent

Most of its total revenues came from its value-added services (VAS) segment, which includes virtual offerings such as video games and social media. It contributed 264.2 billion yuan (US$40.5 billion) compared to nearly 200 billion yuan (US$30.7 billion) in the prior year.

According to its earnings report, Tencent’s fee-based VAS subscriptions grew 22% year-on-year to 219 million, with its long-form video segment drawing in 123 million video subscriptions, benefitting from popular releases last year.

The company also said that its Honour of Kings was the top-grossing mobile game worldwide for the second consecutive year last year. Additionally, the combined monthly active users of WeChat and its Chinese counterpart Weixin grew to 1.23 billion in 2020 from 1.16 billion a year earlier.

Meanwhile, Tencent’s online advertising segment pulled in 82.2 billion yuan (US$12.6 billion), while its fintech and business service segment generated 128.1 billion yuan (US$19.6 billion).

“While 2020 was an unprecedentedly challenging year, we believe our solid operational and financial results testify to our focus on user value and technology innovation,” the company said in a statement.

Looking forward, Tencent plans to expand its chat experiences and deliver a better social commerce experience within its social media apps. It also aims to strengthen its online advertising capabilities, focusing on recommendation algorithms and analytic services to increase user acquisition efficiency and sales conversion.

The company’s report comes almost two weeks after China’s State Administration for Market Regulation slapped Tencent, along with its rivals Baidu, ByteDance, and Alibaba, with a 500,000 yuan (US$77,000) fine for deals that breached China’s anti-monopoly law.