TenCent Reaches New Heights in Virtual Goods Sales

tencentChina’s TenCent social network recently announced it’s Q4 earnings for 2008. Total revenues came in at over $1 billion, marking an 87% increase from 2007. According to the company, $719 million came from virtual goods on the web, $204 million from mobile virtual goods, and $120 million from ad revenue.

Though China has always been a huge market for virtual goods, TenCent’s virtual good totals alone show a 95.5% increase in only one year, and a 75% increase in the mobile department. In fact, the former nearly covers all of the company’s profits for 2008.

TenCent also reported that the amount of virtual goods sales through games had also increased by 18% since Q3 due to the launch of three new games (Dungeon and Fighter, Cross Fire, and QQ Dancer). What is important to point out, however, is that this percentage would have been higher had their existing games not dropped in revenue. “It shows that users aren’t tiring of virtual goods, just the old virtual goods. Add a new game and new products, and sales continue,” says VGN.

“In 2008, TenCent delivered strong financial and operating results, leveraging our diversified, platform-based business model which is unique in China’s Internet market,” says Ma Huateng, Chairman and CEO of TenCent. “We are also excited to see that, during the year, China has become the largest Internet market in the world by number of users and that Internet has increasingly become an indispensable part of everyday life for people in China.”

Despite the success, TenCent is still looking to do better with 2009, as there is not only a long winter break for students (a major demographic of virtual good purchasers in China) during Q1, but there is also Chinese New Year. While this time has always been fairly poor for advertising revenue, it tends to be a significantly stronger time for virtual goods sales (something to certainly make a note of).

After the holidays, TenCent has also stated that it will be expanding to include virtual good sales offline, as well as launch three new MMOGs and a new casual game. The company will also be continuing into 2010 with an equally busy schedule as it attempts to launch up to six more MMOGs. However, the specifics of these later titles is yet to be written in stone.

[via Virtual Goods News]

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10 Responses to “TenCent Reaches New Heights in Virtual Goods Sales”

  1. Dan Taylor says:

    If in fact true, these are truly some staggering numbers.

    SnipClip recently aggregated data from 15 social networking, social gaming, and virtual worlds and found that social games vs. their non gaming siblings racked in 10x as many virtual goods transactions.

    SnipClip chose not to include this data in their survey due to the fact that Tencent did not make a distinction in their data between the virtual goods applications, i.e. classical online games, instant messaging, and social networks.

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    [...] have earned more than $200 million, respectively, in revenue with gross margins of about 50%. TenCent specifically tallied $1 billion in revenue for 2008, with 90 percent coming from virtual goods. Nearly 300 million people are now [...]

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    [...] worth of the virtual currency known as QQ coins. The coins are the currency utilized by the major Chinese web portal, Tencent. It is used for the purchase of online goods and premium services for supported [...]

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    [...] worth of the virtual currency known as QQ coins. The coins are the currency utilized by the major Chinese web portal, Tencent. It is used for the purchase of online goods and premium services for supported [...]

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  7. Outspark Raises $8.3 Million to Grow Virtual Goods Gaming Business says:

    [...] VCs DCM and Altos Ventures, as well as China’s largest and most popular Internet service portal, Tencent. The most recent round was led by Syncom, a VC firm focusing on “underserved segments of the [...]

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  9. Is virtual boom our industrial revolution? | Richard Hartley says:

    [...] underestimate. More than half of this activity is in China where one social network, TenCent, earned $1bn of revenue with an astonishing 90% coming from selling virtual goods including $204m from mobile phones (an [...]

  10. Harvesting Virtual Acorns in East Asia: A Study of Virtual Goods Internationalization | Demystifying Digital Commerce says:

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