With Chinese authorities intensifying their crackdown on online gaming, Tencent’s cash machine, its revenues have been significantly affected.
Faced with increased challenges stemming from heightened government regulations, Tencent Holdings announced stated, it has undergone its first restructuring in six years.
In 2018, its market capitalization has fallen significantly and the company has faced some harsh criticism from investors and analysts due to its fuzzy overseas strategy, increased debt, and heightened regulatory roadblocks.
Tencent Holdings, one of China’s biggest gaming and social media companies whose prospects are now in question following years of heady growth.
Shenzhen-based Tencent Holdings has its stock listed in Hong Kong. As part of its restructuring move it said it will consolidate three content business groups into one unit while creating a new group for cloud and smart industries.
According to its statement, it will “further explore the integration of social, content and technology that is more suitable for future trends, and promote the upgrade from consumer internet to industrial internet”. It went on to add, it will set up a technology committee to help strengthen its research and development as well as promote collaboration and innovation.
Last Friday, Tencent’s Hong Kong shares closed at HK$323.20, down from HK$406 at the end of 2017.
With its biggest revenue stream being online gaming, and with Chinese authorities yet to approve its in-game purchases that allow Tencent to make money, it has yet to fully realize the benefits of its most popular game in 2018 called PlayerUnknown’s Battlegrounds Mobile (PUBG Mobile).
The company has taken a severe beating following China intensifying its crackdown on online gaming. The company reported its first dip in first quarter profits in nearly 13 years.
Although the main business of Tencent is video games, the company also runs China’s dominant social network, WeChat, which has more than 1 billion users.