Tencent to Maintain Cost-Cutting Measures Amid First Drop in Annual Revenue

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Tencent Holdings on Thursday said it would restrict its focus to its core business, while maintinaing cost-cutting and improving efficiencies, as it reported its first drop in annual revenue to date.

The world's largest video game company and operator of the WeChat messaging platform posted revenue of CNY 554.55 billion yuan (nearly Rs. 6,65,600 crore) for 2022, down 1 percent from a year earlier, after China's economic slowdown due to the pandemic and a long-running regulatory crackdown dented profits.

Tencent Chair and CEO Pony Ma told reporters on a call the company would focus this year on getting more out of existing core businesses, rather than on "trying to do everything" and on operating in "red ocean markets", where competition is intense.

"We hope that our entire business management team and technology will be more focused," he said. "I think this is very important because we can see that focus and making breakthroughs are very key to overall development."

The business outlook is uncertain in the world's largest gaming market after two years of regulatory crackdowns, but sector participants are hopeful of a recovery as regulators have resumed granting publishing licences since late last year after a months-long freeze.

Unlike in most other countries, video games need approval from regulators before release in China.

The crackdown has changed the operating environment for China's tech giants as regulators have tightened scrutiny over monopolistic behaviour and companies' handling of user information.

Martin Lau, president of the company, told a later call with analysts that regulations are being normalised and support for platform companies should improve this year.

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