Company  Profile:  Tencent  Holdings  by  Jeremy,  Irem,  Jonathan  

 

Agenda  The  Facts  Company  Strategy  Future  of  Tencent  Conclusion  

The  Facts  

by  Jonathan  Loo  

The  Basics  Founded  in  1998  China’s  largest  Internet  service  portal    

Tencent  went  public  on  HKSE  on  June  2004  

990  million  QQ  users  

Mission  “...to  enhance  the  quality  of  human  life  through  Internet  services”  

Vision:  “to  become  the  most  respected  Internet  enterprise”  

Products  &  Services    

Tencent  has  established  seven  main  business  lines:  

IM  (Instant  Messaging)  Service    

Online  Media    

Wireless  Internet  Value-­‐Added  Services  

Interac9ve  Entertainment  Service    

Internet  Value-­‐added  Service  

E-­‐commerce  and  Online  Adver9sing  Service  

Corporate  Video  hVp://www.youtube.com/watch?v=12DIel6uLyk  (2:18)  

Research  &  Development  More  than  50%  of  staff  are  based  in  R&D  Tencent  Research  Insctute  (Beijing,  Shanghai,  and  Shenzhen)  

Company  Strategy  

•  AVract    startup  founders  with  the  prospect  of  guidance  for  an  entry  into  the  China  market  

•  Uses  investments  to  beVer  understand  the  U.S.  market  

•  Looks  to  invest  in  companies  that  can  provide  with  technology  or  content  that  can  be  brought  to  China  through  licensing  or  partnerships  

•  Takes  larger  stakes  of  30%  or  more  in  companies  

Culture  Values:  integrity,  proaccve,  collaboracon,  innovacon  

Management  Philosophy:  “care  for  the  development  of  employees”  

The  Tencent  Human  Resource  Training  System  Tencent  Charity  Foundacon  

Company  Strategy  by  Irem  

One-­‐Stop  Online  Living    

Tencent  has  established  seven  main  business  lines:  

IM  (Instant  Messaging)  Service    

Online  Media    

Wireless  Internet  Value-­‐Added  Services  

Interac9ve  Entertainment  Service    

Internet  Value-­‐added  Service  

E-­‐commerce  and  Online  Adver9sing  Service  

Clients  

Company  Strategy  

•  Gained  prominence  with  its  instant  messaging  system  called  QQ  that  targeted  Chinese  college  students  

•  More  than  900  million  monthly  accve  users  

•  Makes  money  by  service  fees    

o  virtual  products  (40%)  

o  charging  gaming  fees  (50%)  

o  advercsing  (less  than  10%)  

•  Investments  

Global  Strategy   “The  transforma.on  of  the  company  

from  a  Chinese  firm  which  services  are  s.ll  accessed  through  desktop  computers  for  chat  and  games  to  an  Interna.onal  firm  providing  mobile  services”    

https://www.youtube.com/watch?v=PCWEHEsJ7co

Dream  of  Being  The  Best  •  Rapid  growth  abroad  

o  WeChat  user  doubled  from  50  million  users  to  100  million  within  May  to  September  of  2013  in  the  U.S.  

Global  Strategy  An  internaconal  version  of  its  cloud  storage  product  in  2014  offering  10TB  of  free  

cloud  storage    

•  10  cmes  more  than  1TB  being  offered  by  rival  Chinese  tech  giants  Baidu  and  Qihoo  360  

•  7GB  available  on  Microsom’s  SkyDrive  

•  15GB  giveaway  for  Google  Drive  

•  5GB  of  DropBox  storage    

An  English  version  of  a  new  Instagram-­‐like  image  app,  Story  Camera  (an  app  already  popular  in  China)  

Global  &  Local  Investments  

•  Invested  early  in        and    

•  In  2011,  company  announced  $760  million  fund  for  emerging  companies  

•  Made  investments  in  venture-­‐capital  firms  

•  Acquired  Comsenz  (Pinterest  +  forum)  to  grow  online  advercsing  plaqorm  on  instant-­‐messaging  service,  QQ  

Innovacon  Strategy      

“We  are  very  focused  on  building  user  experience.”  

“When  you  have  the  best  experience  users  will  stay,  and  when  users  stay  they  keep  each  other,  and  that’s  the  biggest  value  of  a  social  network.”  

Innovacon  Strategy  Strategic  Partnership  with  -­‐  $448  Million  stake  in  Sogou  &  Sohu  

“reinforces  "open,  win-­‐win"  philosophy  of  working  with  leading  teams  to  create  innova.ve  products  for  users,  and  build  a  healthy,  diversified  ecosystem  for  the  industry”  

•  Sogou's  strong  innovacon  capabilices    

•  Successful  execucon  track  record  •  Superior  search  experiences  to  users  on  social,  browser  and  content  plaqorms,  especially  on  the  mobile  

front  

Future  of  Tencent  by  Jeremy  Gan  

Is  Tencent  Innovacve?  •  Voted  as  “World’s  Most  Innovacve  Social  Media  Company”  by  Fast  Company  

o  WeChat  suite    §  Aggressive  internaconal  rollout  is  “rare”  for  a  Chinese  company  

•  Voted  #2  as  “Most  Innovacve  Gaming  Company”  by  Fast  Company  o  Subject  to  intense  debate  due  to  numerous  allegacons    

Tencent  Different  Today  •  In  the  past…  

o  Kin  to  Microsom  back  in  90’s  §  “Copy  &  develop”  strategy  

•  Spot  new  technology  innovacon,  reverse  engineer,  leverage  on  its  massive  resources  and  user  base  o  ICQ  -­‐>  OICQ  -­‐>  QQ  

•  Today…  o  Rethinking  “innovacon”  

§  Leveraging  core  strengths  and  relocacng  resources    •  Combining  messaging  with  social  media,  gaming    

plaqorm,  mobile  payment,  and  cloud  storage  o  WeChat  

Metanaconal  Innovacon  Process  Locate innovation team near key market knowledge to experience context firsthand and transfer knowledge on-site:- ●  Technology

Complexity LOW ●  Market

Complexity HIGH

Dream  of  Represencng  The  World  

Rapid  Expansion  (Home)  •  Partnering  with  global  brands  on  internaconal  campaign  

o  Nike  Fescval  of  Sports  2012    o  hVp://vimeo.com/48589953  

WeChat’s  Rivals  Globally  

Global  Advercsing  Strategy  #1  

Global  Advercsing  Strategy  #2  

Set  #2  (Answers)  

Rainee Yang Lionel Messi

Varun Dahwan

Neymar Jr.

Parineeti Chopra

Set  #1  =  LINE    

Set  #2  =  WeChat  

Quesconable  Advercsing  Strategy  

Investment  Porqolio  (in  U.S.)  •  e-­‐Commerce  

o  Fab.com    •  Gaming  

o  Epic  Games  (Gears  of  War,  Infinity  Blade)  o  Riot  Games  (League  of  Legends)  

•  Photo  Sharing  o  Loom  o  Waddle  

•  Social  Networking  o  Ark  

•  Mobile  messaging  o  Snapchat  (Potencally  at  $4  Billion  USD)  

Snapchat  

Sccking  Point  •  “U.S.  is  a  very  tough  market  to  compete  and  crack.”  -­‐  Marcn  Lau  •  Free  SMS  -­‐  takes  away  cost  appeal  

o  Compeccon  an  all-­‐cme  high    §  Local  favorite  

•  iMessage  •  Whatsapp  •  Viber  

•  “BBM  realizacon”  o  Lack  of  “true  innovacon”  o  Switching  barrier  too  high  

•  Unfair  advantage  o  Western  compectors  are  blocked  out  of  Chinese  market  

Crowded  Compeccon  •  China  -­‐  “Mobile  First”  Market:  3X  More  Usage  on  Mobile  than  on  PC    

o  Baidu  §  Expansion  path  through  acquisicon  

•  NetDragon  Websom  ($1.85  Billion  USD)    o  Alibaba  

§  Expected  IPO  valued  at  $100  Billion  USD  §  Banned  its  employee  from  using  Tencent’s  WeChat    

•  Silicon  Valley    o  Facebook    

§  Concnues  to  capitalize  on  social  networking  via  advercsing  o  TwiVer    

§  Experimencng  with  “firehose”  -­‐  selling  public  data  (tweets)  

Quescons