Tencent costs surge as competition Bytes
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Soaring costs saw Tencent Holdings report a net income of US$13 billion for last year, after a slow fourth quarter, which concerned analysts given the subsequent impact of the coronavirus crisis since January.
Costs rose 20 percent last year as the social media and digital company spent money buying new content and securing new users to its WeChat and other platforms to protect itself from fast-growing rival ByteDance, parent of TikTok.
Group revenue topped US$53.3 billion for the year but its cost of sales reached $29.7 billion.
Tencent said its online gaming revenue grew by 25 percent, the fastest rate since the first quarter of 2018 and sales of smartphone games soared 37 percent.
The company said more gamers signed up to its services in January as the coronavirus crisis forced people to stay home, with schools, universities and workplaces closed for an extended period.
Net fourth-quarter income was $3.1 billion.
Questions & Answers
Q.What was the primary reason for Tencent's increased costs last year?
What was the primary reason for Tencent's increased costs last year?
Costs rose by 20 percent as Tencent invested heavily in acquiring new content and attracting more users to its WeChat and other platforms. This strategy was implemented to counter the rapid expansion of its competitor, ByteDance.
Q.What was Tencent's total revenue for last year, and how much did their cost of sales contribute to this?
What was Tencent's total revenue for last year, and how much did their cost of sales contribute to this?
Tencent's group revenue reached US$53.3 billion for the year. The cost of sales accounted for a substantial portion of this, amounting to US$29.7 billion, impacting their overall profitability.
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