Tencent's profit misses estimates as video content costs climb
Tencent Holdings Ltd. posted fourthquarter profit that missed analyst estimates amid escalating costs for video content and online banking transactions. Net income rose 22 percent to 7.16 billion yuan ($1.1 billion) in the three months ended December, the Shenzhen-based company said Thursday. That compares with the 7.44 billion-yuan average of analysts' estimates compiled by Bloomberg.
As desktop gaming growth slows, Tencent is trying to keep mobile users engaged with its social network and content platforms by not flooding customers with advertising and requests for purchases. The company is buying intellectual property rights for anime, comics and novels to convert into mobile games, including Japan's popular manga series Naruto.
"The online game industry in China is pretty mature at this stage so it's hard to replicate the increase previously seen," Marie Sun, a Shenzhen-based analyst at Morningstar Investment Service, said before the announcement. "Even mobile games are past the explosive growth stage." Tencent is also expanding its battle with Alibaba Group Holding Ltd. in services spanning food delivery to video streaming services.