Tencent Soars On Lockdown Gaming Boom

High demand for video games during Covid-19 lockdowns buoyed Tencent Holdings' first-quarter revenue and profits, with blockbuster games PlayerUnknown's Battlegrounds Mobile and Honor of Kings helping it beat forecasts.

The mainland company's video games business, which generates more than a third of its revenue, saw growth of 31% to 37.30 billion yuan as people sought entertainment at home and used online multiplayer games to spend virtual time with friends.

Its flagship games PlayerUnknown's Battlegrounds (PUBG) Mobile and Honor of Kings topped mobile games revenue globally in March, analytics firm Sensor Tower said, reinforcing Tencent's status as the world's largest gaming firm by sales.

In-game spending on extras such as power-ups and object skins for PUBG Mobile alone surged to US$232 million, more than three times the amount the title generated in March last year.

Average revenue per user of mainland’s mobile games jumped from 62.9 yuan in Q4 to 85.2 in Q1 as a result of limited offline entertainment options, Jason Zhou, an analyst with Guotai Junan Securities, calculated.

However, Tencent's President Martin Lau said that in-game consumption was reverting to normal levels after the May 1 holiday as people began to return to work.

Tencent's stock has jumped nearly 14.38% this year, against a 15% decline in Hong Kong's broader Hang Seng index.

Alex Liu, an analyst with China Renaissance, said the lockdown boost was unlikely to be sustained, but strong deferred revenue was likely for the rest of the year and new titles, including Dungeon and Fighter Mobile, would deliver robust growth.

"The pandemic expedited the digitalisation of people's way of life...Tencent is very mature in the monetisation of its current products," Liu said. (Reuters)