Tencent: The dilemma of the giants
Tencent is an Internet company founded in 1998 with many well-known products and services, such as WeChat, QQ, Tencent Video, Tencent News, Tencent Games, etc. The main founder and CEO of Tencent is Huateng Ma, a former programmer who later led Tencent to become one of the largest Internet companies in Asia and the world with his innovation and leadership. Tencent is listed on the Hong Kong Stock Exchange with a market capitalization of more than HK$2.7 trillion, and Ma Huateng has become one of the richest people in Asia.
However, in recent years, Tencent has also faced unprecedented challenges and crises. In this article, I will analyze Tencent's dilemma from three aspects: user dwell time, lack of innovation, and policy uncertainty.
User dwell time
Spend time is the amount of time a user spends on a platform or app, which reflects the user's preferences and loyalty to that platform or app. The longer a user stays, the more a platform or app can attract and retain users, increasing ad revenue or paid conversions.
Tencent's two trump cards, WeChat and QQ, are social networks and instant messaging tools that rely heavily on user dwell time. WeChat is the largest mobile social platform in China, and there is no one. WeChat has over 1 billion monthly active users; QQ is the oldest online social tool in China, with more than 700 million monthly active users.
These two products have brought huge traffic and revenue to Tencent, and also created a huge ecosystem for Tencent, including WeChat Pay, WeChat Mini Program, QQ Music, QQ Space, etc.
However, in the past few years, Tencent has faced strong challenges from competitors such as ByteDance. ByteDance is an Internet company founded in 2012 that owns a variety of short video and information platforms, such as Douyin, Toutiao, Watermelon Video, etc. ByteDance's products focus on content, using artificial intelligence algorithms to recommend personalized and diversified content to users, thereby attracting a large number of young users and constantly refreshing user dwell time records. According to statistics, in December 2019, the average daily usage time of Douyin and Toutiao reached 85.6 minutes and 74.1 minutes respectively in mobile applications, while WeChat and QQ were 38.4 minutes and 23.6 minutes respectively. This means that ByteDance has managed to grab most of users' time on mobile phones and threatens Tencent's dominant position in the social space.
Lack of innovation
Innovation is the soul and driving force of the development of the Internet industry, only continuous innovation can adapt to the needs of users and changes in the market, in order to maintain competitiveness and leading position. In the process of its growth, Tencent has also demonstrated many innovative capabilities and products. For example, Tencent's earliest product OICQ (later renamed QQ) was a network pager developed after foreign ICQ, but Tencent added more localized functions on this basis, such as emoticons, avatars, members, etc., thus creating a unique online community; Tencent's WeChat launched in 2010 is a mobile social application based on voice chat developed after Xiaomi's Mi Chat, and later continuously enriched WeChat's functions and scenarios, such as Moments, WeChat Pay, WeChat Mini Program, etc., thus becoming the entrance to China's mobile Internet; Tencent also has many successful cases in the field of games, such as "Honor of Kings", "League of Legends", "Peace Elite", etc., which are all popular game products by users.
In recent years, however, Tencent seems to have fallen into an innovation dilemma. On the one hand, Tencent lacks breakthrough products and layouts in emerging fields. For example, in the field of short video, Tencent has launched products such as Weishi and Channels, but none of them have been able to shake the status of Douyin and Kuaishou; In the field of e-commerce, Tencent has invested in platforms such as JD.com and Pinduoduo, successfully creating effective competition for Alibaba; In the field of education, Tencent launched products such as Tencent Classroom and Penguin Tutoring, but the education and training industry was hit hard, and Tencent was not spared. On the other hand, Tencent lacks the motivation and vitality to innovate in existing fields. For example, in the social field, it is difficult for WeChat and QQ to make major changes and breakthroughs, and users are increasingly inclined to use more relaxed and interesting social methods, such as short videos, live broadcasts, etc.; In the field of games, although Tencent still dominates, it also faces problems such as homogenization, copyright disputes, and competition between NetEase and Mihayou.
The documents are unclear
Documents are one of the important factors affecting the development of the Internet industry, and changes in documents will bring opportunities or challenges to Internet enterprises. In recent years, a series of supervision and regulation of the Internet industry have been carried out to protect the rights and interests of users, maintain network security, and promote the healthy development of the industry. These documents put forward higher requirements and standards for Internet enterprises, and also bring certain pressure and risks to Internet enterprises.
Tencent, as one of the largest Internet companies in China, has also been affected by its documents.
For example, in 2018, the Cybersecurity Law was officially implemented, requiring internet companies to strengthen the protection and management of user data and personal information; In the same year, the Anti-Unfair Competition Law came into force after being amended, requiring internet enterprises to prohibit the use of technical means or other means to interfere with or disrupt the normal operations of other business operators; In the same year, the Advertising Law came into force after revision, requiring internet enterprises to strictly review and control the content and form of advertisements. In the same year, the issuance of game version numbers was suspended, resulting in the revenue and profits of game companies such as Tencent being hit hard.
In 2019, the Regulations on the Protection of Minors Online were promulgated, requiring internet companies to restrict and supervise minors' use of the Internet; In the same year, the Provisions on the Governance of the Online Information Content Ecosystem was issued, requiring Internet enterprises to regulate and manage online information content and prohibit the dissemination of illegal and harmful information.
In 2020, the Draft Personal Information Protection Law was released, requiring internet enterprises to implement the principles of legality, reasonableness, and necessity in the collection, storage, use, and sharing of personal information, and to protect the personal information subjects' rights to know, choose, change, and delete.
In 2021, the Anti-Monopoly Guidelines were issued, requiring internet enterprises to abide by market competition rules, prohibit abuse of market dominance, and prohibit the implementation of monopoly agreements and centralized operations. In 2022, the Data Security Law was promulgated above, requiring internet enterprises to ensure the collection, storage, use, processing, transmission, etc. of data, and comply with the national data classification and grading system.
These policies have a direct or indirect impact on Tencent, and have also brought many difficulties and risks to Tencent. For example, in the field of games, Tencent not only has to face the difficulty and uncertainty of version number approval, but also faces the restrictions and supervision of minors' anti-addiction; In the social field, Tencent not only has to face the protection and management of user data and personal information, but also the regulation and management of online information content. In the field of e-commerce, Tencent not only has to face the review and control of advertising content and form, but also the constraints and supervision of anti-monopoly guidelines. These policies have increased Tencent's operating costs and compliance risks, and also limited Tencent's development space and competitiveness in the market.
conclusion
To sum up, Tencent, as a once brilliant Internet giant, has fallen into the dilemma of declining user dwell time, lack of innovation and unclear policies in recent years. These difficulties have brought great pressure and challenges to Tencent, and also affected Tencent's market value and reputation. Judging from the current situation, Tencent's future is not optimistic, and it needs to carry out profound reflection and reform in terms of products, technology, and strategy in order to regain its advantages and direction and maintain its leading position in the fierce competition.
