Tencent

History

Tencent was founded by Ma Huateng, Zhang Zhidong, Xu Chenye, Chen Yidan and Zeng Liqing in November 1998 as Tencent Inc. Incorporated in the Cayman Islands, initial funding was provided to it by venture capitalists. In Feb 1999, Tencent's iconic messenger product OICQ released. Shortly after, Tencent had its name changed to QQ; this was said to be due to a lawsuit threat from ICQ and its owner AOL. The company remained unprofitable for the first three years. South African media company Naspers purchased a 46% share of Tencent in 2001. (As of 2014, it owns 34%.) Tencent Holding Ltd was listed on the Hong Kong Stock Exchange on 16 June 2004, and it was added as a Hang Seng Index Constituent Stock in 2008. The company originally derived income solely from advertising and premium users of QQ, who pay monthly fees to receive added extras. But by 2005, charging for use of QQ mobile, its cellular value-added service, and licensing its iconic penguin character, which could be found on snack food and clothing, had also become income generators. By 2008, Tencent was seeing profit growth from the sale of virtual goods. While Tencent's services have included online gaming since 2004, around 2007-2008 it rapidly increased its offerings by licensing games. While least two, CrossFire and Dungeon Fighter Online, were originally produced by South Korean game developers, Tencent now makes its own games.

Investments

On February 18, 2011, Tencent acquired a majority equity interest (92.78%) in Riot Games, developer of League of Legends, for about USD 230 million. Tencent had already held 22.34% of the equity interest out of a previous investment in 2008. On the 16th December 2015, Riot Games sold its remaining equity to Tencent Holdings.

Tencent acquired a minority stake in Epic Games, developer of franchises like Unreal, Gears of War and Infinity Blade, in June 2012.

Tencent recently increased its stake in Kingsoft Network Technology, a subsidiary of Kingsoft Corporation, to 18%. Tencent previously had a 15.68% stake in the company and raised the stake through a USD 46.98 million investment.

Tencent took part in Activision Blizzard splitting from Vivendi as a passive investor and now owns about 5% of the shares as of 2016.

On September 17, 2013, it was announced that Tencent had invested $448 million for a minority share in Chinese search engine Sogou.com, the subsidiary of Sohu, Inc.

On January 15, 2014, Tencent said it will invest HKD 1.5 billion (USD 193.45 million) in logistics and warehouse firm China South City Holdings Ltd to develop its e-commerce and logistics business.

On February 27, 2014, Tencent purchased a 20-percent stake in restaurant ratings and group buying website Dianping for $400 million.

On March 10, 2014, Tencent bought a 15 percent stake in Chinese e-commerce website JD.com Inc. by paying cash and handing over its e-commerce businesses Paipai, QQ Wanggou and a stake in Yixun to JD.com to build a stronger competitor to Alibaba Group Holding Ltd. On May 22, 2014, JD.com got listed on NASDAQ and Tencent expanded its stake in the company to 17.43% on a fully diluted basis by investing an additional USD 1,325 million.

On March 27, 2014, it was announced that Tencent had agreed to pay about $500 million for a 28 percent stake in South Korea’s CJ Games.

On June 27, 2014, Tencent announced that it had agreed to buy a 19.9 percent stake in Chinese e-commerce website 58.com (WUBA) Inc. for $736 million. On April 17, 2015, Tencent announced it has bought an additional $400 million worth of shares, rising its stake in the company to about 25%.

On October 16, 2014, via its wholly held subsidiary Hongze Lake Investment Ltd, Tencent announced that it had bought a 7% stake in lottery technology firm China LotSynergy Holdings Ltd for HKD 445.5 million (USD 57.4 million).

On October 23, 2014, Tencent pitched in $145 million for a 10 percent stake in Koudai Gouwu, a Chinese mobile shopping portal.

In November 2014, the company announced a deal with HBO which would give it exclusive rights for distribution in China.

On December 9, 2014, Chinese taxi-hailing app Didi Dache announced that it had raised more than $700 million in a funding round led by Tencent and Singaporean state investment firm Temasek Holdings.

On January 30, 2015, Tencent announced that it had signed a USD 700 million deal with the National Basketball Association to stream American basketball games in China. Later that year, Chinese automaker BYD became the chief corporate sponsor for Tencent's NBA broadcasts.

On February 27, 2015, Tencent announced that it had acquired a minority stake in Robot Entertainment, the developer of the Orcs Must Die! series.

On April 29, 2015, Tencent acquired a minority stake in Glu Mobile, paying USD 126 million for 14.6 percent of the company.

On May 13, 2015, Tencent acquired a minority stake in mobile developer Pocket Gems, acquiring 20 percent of the company for the price of USD 60 million.

On June 21, 2016 Tencent announced a deal to acquire 84.3% of Supercell with USD 8.6 billion

In July 2016, Tencent acquired a majority stake in China Music Corporation.

In 2016, Tencent, together with Foxconn and luxury-car dealer Harmony New Energy Auto founded Future Mobility, a car startup that aims to sell all-electric fully autonomous premium cars in 2020.

On March 28, 2017, Tesla, Inc. announced Tencent had purchased a 5% stake in Tesla for USD 1.78 billion.

Game development

Starting in 2016, Tencent develops video gaming console dubbed TGP (Tencent Gaming Platform) Box. The TGP BOX is called the Blade. It is an Intel- powered console running Windows 10 and a TGP Box mode. So far, the TGP console has imported many Tencent games, such as League of Legends, FIFA Online 3, NBA 2K, Monster Hunter, Need for Speed, etc. Tencent hopes to bring lots of third-party developed games.

Branching out from messaging products, Tencent's first game was QQ Tang (QQ堂) in 2004. This was soon followed QQ YinSu (QQ音速) in 2006, QQ SanGuo(QQ三国) in 2007. In 2011, Tencent started hosting the game League of Legends.

Virtual goods

Tencent sells virtual goods for use in their MMOs, its IM client, social networking sites, and for mobile phones. Income from the sale of virtual goods was a large proportion of Tencent's revenue in 2009.

Tencent's online currency, Q Coins, can be used to purchase virtual goods. These range from the offbeat, such as virtual pets and the virtual clothing, jewelry, and cosmetics needed to customize online-game avatars, to the more mundane, such as more storage space, wallpapers, bigger photo albums, and ring tones.

Locations

Tencent's headquarters are located in the Southern Hi-Tech Park District (新科技园 xīnkējìyuán) in Nanshan District, Shenzhen. Other sites include a 48,000 square meter compound that houses an R&D center in the Chengdu Hi-Tech Industrial Development Zone, a data and R&D center in Tianjin's Binhai Service Outsourcing Industry Park that is expected to be finished by June 2013, and also some 17,646 square meters of Shanghai office space purchased through a subsidiary, Tencent Cyber (Tianjin), and located in the Shanghai Modern Technology Services Community Zone.

Apple and Spotify are facing threat from Tencent, especially in South-East Asia. Also, Tencent is expanding aggressively in India.

The above list of locations is not exhaustive.

Products and services

Tencent offers a diverse mix of services and counts both consumers and businesses as customers.

iTQQ

China's first "smart interactive television service" and a joint effort with TCL.

Multiplayer online games

Tencent used to offer a number of online, multiplayer games through its game portal QQ Games.

These massively multiplayer online games include Call of Duty Online, a Massively multiplayer online game that consists of previous Call of Duty titles with added content; Dungeon Fighter Online, a side-scrolling online fighting game; QQ Fantasy, a 2D online game that incorporates elements from Chinese mythology; Xunxian, a 3D, online RPG; QQ Three Kingdoms, an online casual role playing game set during the historical three kingdoms period; QQ Huaxia, an online RPG; QQ Dancer, an online musical dancing game that offers QQ IM interactivity; QQ Nanaimo, an online game set on a desert island where players maintain houses and pets; QQ Speed, a casual online racing game; QQ R2Beat, an online in-line skating game; QQ Tang, an "advanced casual game" with gameplay derived from Chinese literature; QQ PET, a QQ IM-based desktop virtual pet game and three online first-person shooters; War of Zombie, CrossFire and AVA.

Music distribution

In 2014, Tencent established exclusive in-China distribution agreements with several large music producers, including Sony, Warner Music Group and YG Entertainment.

PaiPai.com

Launched on March 13, 2006, PaiPai.com (Chinese: 拍拍二手; pinyin: pāi pāi èr shǒu) was a C2C auction site. It was shut down on April 1, 2016 and the site redirects to JD.com.

QQ instant messenger

Launched in February 1999, and Tencent's most notable product, QQ is one of the most popular instant messaging platforms in its home market. As of December 31, 2010, there were 647.6 million active Tencent QQ IM user accounts, making Tencent QQ the world's largest online community at the time. The number of QQ accounts connected simultaneously has, at times, exceeded 100 million.

While the IM service is free, as of 2006 a fee was being charged for mobile messaging.

QQ International

An English version of QQ that allows communication with mainland accounts, QQi is available for Windows and Mac OSX.

QQLive

A peer-to-peer distribution platform for streaming media.

QQ Show

An avatar-based social platform like Cyworld, QQ Show facilitates purchasing virtual goods to outfit avatars, which can also be used with QQ IM.

QQ Player

In 2008, Tencent released a media player, available for free download, under the name QQ Player.

Qzone

A social networking service, which as of 2008 became one of the largest in China.

SOSO

Launched in March 2006, this search engine's name sounds like "搜搜", or "search search" in Chinese. It was a Chinese partner of Google, using AdWords.

Tencent Pictures

Tencent Pictures (Chinese: 腾讯影业) is a Chinese film production company owned by Tencent. It has created film based on books, comic books, animated series and video games.

Tencent Traveler

Abbreviated "TT" (TencentTraveler), this web browser developed by Tencent is based on Trident and was the third most-used browser in China c. 2008.

Tencent Weibo

A Chinese microblogging service, Tencent Weibo competes with Sina Weibo.

Tencent Weiyun

A cloud storage service that offers 10 GB of free storage (until Jan 16, 2017 it was 1 TB ). It is available in English and Chinese, currently free version in Chinese only. Requires an SMS phone number for verification of account registration.

TenPay

An online payment system similar to PayPal, it supports B2B, B2C, and C2C payments. In some Chinese cities individuals can use TenPay for utility payments and to refill their public transport cards. Co-branded credit cards are available, and credit card bills can also be paid using the service. Offline recharging of your TenPay account is possible, as the company sends employees to collect customer money in person.

WeChat

WeChat is a social mobile application with voice and text messaging, timeline, and several social features like drift a bottle. It is the most popular social mobile application in China and some overseas Chinese communities, for instance, Malaysia. It's likely to expand abroad in the future.

Subsidiaries

Tencent has at least four wholly foreign owned enterprises and nearly twenty subsidiaries.

Tencent Technology (Shenzhen) Co Ltd

A software development unit that has created, among others, Tencent Traveler and later versions of QQ IM, as well as some mobile software. This subsidiary is located at the Southern District of Hi-Tech Park, Shenzhen. It also holds a number of patents related to instant messaging and massively multiplayer online game gaming.

Copying claims

Many of Tencent's software and services are remarkably similar to those of competitors. The founder and chairman, Huateng "Pony Ma" Ma, famously said, "[To] copy is not evil." A former CEO and President of SINA.com, Wang Zhidong, said, "Pony Ma is a notorious king of copying." Jack Ma of Alibaba Group stated, "the problem in Tencent is no innovation; all things are copies."

As of 2009, the company holds 400 patents.

Anti-malware software cheating allegations

In 2015, security testing firms AV-Comparatives, AV-TEST and Virus Bulletin jointly decided to remove Tencent from their software whitelists. The Tencent products supplied for testing were found to contain optimizations that made the software appear less exploitable when benchmarked but actually provided greater scope for delivering exploits. Additionally, software settings were detrimental to end-users protection if used. Qihoo was later also accused of cheating, while Tencent was accused of actively gaming the anti-malware tests.