Tencent, parent company of China’s biggest social network WeChat and, by revenue, the biggest global online game business, is also an entertainment titan, with China’s biggest online businesses in music, literature, comics and animation. Tencent Pictures, which invested in last weekend’s smash hit “Wonder Woman,” and “Kong: Skull Island,” is key to Tencent’s effort to become a global player in feature filmmaking. The company is also investing heavily in Silicon Valley projects so as not to miss out on the next big thing.
The Wall Street Journal reports that WeChat’s 1.7 billion combined monthly active accounts, the popular QQ messaging system and control of the country’s top news and video sites already determines much of the content on smartphones.
“Tencent is literally China’s biggest operator of communications and social networks,” said Gao Xiaohu of Beijing-based Sinovation Ventures. “There are a lot of users inside its walled garden, and everybody needs entertainment, which it provides.” In 2015, Tencent chief executive Pony Ma stated that the company focuses on content and connection.
Tencent is in competition with Alibaba Group Holding and Baidu, which also invest in films and videos, “in their search for new revenue as growth in the country’s huge online population slows.” Tencent’s entertainment efforts started as a games business in 2003 and expanded to a “broad content strategy” in 2011.
“We want to create a content ecosystem for our users, in which they can read the literature and comics, watch the animation, film and TV series and play the game based on the same story,” said Tencent Pictures chief executive Cheng Wu, who is also corporate vice president overseeing entertainment strategy.
For example, via WeChat, Tencent sent 46 million targeted ads for “Kong: Skull Island,” which earned $169 million in China, “the single biggest haul in its worldwide box office of $565 million, larger than the take from the U.S. and Canada combined.”
Tencent is also focused on Silicon Valley ventures, says WSJ, “pouring money into everything from electric cars to moonshot ventures such as space tourism and asteroid mining.” Its most well known investment is in Riot Games but, say sources, the company wants to “remain abreast of even the most far-fetched ideas and products out of Silicon Valley,” based on “its fear of missing out on the next big thing” and reaping rewards from “outside-the-box developments.”
Tencent has invested in 41 U.S. tech startups since 2011, participating in fundraising rounds worth $3.5 billion excluding public companies. That makes Tencent the second biggest foreign investor in the sector, behind Korea’s Samsung Group.
“If you want to be a top-10 corporation on a global scale — and Tencent is already a top 10-type of corporation — I don’t think there is any aspect of technology that you should leave behind,” said Sinovation Ventures’s Chris Evdemon. Tencent invests more aggressively in the U.S. than either of its chief rivals, Alibaba and Baidu, and its top U.S. executive, David Wallerstein says that, with U.S. investing, “I deliberately seek to push out on the frontier a little further than the other [Tencent] teams.”