Tencent hit by new moratorium on gambling and increasing competition

Tencent saw a sharp drop in profits and a slowdown in sales growth in the last quarter, as the Chinese technology company was upset by a moratorium on approving new games and increasing competition from young people technology companies.

Tencent, the second largest Chinese company behind Alibaba, said shareholders' profit fell 32 percent in the fourth quarter to 14.23 billion rubles ($ 2.13 billion).

Turnover rose 28 percent to 84.9 billion rubles, an increase of 83.37 billion, according to badysts, according to Bloomberg, but at a level two times lower than a year ago.

Last year, the company experienced a stormy period when the government suspended the commercial approval of licenses for new games. This means that he could no longer make money with newer hit games such as PlayerUnknown Battlegrounds Mobile.

The ruling is due in part to a change in the regulations that brought together the country's main media control body in the communist party's propaganda department, as well as growing government concern over the addictive nature of the communist party. play and its impact on the country's children.

While approvals resumed late last year, Tencent won for basic educational games and badysts expect regulation to remain in the spotlight this year.

Margin compression has continued, reflecting the battle to seduce and retain users at a time when a growing number of newly launched applications are competing to save time and money. At the top of the list is Douyin, a short video streaming application developed by ByteDance that has proven extremely popular.

Although best known for gaming, which accounts for the largest portion of its revenue, Tencent also has a broad investment portfolio, with holdings in more than 700 companies and an estimated value of more than $ 70 billion.

Tencent shares, as well as those of Alibaba, reversed their course this year. Tencent, whose market capitalization is approximately $ 449 billion, has seen its shares increase by approximately 16% to date, exceeding the 12% increase in the market.