Tencent

Biodata

Feature	Information
Name	Tencent
Alias(es)	鹅厂; Penguin
Type	Neutral character (AI); internet company
Affiliation	Tencent Holdings
Occupation/Role	Internet, social networking, online gaming, e-commerce, and investment company
Status	Active 568
First Appearance	120

Background / History

Tencent experimented with monetizing QQ through registration fees after partnering with China Mobile in 2001. The policy initially generated millions of yuan daily, but user abandonment exceeded 50%; Tencent ended the registration charge in August 2003 and shifted toward directing traffic into games and advertising instead. 409 410

QQ Game Hall launched in March 2003 with casual games such as Gomoku, Chess, and Lianliankan. Its popularity, driven by QQ's existing user base, encouraged Tencent to enter large-scale online games by licensing the Korean 3D title Triumph from Imazic. Tencent promoted Triumph by offering a QQ number with game-account registration and placing it prominently in QQ Game Hall; the game entered open beta on September 9. 153

By 2003, QQ had surpassed 100 million registered users and three million concurrent users. Tencent had also established new revenue sources through Q Coin, QQ Show, and QQ Game Hall, though SP mobile and telecom value-added services remained its primary profit source. 179

Tencent listed on the Hong Kong Stock Exchange as Tencent Holdings on June 16, 2004, under stock code 00700.HK. It issued 958 million shares at HK$3.70 each and opened at HK$3.88; regulatory action against SP services soon pushed the share price down to HK$3.43. 251 Century Investment subsequently accumulated Tencent shares during the decline, eventually holding 7.4% before later increasing the stake to 9%. 382 517

Businesses and Products

QQ

QQ is Tencent's core instant-messaging product and its principal traffic gateway. It held roughly two-thirds of the instant-messaging market during Century Horizon's early expansion, with MSN holding most of the remainder. 246

• QQ exceeded 300 million registered users and five million concurrent users by April 2004. 245
• Tencent used QQ's user base to cross-promote games, social-networking services, and e-commerce offerings. 153 317
• YY later surpassed QQ in market share, prompting Tencent to reassess its strategy and organizational structure. 438

Online Gaming

Tencent's game business grew from QQ Game Hall into a major revenue source by combining QQ traffic with licensed, internally developed, and acquired titles. 153 277

• Triumph — Tencent's first large-scale online game; licensed from Imazic and opened for beta on September 9, 2003. 153
• QQ Seal of the Gods — Relaunched after Tencent re-established its game division; surpassed 200,000 concurrent players and earned eight figures within days. 255 277
• QQ Arcade — A game modeled after Crazy Arcade. 285
• QQ Audition — Benefited from the decline of Audition, becoming Tencent's first game to exceed a Century Interactive Entertainment title in concurrent players. 510
• Battlefield King — Acquired by Tencent for US$30 million at a publishing-rights auction. 324
• League of Legends — Tencent became Riot Games' major shareholder and Chinese publisher after increasing its investment in 2006. 497

Tencent later operated several QQ-branded games, including QQ Speed Car, QQ China, QQ Fantasy, and QQ Fighting. 497

QQ Zone

Tencent launched QQ Zone as a social-networking service resembling Century Friendship Net. 259

Tang Daosheng was recruited to improve the platform's technical architecture and product development. Under his management, QQ Zone received full-screen mode, a multimedia blog editor, Information Center, Friend Circle, and the paid Yellow Diamond VIP membership service; the product subsequently became profitable. 396

Paipai.com

Tencent launched Paipai.com on September 12, 2005 as its e-commerce platform. Its initial channels included Online Games, Digital, Women's World, Sports, Students, Lottery, and a QQ Special Zone for QQ-related products and services. 384

Despite QQ's traffic advantage, Tencent struggled to translate its usual product-copying and user-experience approach into e-commerce, where logistics, service quality, and B2C operations were more decisive. 528

Investment and O2O

• Riot Games — Tencent first made a small investment in Riot Games, then increased its stake after recognizing the company's MOBA potential. 497
• Groupon / Gaopeng.com — Tencent and Groupon established Gaopeng.com as a 50–50 joint venture for China's group-buying market. 564
• Century Horizon connection — Century Investment partnered with Groupon and held Tencent shares, giving Century Horizon an indirect connection to Gaopeng despite Tencent and Century Horizon's wider rivalry. 568

Corporate Strategy

Tencent repeatedly used QQ's user base as a distribution advantage: it promoted games through QQ Game Hall, exchanged game participation for Q Coins, and used QQ traffic to launch services in social networking and e-commerce. 153 278 384

Its expansion was frequently characterized by imitation of competing products. Tencent launched QQ Zone after Century Friendship Net, QQ Arcade after Crazy Arcade, Hero Kill after Sanguosha, and QQ Computer Manager shortly after Century Computer Manager. 259 285 314 510

After YY overtook QQ, Tencent conducted an internal review and concluded that its more than 60 important products had dispersed company resources. It cut uncertain projects, strengthened infrastructure and security, and concentrated resources on five fields: QQ, QQ Zone, online games, e-commerce, and investment. 438 439

Tencent also adopted a product-manager responsibility system and internal competition mechanism to increase urgency and efficiency among its teams. 439

Major Conflict: The 4Q War

Tencent's conflict with Century Horizon escalated after Century Security Manager alleged that QQ Computer Manager resembled Century Computer Manager and raised privacy concerns about Tencent's software. 510

Tencent responded through QQ pop-ups, public statements, and a lawsuit against Century Security Technology for unfair competition. It also joined other internet and antivirus companies in a statement against Century Horizon. 511

Century Horizon countered through YY, including full-screen pop-ups and an incompatibility notice requiring users to choose between YY and QQ. 511 514 The campaign shifted the instant-messaging market share from 64–36 to 73–27 in YY's favor. 517

Government intervention ended the conflict. Tencent withdrew its lawsuit, both companies issued public apologies, and Century Horizon received a 100 million yuan fine. 515 516 Century Investment sold Tencent stock before the settlement and repurchased shares afterward, increasing its Tencent stake from 7% to 9%. 517

Relationships

• Little Ma — Tencent's president and principal decision-maker; led Tencent's gaming expansion, organizational restructuring, and responses to Century Horizon's pressure. 153 255 438
• Century Horizon Group — Primary rival across instant messaging, social networking, gaming, security software, e-commerce, and public opinion; also a long-term Tencent shareholder. 246 382 517
• Chen Hao — Century Horizon's leader; Tencent's chief competitor, investor, and eventual counterpart in the 4Q War settlement. 251 515
• Liu Chiping — Chief Strategy Investment Officer; tasked with Tencent's strategy, investments, acquisitions, and search for game-development teams. 277
• Tang Daosheng — QQ Zone and social-network executive who refactored QQ Zone and led its return to profitability. 396
• Riot Games — Tencent became its major shareholder and publisher of its MOBA title in China. 497
• Groupon — Equal partner with Tencent in Gaopeng.com. 564