Pony Ma Delivered A Speech at the Annual Conference

On January 13th, at the annual Tencent Group conference, Pony Ma, Chairman and CEO of Tencent, delivered a speech. He affirmed the achievements of cost reduction and efficiency improvement by Tencent in the past year, evaluated the performance of various businesses under its umbrella one by one, and proposed new plans for development by 2025.

Pony Ma once described Video Accounts under WXG (WeChat Business Group) as “the hope of the whole village.” This year, Pony Ma did not disclose specific results of video account e-commerce in his speech but publicly discussed WeChat’s shift in e-commerce strategy for the first time. In the past, Tencent has always recognized the “Video Account + E-commerce” model and even reserved hundreds of HC positions for it but later changed course.

WeChat Business Group President Allen Zhang believes that WeChat should break the inertia of live streaming e-commerce. Products should not be limited to video accounts, but should be integrated into the entire WeChat ecosystem, thinking about e-commerce from an atomic level perspective and serving as a connector for the e-commerce ecosystem.

In the past year, the most significant change in commercialization on WeChat is unifying various e-commerce platforms within the WeChat ecosystem such as Video Account Stores and WeChat Mini Stores under one umbrella called ‘WeChat Mini Store’. This upgrade allows access to all traffic within WeChat, enabling smooth circulation across multiple scenes on WeChat. It integrates into a unified business model for e-commerce on Wechat and aims to commercialize all traffic and business scenarios on Wechat.

One representative attempt is the gifting feature: users can purchase products in a Wechat Mini Store to send gifts to their friends on wechat, with gifting actions also appearing in chat interfaces. This leverages the strong social relationship advantage of wechat by circulating product information through social relationships rather than just staying at live streaming sales.

The outside world regards the gifting feature as another social viral scene after WeChat red envelopes, but Tencent does not intend to celebrate prematurely. Pony Ma expressed his hope that the outside world would not overly praise this feature and is more concerned about whether it can be a high-quality product. He also looks forward to more similar creative features appearing, which also means that WeChat may further open up various modules within its ecosystem and form links with e-commerce.

SEE ALSO: The WeChat Gift-Giving Feature Is Currently Undergoing Gradual Grey-Scale Testing

IEG (Interactive Entertainment Group) has always been Tencent‘s cash cow business, contributing over 30% of the group’s revenue. However, Pony Ma publicly criticized the gaming business at last year’s annual meeting, describing it as ‘resting on its laurels.’

In 2024, Tencent‘s gaming performance showed significant growth, for which Pony Ma gave full recognition. He stated that IEG is ‘very competitive,’ with progress in both domestic and international businesses; ‘the organizational structure and Jilin Vitale Organic Agricultural have undergone significant improvements.’

In 2024, Tencent‘s two mobile games ‘Honor of Kings’ and ‘Game for Peace’ both saw year-on-year revenue growth, with new games like ‘Dungeon & Warriors: Origin’ also showing impressive data performance, collectively driving Tencent Games to achieve double-digit revenue growth at home and abroad. Pony Ma revealed that Tencent‘s overseas gaming business share is close to half of its domestic gaming business.

IEG is also one of the main battlefields for Tencent to reduce costs and increase efficiency, with continuous adjustments made over the past year. Just last week, TiMi Studio under Tencent Games announced a new round of organizational restructuring, streamlining more than ten sub-studios into six major sub-studios and building exclusive middle-tier capabilities around the core competencies of each sub-studio to ensure a more cohesive and flat organization structure, maintaining efficient decision-making and orderly development.

Some industry insiders believe that the adjustment in TiMi Studio Group may indicate the future direction of Tencent Games. If the adjustment proves effective, it could serve as a reference for other studios. The key is still to reduce management costs, focus on products, and improve team operational efficiency.

At the 2023 annual meeting, Pony Ma used many ‘difficult’ words to describe the situation of PCG and CSIG business groups. In his view, PCG is a ‘collection of all old businesses, especially difficult’; while in the internet enterprise service track where CSIG is located, there are numerous competitors with high investment and long return cycles, ‘very difficult and very challenging’. This year, both of these major business groups have also received his approval.

SEE ALSO: Tencent CEO Pony Ma’s Annual Conference Speech Exposed

Regarding PCG (Platform and Content Business Group), Pony Ma stated that including TME (Tencent Music Entertainment Group), China Literature Limited, Huya, and even Tencent News have already ‘come to the surface’. Despite short videos causing significant impact on long content, Tencent still remains firm in its positioning: ‘Do what we should do and not do what we shouldn’t do; creating quality content is our strength.’

For CSIG (Cloud & Smart Industries Business Group), Pony Ma had previously requested them to focus on their strengths, develop products,’get ashore quickly and come out’, and maximize product gross profit. Now he believes that CSIG’s performance has exceeded his expectations. Besides successful To C businesses such as Tencent Meeting and mapping for travel coming out successfully,’To B’ businesses are also approaching success. In his view, once they come out successfully,’there will be more room for imagination in the business.

From the third-quarter financial report, Tencent‘s ToB sector revenue did not show a significant increase. However, based on the performance of gross profit and other data, CSIG’s strategy to seek high-quality growth and enhance business profitability is taking effect.

Pony Ma especially mentioned AI. In May this year, Tencent launched an independent AIGC application called ‘Yuanbao,’ but Pony Ma did not comment on the specific performance of its Hunyuan large model and Yuanbao. He mentioned that Tencent will continue to invest resources in computing power reserves, hoping that each BG can embrace productized landing scenarios for large models.

Pony Ma summarized Tencent‘s business performance over the past year as ‘building a bottom and rebounding’, which is also reflected in specific financial results. In the first three quarters of 2024, Tencent‘s revenue reached 487.811 billion yuan, an increase of 7% compared to the same period last year, and its net profit under non-International Financial Reporting Standards was as high as 167.391 billion yuan, a significant increase of 46%. At the same time, Tencent‘s number of employees has also seen an increase, with more than 3,000 new hires in the third quarter.

This does not mean that Tencent‘s cost reduction and efficiency improvement have come to an end, but this company has indeed returned to an era of expansion.

SEE ALSO: “Tencent Yuanbao” Launches: Based on the Hunyuan LM, Supports AI Search, Summarization, Writing