Tencent feels like it 'achieved nothing' in 2023 despite making $21 billion from games

Tencent management feels malaise as competition hits a crescendo throughout 2023.

3

2023 was one of the best years for game releases, with a bevy of must-have greats launching throughout the year. All the games that were in development pre-COVID had flooded the market at the same time. Developers and publishers were eager to cash in on the products that had cost many millions and years to make.

All of these projects constrained a market that's already being hit by selective spending. Suddenly, a ton of high-quality AAA games were readily available. Even still, consumers picked and chose which titles to buy. On the surface, big heavy-hitters like Chinese juggernaut Tencent might feel left out of the fun.

A closer look shows that these game releases came at a very real cost. Some studios shut down after their games launched, others performed layoffs that would eventually add up to 6,500 job eliminations throughout the year.

According to a new report from Reuters, Tencent co-founder Pony Ma had some interesting words to say about the company's video games division.

"Gaming is our flagship business, but in the past year, we have faced significant challenges. We have found ourselves at a loss, as our competitors continue to produce new products, leaving us feeling having achieved nothing," Ma reportedly said at an annual Tencent meeting.

3

So, how is Tencent's gaming business actually doing?

Pretty well, in fact. Tencent has made $21 billion so far throughout 2023, and that only includes the first 9 months of the year. There's still another quarter to be tallied up.

While Tencent may not always be the #1 gaming company in the world by revenue--PlayStation has beaten the company four times now in quarterly earnings--the Chinese tech giant produces some tremendous numbers thanks to its myriad of investments and subsidiaries.

Tencent has dealings with dozens of video games developers, ranging from full ownership of studios like Riot Games and Funcom to variable stakes in companies like Epic Games (40%) and Grinding Gear Games (80%). Epic's revenue share alone must be incredible as Fortnite posts up record MAUs.

In fact, Tencent owns stakes in some of the devs responsible for 2023's best games, including Larian Studios (30%) and Remedy Entertainment (3.8%).