Tencent’s 160 logic behind our portfolio of 10 years, layout adjustment of foresight

from: make research institute, the author: tzu-wei wang

after more than ten years of development, the company has gradually grown into one of the largest Internet comprehensive service provider in China at present, along with baidu and alibaba, the Internet industry in China was given a common name, e.g., BAT. At the same time, as a strategic investor tencent in the past ten years has made a series of investment layout as top VC. Made research from the perspective of tencent’s strategy layout, investment in tencent logic comb and review.

his QQ ZuoTianXia, micro letter to self-renewal

tencent technology (shenzhen) co., LTD., referred to as “tencent, headquarters is located in China shenzhen, guangdong province, was founded in 1998. On June 16, 2004, tencent holdings (00700 HK) in the Hong Kong stock exchange main board listed in public.

tencent in the early days of the rapid development depends on its core products – instant messaging tool QQ – the user traffic; Then the portal tencent QQ space, social network platform, game platform, tencent will become China’s leading network platform; At the beginning of 2011 to launch mobile social and communications services – micro letter. Launch marked the tencent micro letter completed an important self iteration and replacement products, after several years of exploration, development and innovation, become and a hugely successful product of tencent.

according to tencent half annual report disclosure, according to data from 2014 up to the second quarter of 2014, QQ on active account number 829 million, the highest online account number 206 million at the same time, the QQ on the mobile end 521 million active users, year-on-year growth of 45.1%. Micro letter active account number and overseas version of WeChat merger month rose 57%, to 438 million.

from the perspective of the form of revenue, in the second quarter of 2014, the network game’s income is still the main source of revenue of tencent, contribution to the current 56% of the total revenue, the income of social networks (including QQ member service revenue, QQ mobile and WeChat intelligence game platform, etc.) contribute 23%. These two pieces of business income accounted for 80% of the current operating income, electronic commerce’s contribution to the revenue is only 7% at present.

tencent’s investment course

, according to statistics CVSource tencent started around 2005 as strategic investors to invest in relevant industries and acquisitions. Founded in January 2011, tencent tencent win-win industry fund, fund 5 billion yuan, at first expanded in June, 2011 to 2011 yuan. Tencent win-win strategic investment and tencent industry fund in the 10 years since 2005, in the case of investments and acquisitions at home and abroad more than 160, totaling more than 53 billion yuan.

figure 1 tencent calendar year investment and acquisition case number

from the investment of time (see figure 1), tencent although since 2005, started to make investments and acquisitions, but released from its foreign investment and acquisition event, the layout of the large-scale began in 2010.

in case of the regional perspective, 114 cases are from mainland China, 46 cases from abroad; Overseas more than seventy percent from South Korea and the United States, South Korea is mostly game company, the main for the games, social networking and tool software, etc.

figure 2 tencent investment and acquisition case field distribution

from the perspective of the field of investment, games, electrical and software tool case number top (see figure 2).

figure 3, 2010-2014 ytd tencent distribution of investment and acquisition case field accounted

from different areas in each annual investment accounted for point of view, into more games in the early days. Tencent acquired in 2008, the producers of “” hero” Riot Games, after only a year in 2010, investment or buy the 11 game makers, occupied more than half of the investment in the case. After a few years with more chance in other areas, gradually reduce the proportion.

e-commerce, tencent has actually been coveted for a long time. Tencent started with clap nets, but its growth rate did not keep pace with the outbreak of the whole industry. Until later, tencent has finally realized that, in the field of electricity complexity embodied in its value chain, suppliers, logistics, marketing and so on a series of links, needs the accumulation of industry experience and contacts, with its advantages of tencent is not consistent, tencent’s core advantage lies in the user traffic and entry. On the other hand, the flow is large, but at the time under the shadow of ali in the field of electricity, how the user flow into the flow of electricity is a difficult problem. So since 2010, tencent resolutely start layout has been in the region’s great effort e-commerce, typical case in recent years have Yi Xun, south China city, le ju, jingdong, wanda, and overall in the United States (see chart).

after 2010 entered a new phase in the development of mobile Internet Internet, software tools, local consumption life application, tencent in these fields make some defensive layout, in order to prevent the trailing, such cases such as jinshan software, mobile, sogou, cheetah new four-dimensional figure and so on. Mobile Internet has led to the rise of the O2O mode, drops a taxi, public review, 58 city by industry leaders have the shadow of the penguins.

in other areas, tencent in the Internet not only financial, online travel, online education, culture media and other hot spots in TMT industry in recent years, comprehensive and investment innovation works a Internet start-ups incubation fund, investment in sinopec sales company, shows its as a strategic layout of diversified investors.

tencent’s strategy layout

mentioned earlier, tencent’s investment in 2010 years ago and acquisition case quantity is less, after 2010, the main is closely related to the tencent’s own development strategy adjustment.

before 2010, tencent’s product lines are widely spread, almost any product market is visible in the field of Internet tencent, give priority to with imitation, strategy is closed.

2010 years later, on the other hand, tencent adjusted their own development strategy, implement the strategy of a more open, start from simple imitation transformation product innovation and development, and ecological funds early in 2011 set up a win-win industry, hatching and acquisition of high-quality companies, began to focus on the construction of the chain.

on the other hand, it is smart phones became popular around 2010, mobile Internet users start explosive growth stage, the development of mobile Internet promoted the electricity and centered on O2O pattern of local life service development. Internet ecosystem of integration between the various industry trends emerge, tencent is significantly accelerated the pace of its industry layout, is the BAT action is the most frequent among the three.

after 2014, so far has been throws a lot of public or quasi public company, 58 city, jingdong, cheetah mobile, public review, wanda, and so on. The game will continue to do, this is the main source of profits; Electricity is still hard, entrance and flow is complementary. Tencent will still be in strategic layout, and will be more and more prospective.

table: tencent calendar year investment case


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