Tencent Holdings Ltd. (HKG:0700) Monetizes Chinese Internet Through WeChat, Tenpay and Mobile Advertisements

May 13, 2013

Tencent Holdings Ltd. (HKG:0700) is expected to monetize its Internet presence in China through mobile gaming at WeChat, by integrating its Tenpay online-payment platform and through mobile advertisement, says Cynthia Meng, Managing Director at Jefferies & Company, Inc.

“We are very positive about Tencent‘s ability to monetize from WeChat. We think that first approach of monetizing WeChat will come through mobile games. There are a couple of successful precedents in overseas players with LINE in Japan and KakaoTalk in Korea. For example, Korea, within one month of launching mobile games, they already saw very strong pickup, and it was profitable for KakaoTalk. Tencent owns a minority share of KakaoTalk. They already see from the successful launch of mobile games at KakaoTalk, so we believe that Tencent should be able to easily replicate that in China,” Meng said.


Meng says the double-digit market share of Tenpay along with the data from the WeChat application may allow Tencent to monetize in an O2O manner, and she adds that mobile advertisements are expected to kick in sometime next year.

Tencent has the number two payment tool in China, with about a 20%, 21% market share in online payments, behind market leader, Alipay ofAlibaba. With the Tencent‘s global positioning and integration with Tenpay, we think they already have comprehensive knowledge of their users on the WeChat with respect to location-based information, with respect to users’ personal interest and social grasps, they should be able to, down the road, monetize from online to offline and offline to online — O2O — that kind of global commerce by offering the ability to transact through Tenpay,” Meng said.