Tencent weathers virtual clampdown
By Wang Xing (China Daily)Updated: 2007-03-22 09:58
Liu said online games only accounted for about 20 percent of the company's total revenue. Of them, casual games accounted for about 70 percent. And of Tencent's revenue from casual games, about 80 percent was from sales of its virtual items, which gave users advantages in playing the games.
Cao Junbo, a senior analyst at research house iResearch, agreed that the impact of the new regulations was limited.
"Tencent is likely to adopt alternatives to keep its users, such as rewarding them with virtual items other than game coins or QQ coins," Cao said.
"And I think the company would see it as a golden opportunity to explore new revenue sources such as online advertising in its games business, and to get itself out of long-lasting disputes over online gambling and virtual money."
Earlier this month, Tencent shut down its service exchanging game coins for QQ coins, closing the door for users who had won the coins in games to convert them into QQ coins.
Facing a dilemma
Although the Chinese government is firm on its online gambling ban, it seems to be facing a dilemma when it comes to virtual money, a tool that has sustained China's booming Internet value-added service industry and, to some degree, saved thousands of Chinese Internet companies when the bubble burst in 2000.
Tencent reported that 66.5 percent of its 737 million yuan of revenue in the third quarter of last year came from Internet value-added services, most of which, according to experts, were purchased with QQ coins.
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