Tencent, the Chinese Internet giant, announced open strategy for mobile apps today. Not only will it open up its mobile app distribution channels and infrastructure, its offerings also, to attract star performers, range from working spaces to IPO consulting.
Before 2011 the Tencent way was licensing a portion of games from third parties and developing Internet services in house. More than half of its revenues were from licensed games and in-house developed games. Another major revenue source was membership subscriptions that offer a variety of virtual items or premium services that were either developed by Tencent or partners — it pays partners and third-party developers, of course.
The company decided to open up in mid-2011, inviting third-party Internet services to take advantage of its huge user base across its online properties, QQ IM, social network Q-zone, etc. Social shopping services Meilishuo and Mogujie were successful cases that targeted ads on Q-zone helped them engage audience whom they otherwise could hardly reach. Of course Tencent wouldn’t help anyone promote services that it has already had and is important to the company, such as instant messaging tool. Other services, such as QQ Connect, a login and sharing widget, and Cloud storage, were also available for developers to use.
There has been 850,000 apps on the Tencent open platform. Developers have pocketed a total of 5 billion yuan (about $800 mn) in the past two year, according to Tencent. With the new mobile open platform, the company’s goal is to generate twice of that for developers in two year.
Tencent announced today it would take 30% of revenues generated from the mobile platform. It is expected the ratio will change as it happened with the Web-based open platform before. It’s possible that Tencent will end up taking less from a hugely popular mobile game in order to keep it on its platform or take more from a game whose most revenues are due to promotional activities on the platform. At the same time the company promises not to take revenue shares from mobile advertising through Tencent’s ad network.
To help distribute Android apps, Tencent revamped MyApp, an app for Android app downloads and management, and relaunched it in December 2013. To promote MyApp itself, the latest WeChat version debuted there. MyApp has seen 50 million daily downloads during the past two months.
Tencent’s MyApp ranked fourth in China’s Android app distribution market, with top three Baidu, Qihoo and Wandoujia had 38%, 28% and 15% in market share respectively as of December 2013; while MyApp’s share was 12%, according to COO of Tencent.
Tencent management think its mobile open platform is way beyond MyApp and are different from those players.
- Tencent offers more platforms, mobile QQ, WeChat, Mobile Q-zone, QQ mobile browser, mobile game platform and other mobile services, for developers to reach users.
- User data and the social element with Tencent’s core product QQ IM are absent with any other distribution platforms. Tencent is able to send personalized recommendations of apps based on user usage history or what apps users’ QQ friends have downloaded. And recommendations by users are believed by Tencent the most effective marketing for apps.
- The company has developed a lot of tools for developers, such as speech recognition SDK, location-related APIs, analytics service, mobile site builder for WeChat, Cloud services, and PC Push — the capability of reaching mobile users through PC.
- Payments solutions including Tenpay, WeChat Payment and virtual currency QQ Coin system.
It is expected that the mobile platform won’t be very much different from the Web-based one that 1) the majority of profitable apps must be mobile games for operating games is what Tencent is expert at and mobile gaming is so far one of the few profitable services on mobile, 2) only a handful of games will stand out given more than one third of Tencent’s total revenues are still from two to three games, and 3) Tencent is still a monster that it can kill your apps if it decides to develop similar ones.
But for sure Tencent is of the most powerful platforms. Shikonglieren, a third-party mobile game on WeChat is performing well that has made 25 million yuan in monthly sales.
To have good apps get on board, Tencent plans to go very far . The company had established startup working spaces in Beijing, Chengdu and Wuhan as of November 2013. A few more will be open in 2014 in more cities. Financial consulting or even IPO consulting is included in the services they’d like to offer. And everything is for FREE. The company didn’t disclose whether they’d take stakes in those mobile startups.
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