WeChat mini programs are Tencent’s silver lining as online gaming revenue slides

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WeChat mini programs were a highlight for Tencent’s strategic initiatives in recent months as online gaming revenue slides, according to Tencent’s 2018 second-quarter earnings release.

According to Tencent, WeChat mini programs have reached 200 million daily active users and has a sizable developer ecosystem. Tencent views mini programs as complementary to mobile apps, as mini programs generate traffic and download for corresponding native mobile apps. Mini programs will contribute to the development of the company’s advertising and cloud business, according to the company.

Tencent first rolled out WeChat mini programs in early 2017, which allows users to use services from different companies on the WeChat platform without actually downloading the application from app stores. Mini programs are especially popular with transportation, retail, restaurant and gaming service providers.

As one of China’s most popular application, WeChat has reached 1.06 billion monthly active users, a 9.9% year on year growth, as user activities in WeChat Mini Games and Moments continued to increase, driving up time spent per user per day in those activities.

Tencent’s conference call of the earnings specially mentioned WeChat Pay, a built-in payment feature within WeChat and reported that monthly active users of Weixin Pay exceeded 800 million.

QQ, another social network application within Tencent’s Communication and Social segment, showed 5.5% decrease of monthly active user accounts to 803.2 million while smart device monthly active users reached 708.6 million, a 7% year over year increase. QQ is especially popular among young users as growth among 21 years or below showed double-digit growth year on year.

Revenues from social networks reached RMB 16.9 billion, 23% of Tencent’s total revenue, the second biggest source of income for Tencent.

However, strong performance from social networks didn’t comfort investors as shares of Tencent dropped 4.8% as the market opened Thursday morning, due to slowing growth from online games. Year-on-year revenue growth from online games, Tencent biggest source of income, decelerated to 6%, due to non-monetization of popular tactical tournament games in China. Revenues from online game achieved RMB 25.3 billion and made up 34% of the total revenues.