Editor’s note: A version of this post by Yiling Pan first appeared on Jing Daily, the leading digital publication on luxury consumer trends in China.

Calling Tencent Holdings a “video game giant” in China could soon be a thing of the past. The internet company has embarked on a transformation and diversification of its business model following the government’s crackdown on the video gaming sector last year. Since then, Tencent’s reliance on luxury brands to drive growth has reached a new level—as has the stiff competition it will face to dominate that sector.

In the third-quarter earnings posted by Tencent earlier this month, there were clear signs the company is heading toward becoming an online advertising powerhouse. Its revenues derived from its “social and others advertising” business, which specifically refers to ads placed on its social messaging platform WeChat (Moments and mini-programs), grew a staggering 61 percent from the previous year. Overall, revenues of its online advertising business jumped 47 percent to $2.34 billion (RMB 16.25 billion).

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Jing Daily

Jing Daily is the leading digital publication on luxury consumer trends in China. They publish up-to-the-minute news updates, reports on key trends, insights from leading industry figures, and in-depth...