Chinese tech giant Tencent reported strong growth in gaming revenues in its first quarter earnings released on Wednesday. Overseas gaming revenue was up 25% year-on-year to RMB 13.2 billion ($1.88 billion), while gaming revenue in the Chinese market rose by 6% year-on-year to RMB 35.1 billion ($5 billion). 

Overall, Tencent surpassed analysts’ expectations with its first-quarter financial results. Total revenue for the company amounted to RMB 150 billion ($21.8 billion), representing an increase of 11% year-on-year. Net profit came in at RMB 33.4 billion ($4.9 billion) on a non-IFRS basis, up 27% yearly. 

Why it matters: The gradual recovery of Tencent’s gaming business was a key factor in the tech major’s upbeat performance, with the unit reversing its trend of negative growth in the last three quarters. Tencent’s release of new games such as Triple Match 3D and updates to existing hit games has helped generate healthy revenues for its overseas gaming business.

Details: In the first quarter of 2023, Tencent’s revenue from games reached RMB 48.3 billion ($6.9 billion), up 11% up year-on-year. The company’s average daily gaming revenue exceeded RMB 500 million ($71 million) in the first quarter of 2023, according to the figures.

  • Tencent’s domestic gaming revenue during the period rose 6% year-on-year to RMB 35.1 billion ($5 billion), while its overseas gaming revenue rose 25% to RMB 13.2 billion ($1.8 billion). 
  • Revenue from domestic games came mostly from established titles such as Honor of Kings, Dungeon and Fighter, CrossFire Mobile, and Arena Breakout. In the first quarter of 2023, Honor of Kings released new paid-for skins based on Shan Hai Jing (a classic compilation of mythological Chinese geography and beasts) using targeted marketing, which the firm credited with helping Honor of Kings boost its income. In January 2023, Honor of Kings earned $250 million globally from Apple’s App Store and Google Play, ranking first in the global mobile game best-selling list, according to market intelligence firm Sensor Tower. Revenue from iOS downloads in China accounted for 94.1% of this total.
  • Fight of the Golden Spatula, Tencent’s self-developed mobile auto battler spin-off of the popular Teamfight Tactics released in 2021, was another highlight for the company, increasing its gross revenue by 30% year-on-year in the first quarter and topping 10 million average daily active users in April 2023.
  • Revenue from Tencent’s international games was mainly driven by the strong performance of Valorant and PUBG Mobile. The first-person tactical hero shooter game Valorant increased monthly active users with the release of a new map and a new agent during the first quarter. Tencent’s financial report stated that the title’s gross revenue increased by 30% year-on-year in the first quarter, helped by popular Japanese- and alien-themed weaponry.
  • PUBG Mobile ensured its growth in daily active users during the first quarter with new combat features and enhanced multi-player modes. Tencent introduced a map editing tool to facilitate user-generated content, increasing the game’s user engagement and time played.
  • The report also provided an update on Tencent’s protection program for underage players. Minors accounted for 0.4% of total time played and 0.7% of total gross earnings for domestic games during the first quarter, down by 96% and 90% respectively from the same period three years ago. The Chinese government introduced a set of regulations in August 2021 ordering gaming companies to ban underage users from playing on weekdays and allow them only an hour of play time between 8 p.m. and 9 p.m. on Fridays, weekends, and public holidays.

Context: At Tencent’s annual gaming conference Spark 2023 this week, the Chinese tech giant introduced updates on 15 previously announced titles and revealed 20 new projects. The previous titles included Honor of Kings, Arena Breakout, Moonlight Blade, and SYNCED. The conference also featured more renowned imported titles, namely Valorant, Lost Ark, and Alchemy Stars. The company was keen to emphasize the “social value” of its gaming arm at the event, as the industry continues to emerge from a lengthy period of regulatory scrutiny.

  • The National Press and Publication Administration (NPPA), China’s gaming regulator, announced 86 new licenses for domestic games on April 20 this year. Currently, 347 domestic games and 27 imported games have been issued with licenses so far in China in 2023, compared to 513 game licenses for the whole of 2022. The renewed issuance of licenses is seen as  a significant sign for the recovery of China’s gaming industry.
  • In the fourth quarter of 2022, Tencent’s domestic gaming revenue was RMB 27.9 billion ($3.9 billion), a decline of 6% year-on-year. Revenue from international games reached RMB 13.9 billion ($1.9 billion) during that period, representing an increase of 5% year-on-year.
Avatar photo

Jessie Wu

Jessie Wu is a tech reporter based in Shanghai. She covers consumer electronics, semiconductor, and the gaming industry for TechNode. Connect with her via e-mail: