Tencent growth trajectory slowed down by low online gaming sales

The group's revenue is expected to grow by 10% in 2024.

Tencent's revenues in online games will likely slow down in 2024 as the group saw lower revenues for the fourth quarter of 2023 due to lower monetisation of its online gaming business, S&P Global reported.

Online games made up about 30% of overall revenues of Tencent in 2023.

"Though Tencent pointed to efforts to improve monetization for existing and new games, we are less optimistic about growth for this segment, particularly for domestic games. The sudden deceleration of growth in international game revenue was also a bit surprising, in our view," S&P said.

On the other hand, the group's online advertising revenue still has room to grow. Improving user activity, monetization of the Video Accounts platform, and using artificial intelligence to augment ad-targeting should support another year of strong growth for online advertising. Notably user time spent on Video Accounts more than doubled in 2023 and increased 80% year-on-year in Q4 2023.

Contributions from online advertising, fintech, and business services will likely rise 10%-20%.

S&P predicts a 10% revenue growth for Tencent in 2024.