Tencent looks to licensing for revenue boost
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Tencent looks to licensing for revenue boost

Chinese internet company Tencent is finding new ways to drive up revenue – and this time around, it’s borrowing from Disney’s playbook by licensing out its creative properties. These properties stem almost exclusively from its incredibly lucrative mobile gaming business. In fact, the company generates the most revenue from global video games sales worldwide – during the first quarter of 2017, its popular (but China-only) mobile game Honour of Kings grossed $810.47 million alone.

Tencent’s share price has risen by 80% so far this year

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Source: Yahoo Finance

Tencent is planning to spread its Honour of Kings game to new territories, but its plan to license merchandise and consumer goods based on it and other games could be even more lucrative. For example, Disney’s licensed goods raised $56.6 billion in sales last year. Nor would Tencent be the only video games company in the licensing business: Activision Blizzard and Rovio are both examples of companies that are making the most out of their intellectual properties.

Tencent has a swift route to market, too. It is the biggest investor in Chinese online retail giant JD.com, owning 21.25% of the company. JD.com has 226 million customers, and any products it sells to them benefits Tencent in turn. So it makes sense that Tencent has partnered with JD.com as its first move.

Could Tencent do a Disney and turn its licensing business into a multibillion-dollar deal? It has the audience, the sales platform (in JD.com), and – most importantly – the creative properties to do it.

Disclosure

Dominion holds Tencent in its Global Trends Ecommerce Fund. 


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