Gaming Business Thriving Both Domestically and Internationally

Written by Chen Dengxin

Edited by Li Ji

Typeset by Annalee

Tencent, which fully embraces AI, has delivered its first answer sheet.

On March 19, 2025, Tencent released its latest financial report, showing that operating revenue for the fourth quarter of 2024 was 172.446 billion yuan, a year-on-year increase of 11%, returning to double-digit growth; operating profit (Non-IFRS) was 59.48 billion yuan, a year-on-year increase of 21%, surpassing revenue growth for nine consecutive quarters.

Correspondingly, capital expenditure for the same period was 36.58 billion yuan, a year-on-year increase of 386%; full-year capital expenditure was 76.76 billion yuan, a record high, accounting for 11.6% of total revenue, with nearly 80% invested in AI servers and computing centers.

It is not difficult to see that after entering a period of heavy investment in AI, Tencent continues to grow steadily.

In fact, for Tencent, AI not only shoulders the important task of incubating the next super traffic entry, but also drives innovation and multiplication in evergreen and emerging businesses.

AI is becoming Tencent's new trump card.

Heavy Investment in AI Pays Off

Good things come to those who wait has always been Tencent's core philosophy.

An internet observer told ZnKedu: "New species often struggle to find their place at the beginning, and only through persistent exploration can they understand demand and eventually find killer applications. There is often a time lag between these stages. QQ only emerged five years after the internet entered China, and WeChat only emerged four years after the iPhone was released."

The same is true for AI.

As early as 2016, Tencent established AI Lab, becoming an early player in China's AI race; in 2023, it released its self-developed Hunyuan large model, laying out the future of intelligence.

Despite this, Tencent has always held back some strength, continuously searching for the best point of leverage for AI.

Ultimately, the relationship between large models and applications has been sorted out: the end goal of large models is application, but application iteration is not to provide feedback to large models to make them more capable, but to serve users and solve their practical problems.

After understanding the point of "creating useful AI," AI has become Tencent's core strategy.

Pony Ma, Chairman of the Board and CEO of Tencent, said: "A few months ago, we reorganized our AI team to focus on rapid product innovation and in-depth model development, increased AI-related capital expenditures, and increased our R&D and marketing efforts for native AI products."

In a word, Tencent is increasing its investment in AI infrastructure and R&D.

From 2018 to the present, Tencent's cumulative investment in R&D has been 340.3 billion yuan, with 70.69 billion yuan alone in 2024, accounting for more than one-fifth of the total investment.

With increased R&D, Tencent's Hunyuan large model has rapidly iterated, paving the way for the subsequent launch of self-developed deep-thinking model Hunyuan T1 and fast-thinking model Hunyuan Turbo S.

All hard work pays off, and Tencent has finally waited for the right moment to "go big."

It was the first to embrace DeepSeek, empowering all businesses through the "self-developed + open source" approach, driving internal business innovation, and successfully providing users with the best AI experience.

For example, after Tencent Yuanbao launched the "Hunyuan + DeepSeek-R1" dual model, daily active users surged by more than 20 times from February to March 2025, making it the third most popular AI-native mobile application in China and the most eye-catching "dark horse" in the market.

Another example is that in the fourth quarter of 2024, thanks to the deep application of AI technology, enterprise WeChat revenue doubled, and Tencent Meeting revenue increased by more than 40% year-on-year, jointly driving the growth of Tencent's enterprise services revenue and gross margin.

More importantly, the AI strategy resonates with emerging businesses.

As AI accelerates its implementation in search, input methods, content generation, and other scenarios, users, creators, and merchants all benefit, promoting the robust growth of emerging businesses such as Video Numbers, WeChat Shops, and WeChat Search, comprehensively refreshing the WeChat ecosystem.

This can be seen from the financial report data.

As of the end of 2024, the combined monthly active accounts of WeChat and WeChat have increased to 1.385 billion; the total user time of Video Numbers increased rapidly throughout the year, with advertising revenue in the fourth quarter increasing by 60% year-on-year.

Gaming Globalization Becomes Increasingly Smooth

Behind Tencent's sounding the "charge" for AI lies the strong support of its gaming business.

In 2024, the operating revenue of the gaming business was 197.7 billion yuan, a year-on-year increase of 9.9%, exceeding market expectations, and providing a steady stream of cash flow for Tencent's AI strategy.

Among them, the performance in the international market is particularly noteworthy.

The financial report shows that the international market's operating revenue in 2024 was 58 billion yuan, a year-on-year increase of 9%, maintaining a stable proportion of about 30% in Tencent's gaming segment.

According to Games Industry data, the total revenue of the global gaming market in 2024 was approximately $184.3 billion, with a year-on-year increase of only 0.2%.

This means that Tencent's gaming business is thriving both domestically and internationally.

Specifically, games such as "PUBG MOBILE" and "Brawl Stars" performed well overseas, with "Brawl Stars" even entering the "Billion Dollar Club" for the first time.

The "2025 Mobile Game Market Report" shows that a total of four games entered the billion-dollar revenue club for the first time in 2024, with two of them being Tencent games: "Dungeon & Fighter: Origins" and "Brawl Stars".

In fact, "Brawl Stars" is just a microcosm of the brilliance of Tencent's Supercell.

Known for its innovation and high-quality products, Supercell saw a surge in popularity in 2024, with global monthly active users exceeding 300 million, reflecting record-high performance.

Supercell's 2024 operating revenue was 2.8 billion euros, a year-on-year increase of 77%; EBITDA was 876 million euros, a year-on-year increase of 78%; it achieved positive operating revenue growth for all games for the first time, with "Squad Busters," launched in May 2024, achieving operating revenue of over $100 million in just seven months.

Supercell CEO Ilkka Paananen said: "Our goal is to become the company most skilled at building new game teams globally, and also the best platform for these teams to develop games."

Apart from Supercell, Tencent's Grinding Gear Games is also noteworthy.

Grinding Gear Games' "Path of Exile 2," polished over many years, topped the Steam global best-sellers list on the day of its early access release and won multiple honors on the Steam platform in just two weeks, including Platinum for 2024's New Game of the Year, Platinum for Most Played Game, and Gold for Best-Selling Game.

As can be seen above, Tencent's path to gaming globalization is becoming increasingly smooth.

The reason for this is that Tencent's overseas gaming layout does not place much emphasis on short-term financial returns, but rather pursues long-term strategic interests, with incubating, discovering, and finding the next evergreen game being its core objective.

Against this backdrop, Tencent's gaming business is gradually entering a harvest period, with the proportion of the international market showing a trend of rising steadily.

In the fourth quarter of 2024, international market operating revenue was 16 billion yuan, a year-on-year increase of 15%, setting a new quarterly revenue high and approaching half of domestic market revenue.

Regarding this, Pony Ma previously gave high praise: "In the past year, both domestic and international businesses have developed, and overseas investment studios have performed well, with going overseas accounting for a large proportion of the gaming business."

In a word, strategic patience brings sustainable output to Tencent.

Evergreen Games Remain Unique

It should be noted that gaming is a natural scenario for the implementation of AI, which can expand the boundaries of gaming experiences. Therefore, Tencent integrates large model capabilities into evergreen games, reshaping the product power of the games.

Taking "Game for Peace," Tencent's first game and one of the first in the industry to access DeepSeek, as an example, the digital spokesperson Jilly has been well-received by players and has become a "group favorite".

Some ask Jilly to assess their combat level, some ask Jilly to assist with wishing and drawing prizes, and some ask Jilly to recommend the most stable sensitivity settings...

In other words, with the deep integration of gaming and AI, the gameplay of evergreen games becomes more diverse, satisfying players' diverse needs, thereby continuously increasing freshness and user stickiness.

This shows that through AI empowerment, evergreen games become even more evergreen.

"We believe that these increased investments will bring sustained returns by improving the efficiency of the advertising business and the lifecycle of games, and as our personal AI applications accelerate in popularity and more enterprises adopt our AI services, we will create longer-term value," Pony Ma said.

In addition, the evergreen game matrix has expanded.

The financial report shows that the number of games meeting the evergreen game standard has increased from 12 to 14, with more and more games withstanding the dual test of time and the market.

Among them, the path to evergreen success of "Teamfight Tactics" is quite typical.

Launched in 2021, "Teamfight Tactics" has continuously innovated in gameplay, giving the game a steady stream of "freshness," thereby successfully breaking out of the circle and attracting a large number of players who were previously not interested in autochess.

According to Sensor Tower statistics, "Teamfight Tactics," which has been released for four years, saw a year-on-year increase of 30% in revenue in the fourth quarter of 2024, achieving double-digit growth for eight consecutive quarters.

More crucially, "Honor of Kings" maintains an unassailable position in the market.

On January 23, 2025, the overseas MOBA game masterpiece "Arena of Valor" officially entered the domestic market, hailed by the outside world as the biggest challenger to "Honor of Kings".

Now, this conjecture has been proven false.

According to Appmagic data, in February 2025, "Honor of Kings" topped the list of the world's most popular mobile games with revenue of $203 million, a year-on-year increase of 68.33%, and its revenue significantly led that of the second-place product for two consecutive months.

This shows that "Honor of Kings" has no rivals, and evergreen games remain unique.

Goldman Sachs expects Tencent's gaming business to maintain a growth rate of 10% in 2025, even with a high base in 2024, stating that "Tencent's WeChat ecosystem and global gaming assets, as well as multiple monetization methods, will enable it to achieve compound growth in revenue during macroeconomic cycles."

From this perspective, as Tencent's AI strategy accelerates its implementation, heavy investment will continue, and it will comprehensively refresh its fundamental business in the future, helping "emerging businesses" aggregate momentum, thereby creating greater expectations.

As Pony Ma said, "Currently, the AI ecosystem is still in its early stages, and all industries will benefit from the popularization of AI. I believe every industry will embrace this opportunity."