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Future titans of the Metaverse: Part 5

In this ongoing series we explore the past, present and potential future of the largest players in the Metaverse. Today, we’re taking a look at Tencent.

The Chinese technology and entertainment conglomerate was founded on the 11th of November 1998 by Pony Ma Huateng, Tony Zhang Zhidong, Daniel Xu Chenye, Charles Chen Yidan and Jason Zeng Liqing. Pony Ma is the current chairman and chief executive officer and Daniel Xu serves as chief information officer. Tony Zhang was Tencent's chief technology officer for 16 years until his retirement in September 2014. Charles Chen, who continues to be involved with the company as an advisor, sponsor, and honorary chairman of the Tencent Charity Foundation, stepped down as Tencent's chief administrative officer in March 2013, and Jason Zeng served as chief operating officer from 1999 to 2007.

While not as familiar to Western ears as other future titans of the Metaverse like Meta (formerly Facebook), Microsoft, Google and Apple, Tencent is a major force in the Metaverse ecosystem, as owner of one of the most popular social networks in the world and the largest video game company in the world by investment.

While Meta currently dominates the social network landscape, with a combined total of 7.5 billion monthly active users (MAUs) across its four platforms, Tencent has the second-highest social media reach 2.4 billion MAUs across its WeChat, Qzone, and QQ platforms. Tencent holds ownership stakes in a number of video game companies, most notably the American video game studio Riot Games, creator of one of the most played multiplayer games in the world and the most played esport in the world, League of Legends. Tencent also owns shares in a wide-ranging portfolio of video game companies, such as in American video game giants Epic Games (40%) South Korean Krafton Game Union (11.5%), and French video game company Ubisoft (5%). Tencent had a 5% share in Activision Blizzard, until it was acquired by Microsoft in a $69 billion deal in January of this year. More recently, Tencent has secured the rights to operate online multiplayer battle royale game PlayerUnknown’s Battlegrounds in China. Alongside social networks and multiplayer online games, Tencent’s services include mobile games, music, web portals, payment systems, e-commerce, internet services, and smartphones.

So where in the Metaverse for Tencent? Pony Ma unveiled Tencent’s initial thoughts on the Metaverse in an earnings call in November last year, when he noted that “Anything that makes the virtual world more real and the real world more rich with virtual experiences can become part of the Metaverse.” The company’s executives went on to describe three potential “pathways” to the Metaverse, specifically: video games; social networks; and augmented reality.

With Tencent’s video game “pathway”, the company will likely start by maximize the value of its intangible assets, including patents, trade secrets, copyright and trademarks, through an IP axis strategy, leveraging its existing video game assets, creating Metaverse-based versions of its most popular titles, allowing users to create Tencent IP-based games, and tying these to real-world physical products and merchandise. Tencent’s “social network” pathway, could include enhancement and gamification of its existing social network, much like what Meta is doing with Horizon Worlds, and increased professionally-generated and user-generated content. Tencent’s augmented reality (AR) “pathway”, could build on its other services, enhancing user experience through AR applications across mobile games (think Pokémon GO), music, and e-commerce.

In June of this year Tencent formally joined the Metaverse race when it announced the creation of its own extended reality (XR) unit, which will look after all metaverse-related tasks including software and hardware developments and will form part of Tencent’s entertainment division. The company plans to hire more than 300 people into the unit, which is expected to be led by Li Shen, the current chief technology officer. Speaking at a recent Tencent mobile gaming event the company’s senior vice president Steven Ma stated that “We hope to seize the opportunity in the next four to five years to actively experiment in software, content, systems, SDK tools, hardware and other links to create virtual reality experiences which can be industry benchmarks”. While this suggests Tencent is still considering its Metaverse strategy in terms of where it wants to play, the company has both the financial clout and the technological know-how to become a future titan of the Metaverse.

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