Author | Huang Yu Editor | Liu Baodan Last year, thanks to the success of the "Speeding" on iQiyi, the company has had a difficult time recently. On the one hand, the explosively popular TV series is on hiatus, and on the other hand, the derivative concert of the variety show "Plant Some Goodness" has been criticized for "free offline but paid online." According to Wall Street News, the second Wheat Field Music Festival, produced by iQiyi's reality show "Plant Some Goodness," was held on June 6th. Some viewers had previously received free offline tickets through official activities, while online viewers, even iQiyi members, had to pay RMB 12 for viewing, and the viewing period was valid until June 14th. This differentiated pricing model has caused dissatisfaction among many viewers, who question that iQiyi's move is "cutting corners." In response, iQiyi's customer service said, "You can buy tickets to watch the concert live according to your own needs, and the edited content of the concert will be launched on the main platform in the future." In fact, this is not the first time that long video platforms represented by iQiyi have been accused of "cutting corners." In recent years, membership grading systems, early access, and inventory restrictions have often caused user backlash, in addition to paying extra for derivative programs. The differential pricing model reflects the growth anxiety faced by long-form video platforms such as "i优腾."

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After experiencing negative or slight increases in the number of employees for 9 quarters, Tencent made a big move, with the total number of employees increasing by over 3,300 in the third quarter.

Does this mean that Tencent's internal adjustments and business streamlining over the past two to three years have essentially ended, and they will re-enter a new expansion cycle? The answer still needs to be found in Tencent's just released third-quarter performance report.

According to the financial report, in the third quarter, Tencent achieved revenue of 167.193 billion yuan, an 8% year-on-year increase, in line with market expectations; Non-IFRS attributable net income increased by 33% year-on-year to 59.813 billion yuan, reaching a historical new high while exceeding market expectations.

Looking at the overall revenue growth rate, Tencent has maintained below 10% for four consecutive quarters, however, the gaming business, a pillar, has begun to revive. The total game revenue in the third quarter was 51.8 billion yuan, a 12.6% year-on-year increase, achieving a nearly 3-year high growth rate.

In addition, according to Wall Street News, since the second half of 2022, Tencent has achieved a growth trend of net income growth rate exceeding revenue growth rate for eight consecutive quarters. Behind the nearly 60 billion net income this quarter, Tencent's income structure continues to optimize.

In simple terms, under the main theme of reducing costs and increasing efficiency, Tencent has chosen in recent years to abandon ineffective revenue growth and focus on high-profit margin business growth.

According to the financial report, in the third quarter, Tencent's overall gross profit increased by 16% year-on-year, mainly benefiting from the growth of high-profit revenue streams such as domestic games, video accounts, and WeChat search, and the improvement of cloud service profitability also promoted the growth of various segments' gross profit.

Of course, after several quarters of over 40% year-on-year high-speed growth in net income, Tencent is now facing pressure as the net income growth rate begins to decline.

On one hand, this may be due to some efficiency improvement measures of Tencent having achieved the expected targets, on the other hand, the increase in promotion and R&D expenses and other expenses has become relatively noticeable.

Data shows that in the third quarter, Tencent's sales and marketing expenses increased by 19% year-on-year, reaching 9.4 billion yuan; general and administrative expenses including research and development expenses and employee costs increased by 11% year-on-year, reaching 29.1 billion.

The signal for Tencent to expand again is clear, but the era of rapid growth in the internet industry has passed, and Tencent's next phase of expansion will certainly be more focused.

So, where does the future growth momentum of Tencent lie?

In addition to continuing to stimulate the vitality of the gaming business, since 2022, Ma Huateng has not concealed his attention to Tencent's short video platform, even stating that the short video platform is basically the "hope of the whole company". However, this year, the short video platform has appeared less and less in Tencent's financial reports, and in the third quarter, there was no mention of the user viewing time of the short video platform.

For the short video platform, the important task this year is to develop e-commerce, which complements the advertising business. However, up to now, the e-commerce of the short video platform is still in the process of improving infrastructure, and the commercialization progress is slow.

Against this background, Tencent has also changed its development strategy. In August of this year, it announced the upgrade of the short video platform store to WeChat store, focusing more on the creation of the entire WeChat ecosystem for business.

The importance of WeChat to Tencent today goes without saying. It is not only the platform with the highest daily active users and the strongest ecosystem for Tencent at present, but also the hope for Tencent to seek the next strong growth point.

In the third-quarter performance report, the WeChat store was first included in the financial report, and it was mentioned that the strategy around the WeChat store was upgraded as a trading platform, aiming to create a unified and trustworthy trading experience based on the entire WeChat ecosystem.

Tencent has high hopes for the WeChat store, hoping that through the WeChat store, a business can operate a platform for indexed and standardized commercial storefronts, utilizing WeChat's social interaction, content platform, and payment capabilities to help businesses effectively reach customers and drive sales conversion.

Tencent's management team is very excited about the long-term potential of this e-commerce ecosystem. In the third quarter, the transaction GMV generated through mini-programs exceeded 2 trillion yuan, although much of it is in services, there is also a considerable amount of GMV from physical goods sold by merchants to customers.

Tencent is upgrading its entire e-commerce strategy around the WeChat store, hoping to build a larger e-commerce foundation through the entire WeChat ecosystem.

AI is also one of Tencent's future hopes, which can not only become a multiplier for Tencent's business development, but also open up new growth opportunities for its B-end business, and ensure its competitiveness in the next super traffic entry battle.

Tencent's financial report points out that the continuous deployment of AI in products and operations, including marketing services and cloud computing services, is bringing increasingly visible benefits.

In the new wave of going global, Tencent has also seized the opportunity for overseas expansion, actively advancing internationalization of businesses such as Tencent Games, Tencent Cloud, and WeChat.

After undergoing transformation over the past few years, Tencent has emerged from a trough and is now facing waves of AI and going global era. In order to return to its peak in the future, efforts must be made to seek incremental growth, promote rejuvenation of existing businesses, and nurture new growth opportunities.

The new journey is full of opportunities and challenges, everything is still unknown.