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Tencent posts 59% increase in operating profits in Q1

Gaming giant sees continued profit increases as it preps for Fortnite, PUBG China localization

Today, Chinese gaming giant Tencent reported its 2018 Q1 financials, showing a 59% increase in operating profit year-on-year and a 48% increase in total revenue. Most of this was driven by mobile games and social platforms, with PC revenue remaining steady.

Tencent's total revenue for the quarter was reported at $11.69 billion, while operating profit was $4.88 billion.

The breakdown showed that smartphone game revenue increased by 68% to $3.406 billion, which included both traditional smartphone games and games attached to Tencent's robust social media properties, such as QQ (which saw 805.5 million monthly active users in Q1). Newly released games like QQ Speed Mobile and MU Awakening were major drivers of smartphone revenue, with the former the second highest grossing game for the quarter. Tencent's best performing game was Honour of Kings, which retained its position as the highest grossing iOS smartphone game in China.

PC client game revenue remained stable from the previous year at $2.21 billion. Tencent suggests that the fairly flat revenue year-on-year will be bettered in the coming months with upcoming Chinese releases of unspecified tactical tournament and sandbox games. The company attributes the lack of sharp revenue increase to an audience that has been gradually shifting from PC to mobile, stating that overall user engagement across both platforms remained stable.

In the coming months, Tencent will continue work on the highly-anticipated Chinese localizations of both PlayerUnknown's Battlegrounds and Fornite. In particular, PUBG's localization in China is ready to go, but is still pending government approval before release. Chinese localization or no, Fornite remains profitable for Tencent, which owns a 40% stake in Epic Games. The Tencent report reiterates Fortnite's achievement from earlier this year of boasting 40 million monthly active users across PC and console and being the highest grossing iOS game in the United States. Tencent also recently made plans to publish Ubisoft mobile and PC games in China, though there is no mention of these plans in the report.

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