Tencent Holdings has revealed that they will be focusing on core businesses in 2023 with their main focus lying on short videos, according to Pony Ma Huateng the founder and chief executive of Tencent Holdings. In an internal town hall meeting last week Pony Ma said in his speech. Parts of the speech were published by the Chinese media outlet Jiemian on Thursday. Pony Ma reviewed the cost-cutting efforts of Tencent in the year-end meeting for company employees and lashed out at employees for a lack of urgency when it comes to improving efficiency.
According to South China Morning Post’s report, Ma’s speech comes for Tencent after months of cost-cutting efforts followed by the Internet giant. These efforts have led to the reduction of its workforce and the shutting of certain businesses in the face of economic and regulatory turmoil that has hit business segments such as video gaming and advertising.
Pony Ma laid out clear instructions for the employees at Tencent
“Please don’t tell me the possible chances,” Ma said. “How big can a noncore business grow into, and if it grows big, so what?”, he was reported as saying. He further said that the company has been dismantling some of its investment portfolios for a while. But now it has to get into a habit of cutting costs and finding core areas instead of expanding. “In the past, when we saw others were adding weight, we also tried to increase in size, but what we added was just fat, and we were still unable to defeat others,” Ma was quoted as saying.
Tencent did not immediately respond to a request for comment. The authenticity of Ma’s remarks has been confirmed by a Tencent employee who requested anonymity. The 51-year-old Chinese tech tycoon has confirmed that any business could be cut if it underperforms. Tencent recorded a 2 percent drop in revenue in Q3, only the second quarterly decline since the company was listed in 2004.
Tencent takes the decision after regulatory scrutiny by the Chinese government hit the gaming industry
Tencent’s core gaming business was hit by a slowing domestic economy and ongoing regulatory scrutiny by the Chinese government. To make up for the recurring losses the company has been on the hunt for growth overseas, through investments and partnerships. It has cut a total of 7,377 jobs since staff numbers peaked in the first quarter, according to its earnings report for the September quarter. Some of the hardest-hit segments in the company are cloud computing and content.
Major reshuffling has taken place at Tencent News which has helped the unit turn a profit in October. Chinese media have reported that there have been major job cuts among news and sports teams. These form part of Tencent’s Platform and Content Group.
Pony Ma has further encouraged employees to focus on product development as opposed to gaining market share through projects that hurt profitability. He also criticized costly customer acquisition efforts and warned against following competitors into new businesses that are non-essential. He said cost-cutting efforts have reaped some rewards. And that measures would continue into next year, according to the employee who declined to be named. Ma said that short video, fintech, and software-as-a-service would be key growth engines.
What are your thoughts as Tencent continues cost-cutting efforts in 2023? Let us know in the comments below!