Tencent Music "strives for excellence," Ma Huateng breathed a sigh of relief.

From last year's "resting on our laurels" to this year's "very promising", Ma Huateng visibly breathed a sigh of relief in his speech at the Tencent Group's annual meeting. Behind this, there is the improvement in Tencent's performance, as well as the emergence of "new sprouts" from several old businesses like WeChat and gaming.

According to TIME Finance, on January 13, Tencent held its 2024 annual employee meeting. Tencent's founder and CEO, Pony Ma, made a brief appearance on stage, sharing his summary of the company's 2024 business and his thoughts on future strategic management.

The usually low-key Pony Ma rarely appeared in industry events or public occasions. Throughout 2024, apart from being reported by CCTV news for participating in the National Federation of Industry and Commerce Consultative Committee and offering his suggestions on promoting healthy and sustainable development of the digital economy in People's Daily, this Internet tycoon has remained almost entirely behind the scenes.

During the 2023 annual meeting, Pony Ma mentioned that in the past few years, he had focused on returning to the essence of "I people" and dedicated himself to internal management and product development.

Therefore, the annual Tencent employee meeting has become one of the few windows where one can glimpse Pony Ma's determination and thoughts on the future development trends of Tencent's various businesses and industries.

Tencent in this year: Multiple businesses 'emerging'

Compared to the harsh criticism of the gaming business as 'resting on its laurels' a year ago, and the tough comments on PCG (Platform and Content Business Group) being 'particularly difficult' and CSIG (Cloud and Smart Industry Business Group) needing to 'come ashore and emerge' quickly, Pony Ma's language this year has been much more moderate.

He not only pointed out that IEG's (Interactive Entertainment Business Group) overall performance was 'very remarkable', with progress both domestically and internationally in terms of sustainable development and cyclical breakthroughs. Tencent's overseas gaming business has already accounted for close to half of its domestic gaming business, with expectations of even faster growth in the future.

Pony Ma also emphasized that under PCG, Tencent Music (TME.NYSE), CHINA LIT (00722.HK), HUYA Inc. (HUYA.NYSE), and all businesses including Tencent News have 'emerged'. CSIG was described as a stable cornerstone beneath the surface, especially with its cloud business providing crucial support to many businesses within the Tencent ecosystem, underpinning the development of the entire group.

"In 2025, I believe they have a great opportunity to stabilize and emerge, forming a new continent," said Pony Ma.

Behind the relaxed tone of this Internet tycoon lies the increase in Tencent's business highlights and the continuous improvement of its profitability.

Over the past few years, under the influence of the macro environment, Tencent's major business sectors such as games and corporate services have suffered significant setbacks. Cost reduction and efficiency improvement have become the key to the new development stage of this Internet giant. Pony Ma even changed his previous encouraging and mild style at an internal staff meeting two years ago, speaking sharply and frankly, saying, "There is not much time left for certain businesses to survive."

Two years later, the previously stringent adjustments have achieved preliminary results.

In the third quarter of 2024, Tencent achieved revenue of 167.193 billion yuan, an 8% increase over the previous year; profit growth was even more significant, with Non-IFRS operating profit reaching 61.274 billion yuan, a 19% year-on-year increase, marking over eight consecutive quarters of profit growth outpacing revenue. After years of continuous cost reduction and efficiency improvement, Tencent's employee count has begun to increase again. As of September 30, 2024, Tencent had a total of 108,823 employees, an increase of over 3000 people year-on-year and quarter-on-quarter.

At the same time, a number of Tencent's old businesses have gradually shown signs of new vitality.

Taking the 'cash cow' gaming business as an example, in the past few years, under the impact of new gaming developers such as miHoYo, criticism about Tencent's gaming business losing its edge has been incessant. The market has begun to worry whether this veteran game developer can keep up with the times.

Organizational changes are then carried out, with multiple game studios and central departments undergoing restructuring. Building on this foundation, old games like 'Honor of Kings' and 'Peacekeeper Elite' have successfully undergone renewal. Supercell's 'Brawl Stars' saw a sevenfold increase in game revenue in the third quarter, leading Tencent's gaming business to a significant recovery.

According to the financial report data, in the third quarter of 2024, Tencent's gaming business revenue increased by 12.6% year-on-year to 51.8 billion yuan, greatly boosting the morale of Internet Plus-Related Product Department. Pony Ma commented at the annual meeting: 'The entire organizational structure and spirit have undergone significant changes.'

However, new challenges keep arising. The emergence of 'Black Myth: Wu Kong' proves the market potential of domestic AAA games, and players' demands are constantly increasing. Tencent must continue to catch up, with adjustments to continue.

Just last week, Tencent Games' TiMi Studio Group announced a new round of organizational restructuring, consolidating over ten sub-studios into six major sub-studios. Tencent aims to ensure a more cohesive and flat organization, maintaining efficient decision-making and orderly development.

WeChat's new mission: to be an e-commerce ecosystem connector.

Having entered its 14th year, WeChat remains one of Tencent's most important products. From social ecosystem to payment ecosystem, and now the most attention-grabbing e-commerce ecosystem or trade ecosystem, WeChat's ecosystem is still evolving.

Initially, the rise of Short Video provided Tencent with an opportunity to enter the live streaming e-commerce track. Pony Ma referred to Short Video as 'the hope of the whole village' at the 2022 annual meeting, and declared at the 2023 annual meeting to 'fully develop Short Video live streaming e-commerce.'

However, this year, Tencent's strategy seems to have changed. In his speech, Pony Ma specifically reviewed the past year's exploration and thinking of Short Video in the WeChat trade ecosystem, especially how to break the inertia of 'live streaming e-commerce' and seek breakthroughs.

Previously, WeChat had been following the 'Short Video + e-commerce' strategy and attempting to rapidly expand and strengthen through the joint cooperation of WeChat Pay, Tencent Advertising, and Short Video teams, trying to quickly grow stronger. However, this path was quickly found to be not as suitable for the more socially interactive WeChat, forcing Tencent to constantly adjust and find its own way.

"Zhang Xiaolong believes that commodities are information and should not be limited to just Short Video accounts, but should be integrated into the entire WeChat ecosystem, thinking about e-commerce from an atomic level. By taking this different path, we will go further." Ma Huateng emphasized, "We firmly support the innovative development of WXG (WeChat Business Group) to leverage our social capabilities as e-commerce ecosystem connectors."

The transformation has begun to take place. In August last year, Tencent announced the upgrade of Short Video account stores to WeChat stores. Compared to the past Short Video account stores, WeChat stores' store and commodity information can circulate within multiple WeChat scenes such as public accounts (Subscription accounts, Service accounts), Short Video accounts (Live streaming, Short Videos), Mini Programs, and search results.

In order to help WeChat stores break through in the global e-commerce market, by the end of 2024, WeChat started to internally test the 'Send Gifts' feature to facilitate the circulation of commodities within WeChat's social relationships. Currently, there are reports that the 'Send Gifts' feature of WeChat stores has completed the internal testing phase and is officially launched.

Many believe that the 'Send Gifts' feature is expected to rival the WeChat red packets of 7 years ago, driving rapid growth in WeChat's e-commerce business, opening up a trillion-dollar e-commerce opportunity for Tencent, and causing concern among competitors. Currently, platforms like Taobao and Douyin have also followed suit with this feature.

However, Ma Huateng's response to this is more calm. During the annual conference, he pointed out that he hopes the public does not overly praise the 'Send Gifts' feature. WeChat aims to become an e-commerce ecosystem connector over 5 years or even longer, harnessing the power of social connections and proceeding methodically.

From a strict perspective, social e-commerce has not yet found a successful form, and Tencent must cross the river by feeling the stones. But as a national-level app with over 1.3 billion monthly active users, WeChat still has the opportunity to slowly explore and adjust, in which Ma Huateng also has confidence.

In his speech, Ma Huateng pointed out that Tencent has bottomed out over the past two years. "We are all on a big ship, facing various challenges we should work together and help each other. I believe we have more solutions than problems, ultimately, no matter what difficulties we face, they can be resolved because we have talents, technology, and market demand, so the future is definitely bright."

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