Tencent: Monetization not our main concern right now

Despite being China's largest internet company, the WeChat developer is still focused on growing its global user base and not concerned about how to monetize its free messaging service, says its international business head.
Written by Eileen Yu, Senior Contributing Editor

Tencent Holdings doesn't want to worry about its monetization strategy right now, choosing instead to focus on growing its international user base before deciding how it should commercialize its services, specifically, its free messaging service WeChat. 

Over lunch Tuesday with reporters in Singapore, Tencent's vice president of international business group Poshu Yeung was asked about the company's monetization plans since it isn't generating any direct revenue from WeChat downloads, and had no current plans to start charging for the app.

Yeung, who helps build the company's global business operations to support its overseas investments, said he was more focused on building its user base outside of its domestic market, China, where Tencent currently is the country's largest internet company. "Monetization isn't really our main focus right now," he said, adding that a significant user base is necessary to support any future plans the company may have to commercialize its services. 

For now, at least, it appears to be on a growth trajectory in terms of user adoption. 

As of August 2013, it has over 100 million registered WeChat accounts outside of China. In its domestic market alone, where its service is called Weixin, it boasts a base of more than 255 million monthly active users.

Citing stats from research firm GlobalWebindex, Tencent said it was the world's 5th most popular smartphone app worldwide, clocking 379 percent growth from second to fourth quarters 2013 in international active users aged between 16 and 64.  In February, it crossed the 100 millionth download mark on Google Play globally.

In India, where it has a team of 20 employees, it's the second-most downloaded app on the App Store and the most downloaded in its category. In Singapore where there are almost 8.2 million mobile subscribers, more than 831,000 used WeChat on Lunar New Year in January to exchange over 15.9 million messages. 

Available in more than 20 languages, the app is free for download on Android, BlackBerry, iOS, Symbian, Windows Phone, Web and Mac OSes. 

And Yeung wasn't kidding about the lack of urgency to monetize. In November last year, Tencent had inked a partnership with StarHub, offering the Singapore telco's prepaid customers unlimited use of the messaging app for S$0.40 a day or S$6 per month. According to Yeung, the Chinese company gets no revenue from the deal which, he said, was aimed mainly at increasing user awareness and collaborating with local telcos. 

For over-the-top (OTT) players like Tencent, the relationship with telcos has been tense, and increasingly so. The growing popularity of messaging apps and other OTT services has been the bane of telcos angsty not only about their dipping voice and SMS revenues, but also for not being able to charge these players for tapping their network. 

Yeung acknowledged thee uneasy relationship and said the issue would continue to be a challenge to resolve. However, he noted that there has yet to be any substantial evidence that OTT services are drastically clogging up telcos' networks, adding that threats to start charging OTT players also have yet to be acted upon. Ultimately, he said, consumers will choose the kind of apps they want on their mobile device.

In other words, start charging for one OTT service, consumers will simply move to the next free app.

Yeung said OTT players and telcos need to start working together to figure out the right balance and business model for all parties. 

Asked about Tencent's competition with Alibaba, he said the rivalry had been played up mainly by the media. "Tencent and Alibaba founders are actually good friends who go on family trips together!" he quipped, before adding that there has been enough market growth for both companies to make significant investments across the industry, such as Alibaba's recent US$215 million investment in Tango and Tencent's US$500 million stake in Chinese restaurant ratings site, Dianping, and US$193.45 million investment in Hong Kong logistics service provider, China South City Holdings.

On the company's rivalry with another popular messaging app, WhatsApp, Yeung was more forthcoming. He said WeChat offered more features and better security with customizable privacy settings. The app allows users to choose their preferred security levels. For example, they can choose who can join their friends list or view their information, and can also use two-way authentication to initiate chats. 

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