Tencent, the huge Chinese-based, worldwide gaming (Riot, Supercell) and messenger/social media (WeChat) digital company has undertaken new initiatives in the important, growing area of digital video.
Tencent recently announced their purchase of a Malaysian video streaming platform, iflix’s content, technology, and resources. It was also revealed very recently by Bloomberg that Tencent has launched trovo.live in the U.S. the beta “testing” stage, which is very common with digital products. When you checkout trovo it is very similar to Twitch, the livestreaming video, esports and multiplayer games-oriented, video streaming service bought by Amazon in 2014 for reportedly just short of $1 billion.
Tencent also recently paid $263M for a controlling stake in Huya, the Twitch of China. Further demonstrating Tencent’s commitment to digital video, Tencent owns a video subscription service, Tencent Video, with over 110 million subscribers in China.
In regard to the Malaysian video streaming acquisition, James Mitchell, the Senior Executive Vice President and Chief Strategy Officer of Tencent said in an email interview with me, “Tencent has purchased iflix’s content, technology and resources. This is in line with our strategy to expand our international streaming platform, WeTV, across Southeast Asia and to provide our users with international, local and original high-quality content in a wide range of genres and languages.”
Mitchell went on to say, “We are committed to invest in the growth of the OTT industry in the
Southeast Asia region. The growing adoption of mobile devices has resulted in increased internet users and their access to OTT content. SEA’s OTT market shows a robust trend where the region is experiencing an explosion of viewership. The purchase comprises a strong local network across emerging markets in Southeast Asia (not only Malaysia) with a wide and compelling selection of video content such as TV shows, movies and local originals, to stream or download, on any Internet-connected device. Through the purchase, WeTV, will further extend our presence in the video streaming industry across Southeast Asia, to reach a broader audience base within the region and to better serve our users with better viewing experience.”
It should be noted that both China’s huge video streaming service, iQIYI IQ -2.1%and Netflix operate in Southeast Asia. Even more interesting are the rumors that Tencent was very recently looking to buy a large piece of iQIYI, which was originally spun out of Baidu BIDU -2.4% (the giant search engine of China) Baidu still owns a majority of iQIYI’s stock.
Malaysia is an important country, particularly in Southeast Asia. Malaysia is the 45th largest country in the world and has the 25th highest GDP. Overall population across Southeast Asia exceeds 650 million people. The countries in Southeast Asia are growing in Internet and smartphone penetration rapidly which is providing many business opportunities in the media and technology areas in that region.
None of the reports of the deal gave a value for the iflix transaction. Reportedly iflix was valued at $1 billion in 2019 when they were considering an IPO in Australia. Variety reported that the Tencent/iflix deal was only several tens of millions in US dollars which reflects the problems that iflix has been encountering in terms of financing and in terms of tough competition.
In real estate it is often said valuation is based on “location, location, location”, Tencent seems to believe that their continued spectacular success will be based on “video, video, video.”
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