Tencent: the biggest web company you’ve never heard of

Something big is happening in the world of web in China. Mike Jennings takes alook at the potential of Tencent.

Those efforts have already begun to bear fruit: in the last three months of 2011 the firm's revenue from video advertising increased by 70 per cent on the previous quarter. It's an encouraging start, but there's plenty of work to be done yet. Rsearch firm Analysys International reckons Tencent accounts for 4.1 per cent of China's online advertising market, behind more established firms such as Google and Baidu.

Facebook learned a lot from Tencent with regards to business models.

Should these moves worry the big players? Heng thinks so. "Tencent's expertise lies in social networking and gaming, and online gaming has been effective in driving traffic and new users," she says. And that, Heng reckons, is the root of the firm's expansion. "Once Tencent has established itself in global markets, it will be able to draw attention to its online media and online advertising."

Risk and reward

The firm's current plans aren't its first when it comes to making global moves. Back in 2010, Tencent ploughed $300 million into Russian investment firm Digital Sky Technologies, which has invested in Facebook and social gaming giant Zynga. That wasn't Tencent's first interaction with Facebook either: CTO Jeff Xiong told TechCrunch that "Facebook learned a lot from Tencent with regards to business models" and confirmed that Facebook extensively studied Tencent's micropayment model as far back as 2006.

In 2007, meanwhile, Tencent launched an international version of its QQ Games portal, but that almost closed down last year - only a response from players, which Tencent described as a "pleasant surprise", persuaded the firm to keep its floundering offshoot open.

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