Tencent Announces Restructuring Plans As Beijing Strikes Gaming Industry

China’s internet giant Tencent Holdings Ltd. announced on Sunday its first reshuffle in six years, initiated at a time when it faces tighter gaming regulation in the country.

The Shenzhen-based company will consolidate three content business groups, namely social media, mobile internet and online media operations, into one unit and create a new group for cloud and smart industries, the company said in a statement posted on its WeChat official account.

Tencent will "further explore the integration of social, content and technology that is more suitable for future trends and promote the upgrade from consumer internet to industrial internet," it said in the same statement.

The company will also launch a technology committee that will create an internal platform for the sharing and collaboration of fundamental technologies within the company and apply them to different industries.

"It [the restructuring] marks a significant strategic upgrade for the company. The next era of the internet belongs to the industrial internet," said Pony Ma Huateng, chairman and chief executive of Tencent in the statement.

Given that Tencent had connected users with consumer services in the past, "the company will connect industries and consumers to build a more open ecosystem", he added, as the company celebrates its 20-year anniversary.

The Chinese government has been tightening regulations over online gaming industry, which is currently the biggest money maker for Tencent. The company’s most popular game PlayerUnknown’s Battlegrounds Mobile (PUBG Mobile) is yet to get approval from the Chinese authorities for inserting in-game purchases that can allow Tencent to make money.

The company has already shut down its popular Texas Hold’Em poker game in late September due to Beijing’s crackdown on gaming industry.

Meanwhile, the government has suspended approvals of licenses for new games since late March and it may take a further four to six months to finalize the new licensing system, said Hong Kong English-language newspaper South China Morning Post citing a government source.

Founded in November 1998, Tencent derives two thirds of its revenue from online gaming and social media. The company’s shares has surged over 88 times after getting listed in Hong Kong in 2004. Its market value hit a record high of US$578 billion in January 2018.

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