Date
24 September 2017
Tencent's QQ instant messaging service boasts 200 million users at any given time. Photo: Bloomberg
Tencent's QQ instant messaging service boasts 200 million users at any given time. Photo: Bloomberg

QQ and WeChat: When is a little sibling rivalry unhealthy?

Tencent Holdings (00700.HK) has watched its QQ instant messaging service take a back seat to its hugely popular younger sibling, WeChat.

But the lopsided attention they have been getting from the market is something founder Pony Ma probably doesn’t mind.

For one thing QQ, which made its debut in 1999, already owns a user base that is more than half the population of the country. For another, the current market focus on WeChat does not hurt Ma’s own efforts to highlight its potential as a major e-commerce player.

If a little sibling rivalry is healthy, at what point does it become a problem for the parent?

The question has emerged as the market has begun to examine the growth trajectory of QQ and WeChat. While QQ has entered a slow-growth phase, WeChat is on a roll, with a worldwide audience of 600 million-strong as of October 2013, according to state news agency Xinhua.

So, when Tencent came up with the latest figures on QQ, it put many investors at ease. More importantly, it shifted the focus back on the 15-year-old platform.

The numbers break down quite favorably – 200 million users at any given time, more than 70 percent on mobile phones. The figure is up 20 million from the end of December.

This reaffirms Tencent’s status as the predominant player in the mobile internet market and QQ’s stickiness as a killer app, with the potential to grow beyond social networking to an integrated business built on a captive market of 800 million users.

QQ’s continuing evolution from a popular social gaming platform has made it possible to introduce other services such as an online classroom. And its strong, cohesive brand has lent itself across its business, from music, e-commerce and app store to microblogging, video and other services.

By linking QQ to other Tencent platforms, the company is paving the way for success in online games and mobile internet applications in the mold of WeChat.

In fact, Tencent has definite ideas about an integrated future for QQ and WeChat. Pony Ma’s vision of that future is tied to growing QQ and WeChat together to explore different business streams.

With the ever increasing use of smartphones, people now spend less time on desktop computers. QQ could easily transform itself for mobile internet use by offering downloads to enhance the messaging experience. 

The next step is no doubt monetization, which should provide a new revenue stream for Tencent. QQ’s group chat platform could target users with specific interests. In addition, QQ could partner with retailers such as coffee shops, helping drive online traffic to offline consumption.

An entire O2O (online-to-offline) ecosystem with social characteristics could emerge. Tencent could be a world unto itself.

– Contact us at [email protected]

RA

 

EJ Insight writer

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