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Tencent to restructure as government tightens regulations on gaming

Tencent to restructure as government tightens regulations on gaming

The Chinese internet giant announced its first restructuring in six years, at a time where it faces increasing challenges from tightening government regulations

The company has seen a significant fall in market value this year, and is also facing fresh criticism from analysts and investors who are unnerved by regulatory roadblocks, an unclear overseas strategy and growing debt.

Back in August, Bloomberg reported that it lost over $160 billion in value since January this year, and considering its shares fell further just last week, that number most likely grew over the past couple of months.

Back in August, it had to pull Capcom’s hit title Monster Hunter: World from the Chinese market after regulators cancelled its license. The company is also behind League of Legends and Clash of Clans, which are immensely popular games in Asia, and owns the social media platform WeChat—which has more than 1 billion users.

The Shenzhen-based and Hong Kong-listed company said in Sunday’s statement that it will consolidate three content business groups to one unit and create a new group for cloud and smart industries. The move is seen at improving cloud-based data offering services for corporate clients, which rival Alibaba Group dominates in China, and boosting its content offering capabilities for a wide range of services such as WeChat, music, games and other entertainments.

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 added. The company said it will also set up a technology committee to help strengthen its research and development and promote collaboration and innovation.

Founded in 1998, Tencent enjoyed uninterrupted growth from when it went public in 2004 until this year. Its shares surged more than 88 times after its IPO, and its market value hit a peak of $578 billion in January this year.

The company’s biggest money-maker is gaming. However, its most popular game this year is PlayerUnknown’s Battlegrounds Mobile (PUBG Mobile), and Chinese authorities have yet to approve the in-game purchases that allow Tencent to make money.

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