Tencent's 4 big progress on mobile internet in May-Sep

Also, 7 big moves to advance Tencents' mobile internet vision further.

In a research note CIMB  increased the value of Tencent’s mobile segment as this business is reaching an inflection point with new revenue from mobile games and mobile app revenue share.

In particular, CIMB notes that Tencents have mad 4 big progress in May-Sept as follows:

1) Mobile messenger Wechat registered >200m users in Sep vs. 100m in Mar

2) Avg/peak daily photo uploads totalled 200m/360m in Sep vs. 320m peak uploads in May

3) Daily LBS data usage rose to 700m in Sep from 50m in May,

4) Mobile penetration is increasing as 53% of photos were uploaded from mobile in Sep vs. 24% in May

At the recent Mobile Developer Conference, CIMB said thatTencent’s chairman and CEO Pony Ma addressed his mobile Internet vision by listing Tencent’s efforts in seven aspects:

1) Tencent is developing an API to allow interaction and integration among applications. In addition, it has launched QR Code (Quick Response Code or
Two-dimensional Code) to facilitate its cooperation with offline merchants. 

2) The most active user group on mobile is mobile QQ and mobile QZone users. In the past, Tencent simply copied its PC products to the mobile platform, the
results of which were not satisfactory. Tencent will leverage its success on Wechat to modify its mobile QQ and mobile QZone.

3) Tencent will open QQ contacts to third party applications to allow users to log into other applications with their QQ accounts. Tencent is trying to open
QQ contacts with selected application developers. These apps have seen 30-50% of their new users logging from QQ accounts. If this does well, Tencent
will further open Wechat contacts to application developers. The major concern with opening up QQ contacts is user privacy.

4) Application hosting service. According to Pony, Tencent has an established application hosting system in its QZone and PC platform. For example, all of
Tencent’s web games are provided through the hosting system in its cloud platform. The company is considering extending this to mobile applications.

5) LBS (location-based service). Tencent has over 700m LBS usages on a daily basis. For example, Shake-shake is a very typical LBS product. The more its
users, the better LBS results it will get. Tencent is also investing heavily in maps and Street View products. Its Street View product was suspended recently due to the need for regulatory approval. When it gets government approval, Tencent will launch a new version of Street View that will be available on both PC andmobile.

6) Payment. For high-margin mobile applications, Tencent will settle the payment with QQ coins and QQ points. For e-Commerce related mobile applications, Tencent will settle the payment with Tenpay and online banking. For free mobile products, the company expects to generate revenue through advertisements. That said, Tencent will extend its targeting ad system Guang Dian Tong (GDT) from the current PC/QZone platform to mobile applications.

7) Mobile game is likely to be the first revenue model in the mobile Internet space. According to Pony Ma, the major difference between mobile Internet
games and PC Internet games is that mobile games are played during fragmented time periods and may be accessed through different devices.
According to the head of Tencent’s open platform division, 30% of games on Tencent’s PC open platform are profitable and 20% of them can break even.
With the recent opening up of its mobile platform, 10-20% of games on its mobile open platform are profitable. Mobile game revenue can be generated
from application download and in-app purchase, with the latter likely to be the mainstream mobile game revenue model, in our view. In May 2012, Tencent
upgraded its Mobile QQ Game Hall to the Mobile QQ game platform. With this upgrade, Tencent’s mobile game platform can support all the major mobile
game platforms such as Android, iOS, WP7, HTML5, Symbian and Kajava. As of May 2012, Tencent’s mobile game platform had over 220m users, with daily
active users exceeding 10m and peak concurrent users at 1.15m.