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Despite large-scale profits, Tencent's mobile game sales are slowing down

Chinese games giant Tencent posted greatly increased profits for its third quarter, although the company wasn't able to hit analyst estimates, due in part to slowing mobile game revenues.
Chinese games giant Tencent posted greatly increased profits for its third quarter, although the company wasn't able to hit analyst estimates, due in part to slowing mobile game revenues. Tencent puts much of its growth down to its online PC games, with its online game revenues increasing by 34 percent year-over-year to 11.3 billion Chinese Yuan ($1.8 billion). Of course, the company owns a majority stake in League of Legends developer Riot Games, and a minority stake in Unreal Engine developer Epic Games. Games and virtual items are the company's main line of business, but it also generates revenue from a variety of web services, including popular messaging service WeChat. However, while smartphone game revenues were also increased year-over-year to 2.6 billion Chinese Yuan ($424.4 million), this also represented a quarter-over-quarter decline. Tencent put this down to "delayed launches of expansion packs" for certain mobile games. This is notable, since Tencent's game revenues are heavily driven by smartphone game sales. For the quarter ended September 30, 2014, Tencent recorded revenues of 19.8 billion Chinese Yuan ($3.22 billion), up 28 percent year-over-year, and profits of 5.7 billion Chinese Yuan ($919 million), up 46 percent year-over-year.

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