The strategic turn behind Tencent's big adjustment: consumption interconnection to industrial interconnection

The strategic turn behind Tencent's big adjustment: consumption interconnection to industrial interconnection

Times weekly reporter Wang Zhouting from Guangzhou

Strategy decides organization.

A week after the news of the restructuring of Tencent, on the morning of Sept. 30, Tencent officially announced a specific restructuring plan.

The 3,000-word adjustment plan is clear. Tencent's previous seven major business groups were restructured into six business groups, retaining the original enterprise development business group (CDG), interactive entertainment business group (IEG), technical engineering business group (TEG), Weixin business group (WXG), social network business group (SNG), the original mobile Internet. MIG and OMG are separated and reorganized into two new business groups: Cloud and Intelligent Industry Group (CSIG), Platform and Content Group (PCG).

This is a new round of adjustment after six years, and the third organizational structure change since the establishment of Tencent in nearly 20 years. A series of adjustments will reorganize the focus of Tencent's business, and will inevitably lead to the distribution of Tencent's power in the existing institutional structure.

"We need to be sober, crisis-conscious and forward-looking at all times to lead Tencent into the next era." Tencent Inc President Liu Chiping pointed out. Tencent chairman and CEO Ma Huateng also said: "Tencent provides high-quality services to users through links in the first half, and in the second half we will build on this basis to help the industry and consumers form a more open new connecting ecology."

As a matter of fact, 2018 was the year of Tencent's "water upside" and many of the games that had high hopes at the beginning of the year failed to materialize commercially. As a result, the Internet company, which once surpassed Facebook in market value, suffered a "black swan" and its market value evaporated by more than HK $trillion in just six months.

In addition, Tencent's overall revenue growth is slowing due to a freeze in the game industry and tightly controlled policies. Tencent's semi-annual results this year showed that its net profit in the second quarter was 17.9 billion yuan, down 2% from a year earlier and 23% from a year earlier, which was lower than market expectations of 19.3 billion yuan. Among them, Tencent game revenue showed a rare ring-to-ring drop, from the smartphone game business revenue ring-to-ring drop of 19%.

Tencent is desperate to find a new fulcrum for its growth outside the game as the game's main industry suffers a setback. The To B/G market, which has considerable commercial value, is the strategic highland Tencent must take, and will inevitably lead to a shift from C-end users to B/G-end industries.

The last major organizational restructuring that took place in May 2012 was in response to the shift from the PC Internet to the mobile Internet. The major restructuring was in response to the shift from the consumer Internet to the industrial Internet.

Change and remain unchanged

Before Tencent's adjustment, the company had seven major business groups: CDG (Enterprise Development Business Group), IEG (Interactive Entertainment Business Group), MIG (Mobile Internet Business Group), OMG (Network Media Business Group), SNG (Social Networking Business Group), TEG (Technology Engineering Business Group) and WXG (Weixin Business Group). Industry group).

Tencent's organizational restructuring is mainly carried out at the B and C ends. From the perspective of the adjustment plan, Tencent's newly established Cloud and Intelligence Industry Group (CSIG), Platform and Content Industry Group (PCG), respectively, integrated the company's B-terminal and C-terminal business.

Specifically, PCG incorporates QQ, Tencent video, news, interest reading services and QQ browsers, applications and other C-terminal business, and video-related Tencent Pictures and other businesses are also integrated. As a domestic traffic giant, Tencent's moat has benefited from the successful card-based PC and mobile Internet era through QQ and Wechat instant messaging tools, and has built a huge ecosystem on C-end users. The PCG adjustment means that Tencent has restructured its social and content businesses that were previously scattered among major business groups. Together.

In Tencent's view, PCG has gathered QQ, QQ space and other traffic platforms, as well as Tencent video, Tencent news and other content platforms under the new framework, which will create a better environment for content ecology to grow; and technology will be the most solid underlying infrastructure, become the driving force for innovation in content ecology.

Some people in the industry pointed out to the Times Weekly reporter that, in the increasingly declining trend of QQ, Tencent will develop better content platforms and social traffic platforms such as QQ integration and development of the adjustment, is a wise move, "in the past year or two, compared to OMG content platform is still a good momentum of development, to Q. Q and QQ space, the main core of SNG, are more and more separated from the Tencent's big strategy.

In fact, in the PC era, QQ is the undisputed king of instant messaging. In the past 20 years, QQ has penetrated into every aspect of Chinese netizens'life. However, with the advent of the mobile Internet era, QQ and QQ space have entered a downward channel since 2017, and their monthly life has been declining continuously. And the rate of decline is far higher than that of the corresponding smart terminals. Tencent's annual report for 2017 showed QQ was 780 million, down 9.8% from 2016, while smart terminals were 680 million, up only 1.7%; QQ space was 560 million and smart terminals were 550 million, down 11.7% and 9.1% from 2016, respectively.

If Tencent's adjustment on the C-side is the strengthening and upgrading of the core position, then the adjustment on the B-side is due to the pressure of competition in the second half of the Internet. Ma Huateng has previously said that Tencent's current organizational structure is mainly aimed at C-end consumers, in order to adapt to the future development, Tencent needs a more adaptable business model to B/G business.

According to the adjustment plan, Tencent's B-terminal business will be unified package to CSIG, covering: cloud, smart retail, security, maps, medical, Internet of Things, intelligent platforms, etc., that is, merged into the original CDG enterprise development enterprise group smart retail strategic cooperation department; the original MIG mobile Internet enterprise group security, maps, medical care. Intelligent platform and other business teams; the former OMG network media business group open platform ToB related team; the former SNG social network business group cloud business line, online education, laboratory group team; the former S1 micro-league platform, government business department.

To sum up, this adjustment will not only adjust Tencent Cloud, which was previously subordinate to SNG, to an independent enterprise group, but also build a new technology-driven B-terminal position with Tencent Cloud as the core, facing the market opportunities of intelligent and digital transformation in medical, educational, transportation, manufacturing, energy and other industries.

B terminal business restructuring

In fact, the adjustment of B terminal business is the top priority of Tencent's adjustment.

In Liu's view, the industrial Internet was the key word in the second half of the Internet. Upgrading the industry through digital technology, linking consumers and industries would create huge social and industrial value. This is the business that Tencent has to carry out under the pressure of competition in the main game industry and the C-end traffic. The heart turns.

It can be seen that the proportion of value-added services of Tencent in the C terminal has been gradually shrinking and being tested. In the past August, the introduction of the heaviest new product since the launch of the WeGame platform, Monster Hunter World was ordered off the shelves less than five days after its launch, sparking widespread concern in the industry over the freezing of domestic game titles, while another national game, Jedi Survival, failed to relay King Glory as expected. To a certain extent, it affects the overall performance of Tencent games.

Tencent's pressure on the game end. In addition, the rise of Licorns in the sinking market, such as jitter, Pindo and headlines, is also squeezing Tencent's advantage on the traffic side. Tencent's opening of Wechat links has once again strongly supported short video platform micro-viewing, to see the pressure it is under. Therefore, under the influence of many factors, turning to the B end business has become an important starting point for the development of Tencent.

From the current revenue structure of Tencent, it is easy to find that the proportion of Tencent B-terminal business has gradually expanded in recent years. For Tencent, which has a large number of streaming media, online advertising is one way to cash in on its traffic. Since 2013, Tencent's revenue share of online advertising has gradually expanded. After Tencent cut off e-commerce services in 2014, online advertising has become the company's second-largest revenue source with a 14.83% share, compared with the target in 2017. Annual report reached 17.01%.

In addition, over the past few years, the development trend of WeChat payment and Tencent cloud has become more obvious. The 2017 annual report shows that Tencent's other businesses'revenue is 43.338 billion yuan, 18% of the first annual revenue exceeded the proportion of online advertising business, and its growth rate reached 121%, much faster than other businesses.

However, Tencent's To B business is dispersed in the body. Tencent cloud, an important carrier of Tencent's To B business, is located in SNG. Other AI, Internet +, enterprise WeChat, small programs and other To B business are scattered in different BG and business departments, often difficult to have an efficient joint.

"The newly established cloud and smart industry cluster will bring together the company's many years of leadership in various related fields, integrating core product lines including Tencent cloud, smart retail, safety products, Tencent map, excellent maps and so on, and helping the medical, educational, transportation, manufacturing, energy and other industries to become intelligent and digital. Transformation. " Tencent said in the adjustment plan.

It is noteworthy that the scheme proposed that Tencent will set up a technical committee in addition to upgrading its advertising and marketing service lines, strengthen basic research and development through internal distributed open source collaboration, and create a series of measures with Tencent characteristics, such as technical center and Taiwan.

Latecomer and first come

The restructuring of Tencent's organizational structure may help the development of its B-terminal business, but whether the restructuring can be implemented depends on the composition of the staff.

As the industry has pointed out, compared with Lu Qi to Baidu, Wang Jianzhi to Ali Yun, Tencent Yun since its inception in 2014, although has experienced Tencent Group Vice President, Tencent Yun President Qiu Yue Peng "go out" as head of Tencent Yun, has worked in Google and Microsoft two Internet companies Chen Lei to build the basic framework and facilities, and Previous and successive airborne managers, but Tencent cloud, including the entire technical level of Tencent has been the lack of a spiritual leader with internal appeal and behavior influence.

"It is not difficult to predict that QQ and Weixin are the two important cornerstones of Tencent's traffic empire, so how to effectively mitigate the decline of QQ is particularly important," social + content "itself in the release of traffic value and content flow demand has a natural. Matching advantage, in the future may be able to play a convergence effect, but whether Tencent can be as innovative as the idea of the company's convergence as a test ground and new engine, the key is who will steer the reform.

According to the plan, COO Ren Yuxin will also be responsible for the new PCG, while continuing to manage the game-based interactive entertainment group IEG, and the former senior executive vice president of SNG Tang Daosheng, will become the president of the new company Cloud and intelligent industry group.

According to the data, Tang Daosheng graduated from the University of Michigan in 1994 with a bachelor's degree in computer engineering, and obtained his bachelor's degree at Stanford University in 1997.

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