Shanghai Securities News, 1/17/14
Chinese internet and mobile services firm Tencent (0700.HK) announced at the company's 2014 mobile open platform strategy meeting yesterday that the company has upgraded its Myapp app store to become Tencent's unified mobile app developer distribution platform. Tencent has integrated its 7 major PC and mobile app platforms into Myapp, most of which have user bases exceeding 100 mln, allowing developers to reach mobile app users through a "single access point" model with distribution to all Tencent app platforms through Myapp. App platforms integrated into Myapp include Tencent's mobile instant messaging services WeChat (Weixin) and Mobile QQ. Tencent also confirmed that the revenue sharing ratio between Tencent and third-party app developers for non-exclusively licensed apps is 3:7. Additionally, Tencent Maps has been added to Tencent's open developer platform (open.qq.com), with the service's LBS features now open to app developers and small and medium enterprises.
Tencent COO Ren Yuxin has disclosed that Myapp's daily app download total will exceed 100 mln in 2014. Tencent plans to share more than RMB 10 bln with third-party developers through its open platform over the next two years. Since launching its open platform in 2011, Tencent has shared more than RMB 5 bln with third-party developers, and 10 third-party developers earned revenues exceeding RMB 100 mln in 2013 alone, with 26 apps achieving monthly revenue of more than RMB 10 mln during the year. More than 100 apps recorded monthly revenues exceeding RMB 1 mln.
At the conference, Tencent also announced that the company has partnered with government and financial institutions to launch incubation bases for startups and provide supporting policies. Tencent has announced incubation projects in 10 cities, including Beijing, Chengdu, Wuhan, Shanghai, and Xiamen. Tencent has already begun accepting applications for its incubator program.
Editor's Note: At present, the app distribution channels of Tencent, Alibaba Group, Qihoo 360 (NYSE: QIHU), Baidu (Nasdaq: BIDU), and Wandoujia all have base revenue sharing ratios of 3:7. Only Downjoy (D.cn) and UCWeb maintain ratios of 5:5.
According to industry rumors, the revenue sharing structure for Tencent's exclusively operated products, after deducting a 25% platform fee, sees content providers (namely developers) get 45% of the remaining 75% of revenue, or around 33.8% of total revenue. For non-exclusively licensed products, content providers must purchase significant advertising space from Tencent to promote their apps, due to limited promotion from Tencent. Thus, the share of actual revenue that developers see is most likely less than the 3:7 (70% to developers) ratio announced by Tencent.
Editor's Note: For more background on this topic, please see "Alibaba Takes Aim at Tencent with Mobile Gaming Platform" MD 1/08/14 issue and "Tencent Connects Myapp Store with Open Platform App Store" MD 11/29/13 issue.