China’s Top Company Shifting to AI Amid Gaming Profit Decline

Tencent, the most valuable company in China, has announced its plans to shift its focus towards artificial intelligence (AI). This decision comes as the company’s gaming sector has experienced a decline in revenues, resulting in a drop in profits. The Chinese gaming sector, which made $16.9 billion in deals in 2018, saw a significant decrease in deals to $10.3 billion in 2020 and further dropped to $158 million in 2023.

During an annual corporate event, Tencent CEO Pony Ma acknowledged the challenges faced by the gaming sector and expressed concern over the company’s lagging position compared to its Chinese competitors. Ma admitted that they felt left behind as competitors continued to release new products, while Tencent struggled to keep up.

In response to the decline in profits, Pony Ma hinted at a shift towards AI technologies. Although Tencent is not currently considered an industry leader in AI, Ma believes that they are not far behind their competitors and can start catching up. The company’s ambitions in AI rely heavily on their language model called Hunyuan, which was launched for enterprise use in September 2023. Hunyuan has quickly gained popularity in China, alongside Alibaba’s Tongyi Qianwen and Baidu’s Ernie Bot.

China had previously set a goal to become the global leader in AI by 2030, but with the dominance of OpenAI and Nvidia in the market, it remains uncertain if this ambition is still feasible. Tencent remains determined to invest in AI and believes that they can at least keep up with other leading companies in the field.

The company’s move towards AI signifies a strategic shift for Tencent, as it recognizes the potential growth and opportunities in this emerging technology. By focusing on AI, Tencent aims to diversify its business and reduce its reliance on the declining gaming sector. This decision aligns with the global trend of major technology companies prioritizing AI development in various industries.

The success of Tencent’s AI endeavors will largely depend on the performance and adoption of Hunyuan. As the competition in AI intensifies, Tencent will need to continue innovating and improving its AI technologies to stay competitive. With its existing resources and expertise, Tencent has the potential to become a significant player in the AI industry and regain its position as a leader in the Chinese tech sector.