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Case Study

China’s Tencent: Leading the way in monetizing platforms

By Salvatore Cantale, Ivy Buche and Joel Barbier

17 pages

November 2017

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Reference: IMD-7-1936

Worldwide, there is no parallel comparison to China’s Tencent Holdings. The $22 billion tech giant is a collective answer to Facebook, WhatsApp, Spotify, Kindle, Skype, Pinterest, Apple Pay and others. This case explains how Tencent built a digital platform business from scratch over a period of nearly two decades. Undoubtedly, it gained significant benefits from being an early mover in developing a massive one-billion-strong user base on its gaming and messaging platforms. However, what is exceptional about Tencent is that it has been able to successfully monetize its social audience at scale – a tough challenge for most digital platform companies. Tencent’s double digit growth boosted investor confidence that the company would continue to tap the spending power of its users while leveraging the growth potential of its still-nascent advertising and payments businesses. Could the most valuable company in Asia, continue to meet shareholder expectations in 2017 and beyond?

Learning Objective

To illustrate the organizational challenges in large,
Understand the platform business model compared to the traditional pipeline business model
Recognize how network effects create value on a platform
Examine the three types of value that digital disruptors deliver – cost value, experience value and platform value
Comprehend the challenges in monetizing platforms effectively

Keywords

Finance, Gaming, Online Gaming

Settings

Asia, China
Tencent, Information Technology, Internet, Information Technology, Social Networking
2016 - 2017

Type

Published Sources

Available Languages

English

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Teaching note

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