TENCENT(HK:00700) Cai Jing Wang·2025-08-14 16:26Core Insights - Tencent's video subscription numbers have significantly declined, with a drop of 3 million subscribers year-on-year and quarter-on-quarter, totaling 114 million by the end of Q2 2025 [1] - Despite a 15% year-on-year revenue growth to 184.5 billion yuan and a 17% increase in net profit to 55.6 billion yuan, Tencent Video's performance negatively impacted the overall results [1] Group 1: Market Environment - The advertising revenue for Tencent Video is under considerable pressure, similar to competitors like iQIYI, which saw a 10.4% decline in Q1 2024, and Mango TV, which reported a 2.7% drop in advertising revenue [2] - The rise of short video platforms has been a significant factor in diverting traffic and advertising clients away from long video services [3] Group 2: Industry Trends - As of December 2024, the number of short video users in China reached 1.04 billion, with a usage rate of 93.8%, maintaining its position as the leading segment in online audio-visual applications for six consecutive years [3] - Short videos are perceived as more efficient in monetization, with new consumer brands preferring to invest in platforms like Douyin and Xiaohongshu rather than long video services [3] Group 3: Company Strategy - Tencent Video is adapting to the changing landscape, with plans to launch vertical short dramas starting from the end of 2024, having already released over 20,000 such dramas [4] - The chairman of Tencent Online Video, Sun Zhonghuai, highlighted the need for the long video industry to navigate two major variables: the integration of vertical screen dramas and the impact of AI on content production and consumption [4] - Despite these strategic changes, the decline in Tencent Video's subscriber numbers indicates that these adaptations need to be accelerated [5]