MoonFox Data: Tencent focuses on the WeChat ecosystem and leverages mini-programs to create the second growth curve

SHENZHEN, China, Oct. 30, 2023 /PRNewswire/ -- About us：Aurora Mobile (NASDAQ: JG) established in 2011, is a leading customer engagement and marketing technology service provider in China. Its business includes notification services, marketing growth, development tools, and data products. As its sub-brand, MoonFox Data is a leading expert in data insights and analysis services across all scenarios, aiming to help companies gain market insights and empower precise decision-making.  

In the first half of 2023, Tencent's revenue was RMB 299.19 billion, a year-on-year increase of 11%. The net profit attributable to owners of the parent company was RMB 52.01 billion, a year-on-year increase of 24%. Overall, with the continuous development of its business and the adjustment of its operational focus, Tencent's overall revenue has maintained stable growth, in line with market expectations. At the same time, a proactive cost control strategy combined with the exclusion of low-margin businesses has provided momentum for Tencent's accelerated net profit growth with a healthy cash flow level.

1. WeChat: Lightweight tool + content that help develop user stickiness

According to financial report data, in June 2023, the combined monthly active accounts of Tencent, WeChat, and WeChat reached 1.32 billion, with a year-on-year increase of 2% and a month-on-month increase of 1%. Based on MoonFox data, as of October 2023, WeChat's DAU has exceeded 710 million and has maintained long-term stability. Simultaneously, the industry penetration rate of WeChat has increased, rising from nearly 90% in early 2022 to 91.52% at present.

Starting with IM+Moments, WeChat was the first to enter the era of official/business accounts. Tencent introduced the WeChat Open Platform in 2012, which granted regular users the ability to utilize the platform for content access, composition, and publication. Then came the gradual introduction of advertisers and the "Sponsor" function, along with tools like editing and data statistics. In 2016, the number of WeChat official accounts reached nearly 17 million. With real-time conversations, socialization function, and the combination with the PUGC model, WeChat has attracted a large number of outstanding creators, established a user base, and reached a monthly active user base of around 500 million in 2016.

2017 marked a turning point with the launch of WeChat mini-programs. These lightweight enterprise-level service programs embedded within public accounts quickly gained user recognition. As the user base grew, the introduction of mini-games within the Mini-Program ecosystem further accelerated its popularity. "Jump Jump," as a phenomenal product, quickly gained over 100 million DAUs. Subsequently, mini-programs continued to optimize management interfaces, facilitating third-party development, and launched customized components for various industries, supporting the development of e-commerce, finance, and other sectors. On the other hand, mini-games were separated to focus on addressing the needs of developers and advertisers. This included adding cloud development capabilities, proposing advertising solutions, and launching preferred plans.

Changes in the proportion of WeChat heavy users (consecutively online for more than 26 days) over time:

In the domestic market, WeChat currently has the most active users and the highest market penetration rate. Tencent heavy users make up 40% to 45% of the user base, according to MoonFox data. Multiple days of consecutive online use have become the norm, and user habits have developed over time. Based on this, in the context of Tencent's mature businesses reaching a growth bottleneck and industry development slowing down, WeChat, with its fertile "self-retention area," will become the core of Tencent's business growth in the next few years. Revolving around WeChat Channels and advertising resources, mini-programs will be the key driver of the next growth narrative.

2. WeChat mini-games: from a sideline to a core strategy, driving breakthroughs and growth in the gaming business

Distribution of the Top 500 Mini-Programs by MAU (Monthly Active Users) in Different Industries:

Based on the September 2023 mini-program statistics from MoonFox, games accounted for only 10% of the top mini-programs, with 48 out of the Top 500. This is far behind leading categories such as life services, shopping, and tools. However, due to the strong stickiness of games, mature business models, and strategic support from Tencent, Mini-Games are no longer a single-category, limited revenue stream. As of the first half of 2023, the overall MAU of WeChat mini-games has exceeded 400 million, with over 100 mini-games achieving over RMB 10 million in revenue in Q2 2023.

Taking the Top 3 mini-games as examples, "Sheep a Sheep" achieved its highest MAU of over 300 million and DAU of over 100 million in September 2022 by combining elements such as catchy background music, regional rankings, and extremely challenging gameplay. In February 2023, "Fish Kingdoms" took over and experienced MAU growth through a combination of card development and idle gameplay, attracting players with historical character backgrounds and the design of Xianyu. With massive user acquisition campaigns, " Fish Kingdoms" further cemented its top position. By August, its material distribution accounted for nearly 50 percent of all mini-game advertisements. Overall, both player feedback and data performance in the mini-game market are better than those in the mobile gaming market, whether in terms of innovation in themes or large-scale user acquisition and promotion. Traditional strategies still have room to play.

Comparison of MAU changes in the Top 10 WeChat Mini-Games (Unit: million/person)

Looking at the data of the Top 10 mini-games, the MAU of the leading products has stabilized at tens of millions, with gameplay becoming more diverse and multiple categories coexisting, transitioning from a single lightweight RPG category to chess, card, and casual games. On the one hand, the integration of the Unity engine has allowed mini-game development to move beyond the H5 era, breaking the limitations on various genres. On the other hand, WeChat developer kit and AIGC have drastically lowered development costs, which has led to the creation of casual games with a variety of gameplay options.

Based on business models such as advertising, in-app purchases, and revenue sharing, we estimate that the overall revenue of WeChat mini-games has surpassed 10 billion yuan. Combined with Tencent's repeated mentions of mini-games in their performance meetings and other channels, the strategic position of WeChat mini-games within Tencent's business will be further enhanced. In the future, more mid- and large-sized game companies will make strategic moves by entering the mini-game market, starting with porting their existing games as mini-games, and building mini-game ecosystems to enhance user acquisition and monetization capabilities. At the same time, based on cloud gaming, the integration of PC and mobile games into the mini-game platform has a solid technological foundation. Combined with WeChat's mature social system and user base, Tencent's mini-game business has enormous growth potential.

3. Non-Game Mini-Programs: With Comprehensive Ecosystem Coverage, Advertising + Commission Help Expand Commercialization Pathway

The mini-programs that attract WeChat users are not limited to games. E-commerce, life services, and other online tools are the other three core categories that occupy users' time. Through methods such as friend sharing, QR code scanning, and active searching, users can quickly access dedicated mini-programs platforms of major companies to obtain information and achieve retention.

September 2023, WeChat Mini-Program MAU Ranking of Top 8 in the Life Services Industry

Based on our previous analysis of the industry distribution of the Top 500 mini-programs, the life services category has the highest proportion, reaching 21%. Currently, from the perspective of traffic structure, mini-programs have become the core entry point for the majority of life services products. For example, SF Express+ integrates user information and simplifies operational processes to facilitate package inquiries. Meituan Takeaway drives user sharing through daily red packets and exclusive promotions, achieving traffic conversion from click to usage. Overall, integrating with mini-programs makes it easier for platforms to manage user tags and convert private domain traffic. This leads to stronger user stickiness and willingness to share.

September 2023 Top 8 WeChat mini-programs in the mobile shopping industry by MAU

Mobile shopping (i.e., e-commerce) mini-programs accounted for the second highest proportion within the Top 500 mini-programs, reaching 18%. We believe that mobile shopping mini-programs will become the industry category second only to games in terms of user usage time on WeChat mini-programs. Firstly, based on WeChat's Channels and Moments advertising resources, e-commerce activities can achieve maximum dissemination. By redirecting users to mini-programs, their user journey is shortened, and their discomfort is reduced. Secondly, by relying on mini-programs, it is possible better to facilitate interactive activities such as bargaining and group buying and achieve rapid conversion within shared links among acquaintances.

Not limited to the above, tool mini-programs, official accounts + mini-programs for utilities such as water, electricity, and internet are the main channels for users to pay online. They also include public affairs expenditures such as subway and bus rides. Mini-programs can quickly meet these needs. Automotive services mini-programs can be combined with user authorization through WeChat personal profiles to capture user information quickly. By adding customer service WeChat, private domain operations and precision marketing can be achieved.

4. Create a Channels traffic portal to drive and empower mini-programs

The excavation of existing resources is the core strategy for top companies in the second half of 2023. We believe that mini-programs will be the core focus of Tencent's future efforts, and Channels will be an important catalyst for accelerating the monetization of mini-programs. On the one hand, Channels will bring new traffic growth for game advertisers. Click-to-play and quick redirection to mini-programs have lower promotion and customer acquisition costs compared to other channels and higher efficiency. On the other hand, the combination of live streaming and Channels stores has begun to emerge. E-commerce mini-programs will attract more visitors in the future by replicating the current live streaming/short video sales model, which is directly attracted by the official launch of the store assistant.

Overall, based on the above model, Tencent can collect fees from mini-programs in various forms, such as revenue sharing and commissions. However, we believe that the revenue brought by mini-programs to Tencent will not manifest rapidly in the short term. Time will be required for the integration of advertising resources and the entry of new developers. Furthermore, WeChat will not hasten commercialization to the detriment of the user's experience. We look forward to seeing more about mini-programs in Tencent's financial reports, injecting momentum into Tencent's future growth.

In China, MoonFox Data is a top supplier of thorough data insights and analysis services. With a solid foundation in the mobile big data that is comprehensive, stable, secure, and compliant, as well as professional and accurate data analysis technology and artificial intelligence algorithms, MoonFox Data has launched various products, including mobile application data (iApp flagship edition, mini-program edition, vendor edition, overseas edition), brand insights data (iBrand), marketing insights data (iMarketing), alternative financial data, etc. In addition, it provides professional research consulting services through the MoonFox Research Institute, aiming to help enterprises gain market insight and empower precise business decision-making with data.

• Our Information:

Website: https://www.moonfox.cn/
Contact number: 400-888-0936

• Contact us:

Name: Felix
Title: Director of Sales, Industry Insight Division
Tel: +86 -13366276383
Email: zhouzt@jiguang.cn
Address: 608/F, Tower B, Wintrust Center, No. 1 Xidawang Road, Chaoyang District, Beijing, China

Name: Silvia
Title: Senior Marketing Manager
Tel: +86-13691629681
Email: [email protected]
Address: 608/F, Tower B, Wintrust Center, No. 1 Xidawang Road, Chaoyang District, Beijing, China

SOURCE Aurora Mobile