Tencent is reportedly cutting its marketing budget following a market slowdown driven by the regulatory disruption in China.
Bloomberg reports that a leaked internal memo is instructing Tencent executives to "endure the hard times together" and trim back their marketing spend. The WeChat social network operator is said to be halving the branding budgets for some "mature games" if "the money hasn’t already been deployed", as well as reducing spending on those that aren’t performing well or have yet to be released.
While still a "strongly profitable" company, Bloomberg analysts project the Chinese company’s "total debt has soared to a record $26 billion", and expects the company will reveal its slowest growth in more than three years when it reports on its third-quarter earnings.
Tencent spokesperson Jane Yip declined to comment on the news.
Last month Tencent announced it will be restructuring for the first time in six years following increasing challenges dealing with Chinese governmental regulations for the gaming industry. The megacorp was hit with a fall in profits for the first time in 13 years owing to the very same Chinese regulatory issues that have pushed the decision to restructure.
Tencent also recently announced that it will expand its player identity verification processes across all its games by the end of 2019 after governmental pressure to reduce game addiction, minimise underage players, and curtail short-sightedness. The new legislation, introduced in August, has made it increasingly difficult for Tencent – which, by sales, is the world’s biggest game company – to release new titles or include microtransactions or in-app purchases. Its last release was back in March, pushing its share price down by 28 per cent and reducing the company’s market value by $138 billion.