Campus Life

WeChat boosts revenue for Apple in China

WeChat

Its WeChat users like ‘Deng’ that illustrate just how addictive the social messaging app from Tencent Holdings has become. Deng is the surname of a Beijing-based quality analyst who spends dozens of hours playing mobile games on WeChat. In fact, she spends so much money on the games she’s too too embarrassed to give her full name. Apple, who takes a 30% cut on all sales, has a lot to thank Deng for.

“The most expensive time was when I spent 68 yuan ($11.08) on a leopard on Tiantiankupao,” said Deng, an avid iPhone user, referring to Tencent’s hit game – called Timi Run Everyday in English – where characters run through obstacle courses. Having a leopard as a pet gives the characters extra power, helping players beat their friends.

Deng and tens of millions like her have made China Apple’s third-largest market for software sales, and a huge chunk of that comes through WeChat.

Known locally as Weixin, WeChat had 438 million monthly active users globally, mostly in China, at the end of June, and has rapidly evolved from a messaging tool into a digital Swiss Army knife, allowing users to send messages, play games, book taxis and shop online.

The app has proved a winning formula in getting people in China, a market notorious for not paying for software, to connect their bank accounts with their phones and pay for virtual goods like extra lives and power-ups in mobile games.

Apple’s cut has netted them a healthy profit.

“We’re seeing some substantial strength there,” Apple CEO Tim Cook said of China in a July earnings call. “The thing that’s actually growing the most is the iTunes, Software and Services category, which has the App Store in it. That area is almost doubling year over year.”

Apple’s Greater China revenues, which include Hong Kong and Taiwan, soared 28% in April-June from a year earlier to $5.9bn, and globally, iTunes, Software and Services sales were the company’s second-fastest growing product category, up 12% year-on-year to $4.5bn.

Tencent was the top game publisher for Apple’s iOS operating system in China by revenue for both June and July, according to App Annie, a company that measures app usage. Apple is this week expected to launch its new iPhone – with a gamer-friendly larger screen.

“By far the biggest factor driving App Store revenue in China is WeChat,” said Ben Thompson, who writes about technology at stratechery.com. “WeChat has driven app download and usage, which drives people to want to buy stuff, which drives them to connect their payment information. It’s been a very virtuous cycle.”

Growth has also been helped by increased smartphone sales since China Mobile, the country’s largest carrier, began offering the iPhone in January.

Image and article source: Fin24