Over a decade ago, Tencent, which had traffic and capital in hand, reached into various fields like an octopus and built a huge commercial empire. However, the era of high-speed growth of the Internet has passed, and Tencent has slowed down its expansion pace in recent years, and also actively withdrew from or shrunk many businesses.

Recently, Tencent announced that Tencent Classroom, an online vocational education platform that has been operating under the Tencent brand for over ten years, will stop operating on October 1 and cease all platform services. Thus, another product that carried memories of a generation will exit the stage of history.

According to incomplete statistics from Wall Street News, since 2022, Tencent has closed or removed more than 50 products, including various business sector products such as Little Go, Magic Core, QQ Player, Kandian Fast Report, Sogou Maps, Tencent WiFi Butler, QQ Hall, QQ Lianliankan, and Tencent To-Do.

These businesses are all non-core businesses of Tencent, either at the end of their lives or with no clear future prospects, still in a loss or low-profit state.

Those who are outdated will not be spared by the times. Against the background of the global economic slowdown in recent years, Tencent, with its abundant financial resources, must also reduce costs and increase efficiency, spend money on the front line, and invest more resources into sustainable businesses.

The era when internet giants used their abundant resources to encircle and suppress others no longer exists. A new era has arrived, and Tencent is rediscovering its best state.

The End.

Tencent Classroom was born in 2014, the year Tencent entered the education field and the curtain had just been lifted on China's internet education.

Tencent Classroom was initially launched relying on QQ's platform resources, offering learning classrooms such as vocational training, language learning, animation design, and studying abroad by introducing third-party education institutions. One year after launching, Tencent Classroom released mobile apps and H5 pages.

With the help of Tencent's strong resource advantages, Tencent Classroom was once a leader in the online education industry. In March 2020, Tencent Classroom announced that the total duration of its online vocational education classes had increased 3.5 times. In the same year, QuestMobile released data showing that on Sundays, the average daily active users of Tencent Classroom were ranked first in the education and learning industry.

For Tencent, the education sector is not only an important field to demonstrate its connection capabilities but also an important embodiment of fulfilling the social responsibility of a large enterprise.

Therefore, in addition to Tencent Classroom, Tencent has continuously expanded its education business map over the years, including a series of To C products such as K12 Online School and Tencent Happy Mouse English, as well as solutions for B-side such as Tencent Education Enterprise Cooperation, Smart Campus, and Tencent Weichao covering the entire process of technology, services, and content from early childhood education to adult education.

In the early years, Tencent's education business was dispersed, with over 20 educational products in various business groups.

However, in 2018, with the establishment of the 'Cloud and Intelligent Industry Group' (CSIG), Tencent thoroughly organized its education business for the first time and unified it under 'Tencent Education,' which was assigned to CSIG.

However, the good times didn't last long. In July 2021, the 'Double Reduction' policy was implemented, K-12 education and training institutions were 'plunged into winter overnight,' and Tencent's related businesses were significantly adjusted. For example, K12 Online School, children's English enlightenment product Happy Mouse English, and K12 English assessment tool Tencent English Jun have successively closed or transformed.

Although not belonging to the K-12 education and training category, Tencent's life has not been easy for Tencent Classroom, affected by the overall economic environment. Plus, after Ma Huateng proposed to converge and focus, Tencent Classroom's 'Jiaopeitong' stopped providing services in September last year.

In the same month, Shi Mei, Vice President of Tencent Cloud and Head of the Tencent Education Industry, publicly stated that Tencent Education would gradually shut down C-end businesses and focus on B-end businesses.

Under these circumstances, Tencent Classroom's 'class dismissal' became inevitable.

Standing at a new starting point, although Tencent Education will no longer directly serve individual users, it faces the billion-dollar B-end education digital market, covering K12, higher vocational education and adult education, and providing intelligent connectivity, teaching, scientific research and management products and services for individuals, schools, educational institutions, and education management departments.

In the field of digital education, based on the advantages of cloud + AI + connectivity, Tencent Education has found new power points for itself.

Transformation

Tencent Education's self-reconstruction is a microcosm of the great changes in the entire Tencent Cloud, and even the Tencent Group in recent years.

As a Chinese Internet giant, Tencent was criticized by the outside world for 'doing everything' more than ten years ago. Therefore, since 2013, Tencent's own strategy has undergone a major change, proposing hopes to withdraw its edge and return to its greatest expertise in communication and social networking, launching the 'Internet +' and 'connecting everything' strategies.

However, at that time, it was still in the golden age of Internet development, and expansion continued to be the main theme for a long time. Although it no longer sought to monopolize all sectors, it still invested a large amount of resources in seizing important areas and began to use external strategic investments as an important measure of expansion. According to IT orange statistics of Tencent's investment portfolios, Tencent's investment areas over the years have covered 23 industries including entertainment, media, games, enterprise services, AI and e-commerce retail, and its investment layout is diversified.

From 2012 to 2021, along with industry development and strategic opportunities, in the C-end, Tencent seized the ship ticket of mobile Internet, social networking, and games, in the B-end, it also participated in the industry Internet carnival of all industries moving to the cloud, and achieved rapid growth in revenue and profits.

However, in 2022, affected by the economic environment, Internet regulation, and slow growth of its own business, Tencent's revenue declined for the first time, decreasing by 1% year on year to 554.6 billion yuan.

Feeling the crisis, Tencent launched its latest round of major changes in 2022, reflecting its efforts to reduce costs and increase efficiency and withdraw from non-core businesses.

At the end of 2022, at the internal employee conference held online by Tencent, Pony Ma highlighted 'reduce cost and increase efficiency' as the focus of the meeting, and sharply pointed out that 'there is not much time left for some businesses' and that many businesses should be cut off as it is not cost-effective to have too many non-core businesses compared to the management costs and efforts expended by the company.

For CSIG, Pony Ma also called for an end to its model of large-scale operations and support for its strategic production of integrated products. Pony Ma believes that it should not be swayed by voices from outside the company that it lags behind Huawei Cloud's rankings and has lost its unique advantages. This year, he once again demanded that many products of CSIG must go online as soon as possible except for special strategic products and basic investments.

For the game business, Tencent has also begun to tighten its belt. As Pony Ma said, he hopes that the game business will make horizontal and solid development in software and game research and development, rather than engaging in vertical conflicts with other game companies or hardware manufacturers. The key is to find its own main business and focus, which is more manageable.

A Tencent game employee told Wall Street News that in the past, the company invested heavily in the development of many projects, which were terminated or phased out either because of unclear positioning or no longer meeting audience needs. Now, decisions on the market will be more cautious, the internal review will be stricter, new projects will not be easily made, and existing projects will first reach break-even before new projects can be deployed.

In addition to shrinking its own business, Tencent has also slowed down external investment. Starting from the end of 2021, Tencent has successively reduced its holdings of shares in many listed companies, such as JD, Sea Limited, New Oriental, and Meituan.

In addition, IT orange statistics show that 2021 was the peak year for Tencent's external investment, with 301 investments throughout the year, down to 95 in 2022 and continued to shrink to 40 in 2023.

Under the main theme of 'convergence and focus,' Tencent's current investments are mainly in AI, medical and health care, games, entertainment and media, and enterprise services. These areas can basically synergize with Tencent's own key businesses, such as WeChat, Video account, games, cloud business, and AI.

In the era of AI's large model wave, the world has entered a new era, and the pattern of technology enterprises may welcome new changes at any time. If Tencent wants to hold onto its 'iron throne,' it must dare to 'slim down,' consolidate its core advantages, and seize the huge opportunities brought by AI, promote the old trees to stay green, and let the 'new buds' grow strong.

Of course, turning around the elephant is not easy, and it is destined to be a challenging transformation.

Editor/Emily