- Chinese tech giant Tencent said it wants to work with Snap Inc. on developing mobile games and “newsfeed” ads. Snapchat is planning a significant redesign that will include a feed of personalized content. Tencent recently announced that it had acquired a roughly 10% stake in Snap.
Tencent’s newly acquired stake in Snapchat parent Snap Inc. is intended to help the two companies work together on “mobile game publishing” and “newsfeed” ads, a Tencent spokesperson told Business Insider on Thursday.
“The purchase of the shares is the starting point for us to explore the collaboration opportunities,” the spokesperson said.
China-based Tencent, the largest gaming company in the world by revenue, announced Wednesday that it purchased roughly 10% of Snap’s nonvoting shares on the open market. The disclosure came after Snap reported quarterly earnings that disappointed Wall Street and sent its shares sinking.
Snapchat has never offered games inside its app, aside from a few simple game-based ad experiments, and it currently doesn’t feature anything resembling a newsfeed. Snap CEO Evan Spiegel said Tuesday that a redesign of Snapchat would make the app “easier to use” and alluded to it including some kind of Facebook-like feed for delivering content.
The planned redesign is expected to debut on December 4 and feature an "endless" feed of videos that are personalized by algorithms, Business Insider first reported on Wednesday.
Tencent, which also makes the popular messaging app WeChat in China, was an early investor in Snap. "We see that Snap has a large and rapidly growing user base, particularly in affluent western markets, US and Europe," a spokesperson said Thursday.
Snap didn't respond to a request for comment on this story but said in a regulatory filing Wednesday, "We have long been inspired by the creativity and entrepreneurial spirit of Tencent and we are grateful to continue our longstanding and productive relationship that began over four years ago."
Tencent's games division makes "King of Glory," the world's top-grossing mobile game, along with Riot Games, the publisher behind the hit game "League of Legends."
Facebook makes the majority of its money from ads shown in its News Feed. Showing targeted ads in a personalized feed of content could help Snap grow its revenue at a time when it's facing mounting pressure to meet the expectations of public investors.