Major Chinese technology company Tencent Holdings has revealed plans to open a third data centre in Japan, citing strong and robust demand for its cloud services from online games and livestreaming systems within the country. Tencent’s expansion decision was first reported by Nikkei Asia.
According to Poshu Yeung, senior vice president for Tencent’s international cloud operations, Tencent, , has been performing very well in Japan. From Tencent’s initial entry into Japan’s cloud market in 2019, Tencent has enjoyed triple-digit annual growth for its Japanese business.
Yeung revealed that Tencent was considered a third site for a data centre, noting that “we have the experience, so this won’t take much time.”
Significant Stake in Japan’s Gaming Industry
When Tencent first entered the Japanese cloud computing market in 2019, it targeted its one-stop cloud computing services at gaming companies. Beyond holding a salon in Tokyo to promote the firm’s capabilities to local gaming companies, Tencent also formed preliminary cooperation agreements with gaming companies such as Pitaya and IT company E-business.
Home to around 70 million gamers, Japan has a major digital gaming industry which is projected to have strong compound annual growth rates from 2018 to 2023, according to a report released by Quadintel. In addition, Quadintel also found that Japan’s gaming market is both large in volume, and also has users who present a diverse range of preferences for all gaming platforms: PC, mobile, and console.
Hence, Tencent places a high priority on expansion into the Japanese market. Since 2016, Tencent has embarked on its growth strategy to internationalise its business, branching into overseas markets. As of 2022, Tencent has achieved a global presence in over ten countries and regions. Yeung observed that Tencent now “operates 30 data centres outside China, with new additions in Brazil and Indonesia”.
Tencent’s choice to promote its data centre services to local gaming companies is an especially strategic move, due to the significant stake Japanese companies have within Japan: notably, according to Quadintel, 90% of gaming revenue from games in Japan comes from Japanese gaming firms, as gamers tend to prefer localised content.
Yeung expressed his optimism that Tencent would be able to capitalise on robust demand with its third data centre in Japan, saying that “Tencent will tap its experience in the gaming sector to support game companies in Japan and South Korea in expanding their customer bases to Brazil and Southeast Asia.”
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