This episode is sponsored by CuriosityStream
and Nebula â get both for just **UPDATE: $12** dollars a year. Each year, various marketing firms assemble
highly-publicized lists of the âMost valuable brands in the worldâ. This one, Brandz, considers financial factors
â such as how much revenue a company generates, as well as subjective measures, like awareness
and opinion surveys of the general, consumer public. Last yearâs rankings, for example, went
pretty much as youâd expect. At the top are Amazon, Apple, Microsoft, and
Google. Below them are other iconic, global brands
like Disney, Starbucks, and Netflix. But a few, in particular, stand out. While theyâve scored very highly precisely
for their popularity, strangely, thereâs a very good chance youâve never heard of
them. One such company is Tencent â whose Twitter
account has a measly 23,000 followers. Visa, meanwhile, despite being a credit card
company, has 383,000. Mastercard has 480,000. Of course, âNumber of Twitter followersâ
is by no means a complete or accurate picture of a companyâs popularity, but thatâs
exactly the point: Tencent is one of the worldâs most recognizable brands, and yet most of
the world doesnât even know what it is. Such is the insularity of the Chinese market. There are, however, many good reasons to become
familiar. At the highest level, Tencent is one of the
three Chinese internet giants â along with Baidu and Alibaba â together abbreviated
as âBATâ. Headquartered in an unusually-shaped building
in Shenzhen, across the border from Hong Kong, the company exists in a Chinese mirror-image
of Silicon Valley â with arduous work hours, an intense culture of competition, and a reputation
for doing the unconventional. Tencent was founded, most famously, by âPonyâ
â his nickname â Ma, whose first major success was âQQâ â a social network
which took off in early-internet China. In many ways, Ma, and Tencent were simply
in âthe right place at the right timeâ. But two of its ideas stand out, if not for
their originality, certainly for their early application. Firstly, rather than rely on advertising for
the majority of its revenue, QQ helped pioneer âValue Added Servicesâ. Users could purchase virtual âgoodsâ like
customizable avatars, gifts, and status symbols. Secondly, with each subsequent product, Tencent
never truly started from scratch. It would carry its enormous and ever-growing
user base from one venture to the next until it had near monopoly-level control over the
worldâs largest market. In 2011, it launched what became its most
popular app ever: the chat application known in English as WeChat, which integrated with
QQ. Its momentum grew dramatically with the introduction
of the now-ubiquitous WeChat Pay and Mini Programs, which allows users to install other
apps within the app â bypassing the App Store and iOSâ rules â which Apple conveniently
turns a blind eye to. Today, WeChat is called a âsuper-appâ
or the âoperating system of Chinaâ because of its ability to do everything from act as
a wallet, pay rent, shop online, and much much more. Its over 1.2 billion users spend 4 hours a
day in the app, on average in China. Thatâs more than American users spend on
all social media, combined. With WeChat, Tencent is like Amazon in that
it acts as a gatekeeper of the market â setting prices, copying and killing competitors, and
effectively taxing all other companies. When foreign firms enter China, they inevitably
partner with Tencent or die of obscurity. And yet the app is only a relatively small
part of the Tencent business empire. Its seven divisions each compare favorably,
if not embarrass, entire other companies. For example, its payment services division
is almost as large as Paypal. Itâs subscription revenue closely follows
that of Netflix. And it makes more from games than Sony or
Nintendo. Outside of China, Tencent holds a vast collection
of investments, including Tesla, Snap, and Epic Games â the maker of Fortnite and the
Unreal Engine. It also wholly owns Riot Games, the parent
of League of Legends. Tencentâs game store, called WeGame, is
significantly bigger than Steam, its American competitor. You could say that Tencent is not a games
company, but it is the worldâs largest game company. That is also one of its most long-standing
criticisms. That somewhere along the evolution from chat
application to internet technology social network, game, payment service platform, the
company lost its soul. Some argue it lacks a singular drive, motivation,
or focus, and is more akin to a boring old investment fund. Tencent is a part-owner of so many hundreds
of companies, youâve almost certainly unknowingly used one of its products. But you might ask: Why? Any country with Chinaâs diversity of regions,
languages, and cultures, not to mention its sheer size â would seem to predispose it
to much competition. Why is the U.S. home to Facebook, Twitter,
Netflix, Discord, Instagram, and YouTube â while China, four times its size, home to effectively
one company to rule them all? The answer is counterintuitive to almost everything
most people have been taught about China. In a word: non-interference. Itâs not exactly true that the Chinese government
is overbearing and controlling. For foreign companies, absolutely. But in terms of oversight and industry regulation,
China has actually given certain companies extraordinary freedom. The very existence of Alibaba, Baidu, and
Tencent prove Chinaâs willingness to tolerate extreme monopolies when it benefits the state. Broadly speaking, large private Chinese corporations
serve three purposes: Firstly, they elevate the image of Chinese
entrepreneurship, and therefore, the âChina brandâ more generally. Evidence of its transformation into a âModerately
prosperous societyâ, in party speak. Second, the success of domestic companies
comes at the expense of foreign ones. To the very limited extent that Western companies
succeed in China, they do so with the express approval and financial benefit of a Chinese
counterpart. This is even legally codified, in the way
that foreign firms are required by law to partner with a local one. Third, finally, and most controversially,
global brands provide China with extra-territorial power. By holding majority or even minor stakes in
overseas companies, China can impose its laws and sensibilities on the rest of the world. When overseas Chinese communities get their
news from WeChat, they continue, for example, to be shaped by Chinese narratives, despite
living on Australian, Canadian or American soil. Tencent is so colossally huge thanks to Chinaâs
grand political ambitions. But, now, having accomplished them, the mood
is changing. And no recent event better represents this
shift than the cancellation of the Ant Group IPO. According to reports, Chairman Xi Jinping
himself, stopped one of the largest Chinese financial firms from going public â sending
a clear message that no company, interest or individual, even the very richest and most
influential, is above the law or party. You can watch the full version of this video,
which replaces this section now with an explanation of what happened to the Ant Group and why
itâs just the beginning â on Nebula, the streaming site I helped create, to give you
the very best experience â there are no ads, videos are available early, and you can
watch entirely exclusive original content. Weâve partnered with CuriosityStream â home
to great documentaries on technology, history, and science â like this one about Facebookâs
data collection â so that you can get it and Nebula for less than $15 a year. Sign up with the link in the description and
watch the extended version of this video over on Nebula.
I really don't like the practice of locking part of the video behind a paywall. The end of the video explaining China blocking the Ant Group IPO is exclusive to the Nebula version of the video. I have a Nebula subscription but usually watch channels like this one and Wendover on YouTube instead since it's more convenient. Ad free videos without sponsor messages or entirely exclusive videos are fine, but I hope it doesn't become common practice to cut content across platforms.
Hi. I just wonder how come that WeGame is significantly bigger than Steam? International version of Steam are accessible in China, you can pay for games with Alipay and Wechat, and for example forum about Steam in č´´ĺ§ is way way bigger than forum about WeGame.
Can you please give us some data that proves that WeGame is bigger than Steam?