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Tencent Partners With TCL for Web-Browsing TV in China

(Corrects to say Tencent provides software for device in first paragraph, sales date in last paragraph in story published Aug. 23.)

Tencent Holdings Ltd. (700), China’s biggest Internet company, will provide software for a flat- screen TV made by TCL Multimedia Technology Holdings Ltd. (1070) that allows viewers to access online games, shopping and videos.

This is the first time Tencent collaborated with an appliance maker, and the company will continue to work with device manufacturers, Tencent Chief Executive Officer Pony Ma said in Shenzhen yesterday. The 26-inch TV allows access to Web services using cloud computing technology.

Tencent has bolstered collaboration with technology companies including Activision Blizzard Inc. (ATVI) and Zynga Inc. (ZNGA), adding games and services to counter competition from Chinese rivals such as Baidu Inc. (BIDU) and Alibaba Group Holding Ltd. Growth in online-game sales and video advertising revenue helped Tencent increase second-quarter profit 32 percent, the Shenzhen- based company said last week.

“The company is working on ways to get its games played across a range of devices, from computers, smartphones and other terminals,” Dundas Deng, who rates Tencent buy at Guotai Junan Securities in Shenzhen, said before the announcement. “Tencent has previously avoided getting into the hardware market, and they are spreading the risks by working with TCL.”

Tencent rose 1.1 percent to HK$248 at the close in Hong Kong trading today. The stock has advanced 59 percent this year, the second-biggest gainer on the city’s Hang Seng Index. (HSI) TCL Multimedia rose 9.9 percent.

Online Games

Tencent increased sales of online games 53 percent to 5.57 billion yuan ($877 million) in the second quarter, accounting for more than half its revenue. Sales of video ads helped boost online advertising sales by 72 percent to 880 million yuan, the company said.

Last month, Tencent said it will offer Activision’s “Call of Duty” game in China. Zynga has introduced a Chinese version of its CityVille game through Tencent’s platform.

In April, TCL Multimedia started selling a television with cloud-computing technology. TCL Communication Technology Holdings Ltd. (2618), a sister company that makes handsets, also offers tablet computers.

Lenovo Group Ltd. (992), China’s biggest maker of personal computers, started selling so-called smart TVs in May.

Android Based

Tencent is stepping up development of services including the Mobile QQ and Weixin messaging tools for users of smartphones and tablets such as Apple Inc. (AAPL)’s iPhone and iPad, as well as devices running Google Inc. (GOOG)’s Android operating system.

Baidu, China’s biggest search-engine company, said in May it will offer a smartphone that supports cloud technology with manufacturer Sichuan Changhong Electric Co. In September last year, Dell Inc. agreed to produce smartphones running Baidu software for users in China.

Alibaba, China’s biggest e-commerce company, said in June it will offer a smartphone with partner Haier Group.

The TV, named Ice Screen, uses Google’s Android, and will be available for ordering this month for 1,999 yuan, according to information released at the product event organized by Tencent and TCL.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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