Burning money mercilessly for ZaloPay, VNG still loses in the e-wallet war: Even worse than the financial apps of banks, overwhelmed by MoMo

TechinAsia recently published an article analyzing VNG’s business activities. The article points out some notable points about VNG’s key business segments such as online games, Zalo, Zalopay…

Online game: Is it still the owner of the game?

Like Sea Group – VNG has deep roots starting from the game segment. In fact, this is still the area that contributes 70% to 80% of the company’s total revenue. The company now operates and distributes games from other studios and also develops some of its own titles.

Their online gaming revenue saw a 90% increase from 2021. However, this segment’s revenue fell 12.7% in the first 9 months of 2022 compared to the same period in 2021. This also It’s not surprising that demand has dropped post-pandemic.

Even Sea Group, which announced 7,000 job cuts last year, has seen a decline in its Garena digital entertainment business. According to TechinAsia’s analysis, the company’s Q3 2022 results suggest that Garena’s top revenue will slow further, due to lingering obstacles affecting user numbers, engagement and capabilities Free Fire’s monetization.

It’s also important to note that VNG doesn’t have a self-developed game on the scale of Sea’s Free Fire. However, they have made some progress in the international market with Dead Target and other titles developed by ZingPlay Studio after spending heavily in international markets since 2021.

ZPS and MadPoly Studio – the branch behind Dead Target will continue to be the two main engines for the company’s game thrust outside of Vietnam.

On the other hand, the company’s board of directors recently announced that the proceeds from the sale of 7.1 million treasury shares will be used for licensing and marketing costs for titles like PUBG Mobile and Martial Arts. Lam Truyen Ky mobile version in the next 2 years. This shows that the company is still investing heavily in popular games from other developers such as Garena, Tencent and Kingsoft.

Is Zalo a superapp?

VNG also recorded a loss of nearly 33 million USD in the first 9 months of 2022 due to increased investment in subsidiaries and associates. In particular, the company has pumped more money into Zion – the company that runs ZaloPay. In 2022, VNG increased its ownership in Zion from 60% to 69%.

Back in 2020, TechinAsia analyzed why the popular presence of Zalo has not made ZaloPay able to dominate the domestic market. According to a new report by Data.ai, ZaloPay ranks 6th in terms of monthly active users in Vietnam, behind financial applications of Techcombank, Vietcombank and MoMo. Also in this report, ZaloPay is not in the top 10 financial apps in terms of downloads.

According to TechinAsia’s previous assessment, the e-wallet war in Vietnam is extremely fierce and both parties do not regret spending money on promotions to win customers. However, the truth is that promotions don’t last forever. To be profitable, e-wallet companies still need to wait a long time and the winner must be someone with sustainable financial resources to compete and importantly, how to generate money from customer data .

“A few companies going bankrupt or merging is also a possible scenario.”

Until then, the game is not over and the players still have to keep fighting to win.

For his part, in an exclusive interview with TechinAsia in 2022, Zalo COO Nguyen Cong Chinh said that the company prioritized messaging functionality over other additional features.

VNG’s prospectus also shows that the company still wants to pursue two different strategies: Zalo – a messaging service for both individuals and businesses and ZaloPay – an electronic wallet. This confirms TechinAsia’s previous assumption that ZaloPay is not central to VNG’s efforts to promote super-apps.

The good news is that the company’s cloud computing, financial, and payments services sector is growing rapidly. In the first 9 months of 2022, this segment contributes nearly 12% to total revenue compared to 5% in 2020. However, it is unclear how much money VNG will pour in to stay competitive outside of games.

Source: TechinAsia