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Chinese SNS: Gaming themselves into online graves?
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17:16, July 29, 2009

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He Di switched off the cell phone alarm clock, and wolfed down the meal. He left his friends at the dinner table and rushed back home. Time to harvest "vegetables," and tend to his online garden, as the clock reminded him.

He is among 42 million users of social network site (SNS)-- kaixin001.com. iResearch, an IT consulting firm told Xinhua this week, the monthly number of Kaixin001 users hit 42 million in June, over one-tenth of China's netizen population.

These people (called Kaixiner hereafter) are crazy about game applications of Kaixin001, such as "growing vegetables", "snatching parking lots" and "buying friends", even at the expense of less sleep and fewer time hanging out with friends.

"Such a fever cannot endure," said Zhao Fujun, an IT observer. He blamed the lopsided emphasis of Chinese SNS on games over real life services in an article he wrote.

Liu Xingliang, CEO of Chinalabs, a Beijing-based Internet research company divided Chinese SNS into three categories: sites for stranger networking such as 51.com and QQ community -- Myspace's likes; sites for friend networking such as Kaixin001 and Xiaonei-- Facebook's likes; and sites for information release such as fanfou.com -- Twitter's likes.

However, "none of them are doing their business, they are all obsessed with games," said Liu, "Kaixin001, especially, looks more and more like an online-game company."

"Kaixin001 only attracted bored white-collared workers who look for occasional fun in office hours, so they get hooked to these low-cost and fool-proof games on this site," he said, "but they will be bored with games someday."

This month a "seasoned" Kaixiner Wang Ping tried to sell his Kaixin account on online auction site Taobao at 8,000 yuan ($1,170). Nine months into this game, he had won "parking lot" worth 250 million dollars of Web site currency and "property" worth 300 million such dollars. Wang said he was no longer interested in those games.

Games are draining Myspace's users, Jenny Townsend, an American Journalist working in China, said.

"I left Myspace because I used it for social networking, but others always invited me to games.I found it annoying," she said.

A survey conducted by comScore, a global IT marketing research company, suggested that Myspace, the world's largest SNS, lost nearly four million users in June.

Related readings:
China has 338 million netizens now
China's online gaming sector posts 77% surge in revenue
It's not all good news on the gaming front
Popular Chinese SNS sites

Will Chinese SNSs follow Myspace?

Zhao Fujun said, most early registrants of Kaixin001, including him, stopped using it. However, as there are newcomers flocking in, its size of users keeps snowballing from 36 million in May to 42 million in June, according to iResearch.

"Customer retention should be SNS's priority," said Ruan Wenjing, chief operation officer with iResearch. But he argued that the strategy of using games to get the ball rolling was a good one, because Chinese netizens mostly use the Internet for fun.

The latest report by China Internet Network Information Center(CNNIC) echoed his view, showing the most frequent use of Internet is for entertaining.

But for future, both Zhao and Ruan agreed, this mode of business cannot sustain.

Liu Xingliang, CEO of Chinalabs, a Beijing-based Internet research company, said, "SNS is supposed to build a platform for friends to share information and feelings, such as book recommendations, songs to listen to, personal comment on a digital device and so forth." He went on, "One could even ask for suggestions on some major life choices on these sites."

"Unfortunately, this is not what Chinese SNS is about," he said, "SNS users here just bask in the illusionary pleasure of being able to buy houses, limos and even beauties."

Zhao also pointed out that SNSs do not have a sound profit model.

"At present, none of the SNS companies can break even, and they are just burning venture capitalists' money." He applauded the profit model of QQ.com, a company starting from instant message services. Now, their services expand to search engine, QQ games, portal Web site, online auction and payment services.

"Quite a number of these services are profitable. Its market capitalization reaches over 10 billion yuan," said Zhao.

Ruan and Liu are still expecting a bright future for SNSs in China, but the trick is "whether they could be led into the right track," as Zhao believed.


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