Profitability low for Chinese microblogs despite surging users

14:36, November 25, 2010      

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Although the number of microblog users registered on Web portals such as Sina is growing exponentially, industry insiders say a model needs to be developed in order to make the platform profitable.

The number of registered microblog users in China grew from 8 million in 2009 to 75 million in 2010, a nine-fold increase, and the figure is expected to reach 145 million in 2011. A research report released on Nov. 24 by the company Analysys International, shows that the number of microblog users in China is expected to reach 240 million by 2012.

China's microblog market is now in the stage of customer development. A large number of users of microblog services will be the real turning point of the microblog market.

Sina's Twitter-like microblog was launched in August 2009, and it was announced that by the end of October 2010, the number of microblog users registered on has reached 50 million and the daily average number of items posted reached more than 25 million.

Peng Shaobin, vice president of Sina and general manager of the Microblog Department, revealed that the internal evaluation of Sina's "Advertising Self-service System" has begun. The system will be launched at the end of November and its operation will be similar to Apple's App Store.

Cao Guowei, CEO of Sina, said that he did not formulate a timetable for microblog profits. He believes that if the number of microblog users can reach 200 million, they will surely profit from it. However, Cao admitted that Sina is currently exploring a method of advertising and distributing shares on the microblog platform.

However, other competitors are not willing to let Sina monopolize the microblogging field. Zhang Zhaoyang, Sohu's chairman of the board, recently announced that they will not limit the investment in microblog development. Sohu's third quarter report shows that their cash and cash equivalents amount to nearly 535 million U.S. dollars on Sep. 30. Therefore, their capital is adequate.

Ma Huateng, CEO of Tencent, said on Nov. 17 that although Tencent has been leading in the instant messaging field, they have realized that more people may not spend their time using SMS or microblogging rather than instant messaging.

Twitter, founder of global microblogging, has not yet found effective ways to profit at present, and its Chinese peers are also exploring possibilities. Experts pointed out that competing in the microblogging field, Web portals are actually defending their advertising business fields. Zhang said that the advertising business of traditional Sohu portals will be in danger once their battle in microblogging suffers a setback.

By People's Daily Online


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