Weibo operators struggling to make profit
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E-mail CE.cn, February 23, 2012
As of the end of 2011, Sina's Weibo site has 250 million registered users, and 20 million more are added every month; Tencent's Weibo has more than 310 million registered users, with more than 50 million active users every day. The numbers of registered users of Sohu and Net Ease are both up to tens of millions. Weibo (microblog) has not only become one of the hottest internet applications, but also changed the internet using habits of a huge number of internet users. Weibo on mobile phones has been the fastest growing internet application, generating enormous amount of data traffic.
After the initial turf competition, the Weibo business still has to face the time-honored problems: how to create commercial value? What are the profit points of Weibo? Without profit more users would only lead to higher maintenance and R&D cost. According to the statistics of the 3rd quarter of 2011 published by Sina, Sina suffers a net loss of US$ 336.3 million, and the current quarterly expense of Sina's Weibo business is US$ 100 million. In the third quarter, Sina's total investment in Weibo marketing and R&D doubles that of the same period in 2010. Cao Guowei, CEO of Sina, said that: "Presently, the expenditure of Weibo is still increasing".
Improving stickiness, from style to content
For Weibo service providers, there is a profit pattern to follow. First, gather popularity, then increase stickiness, and eventually capitalize on the stickiness through value-added services. In terms of style, the UI of Weibo users are carrying more and more services: album, video, music, games, Micro-Mall, Micro-groups, Micro-interview, and Micro-disk.... Through the 140-word window, Weibo service providers are trying to create more value. Liu Yunli, general manager of Sina's Game Department, suggests that on Sina's Micro-games, a Weibo game platform, "the highest daily settlement is RMB 500,000 Yuan for a single game, and the top monthly revenue of a single game is RMB 4 million Yuan".
For Weibo, whose main selling point is creating and sharing of contents, the key to retain users lies in its contents, particularly authoritative information that is closely related to the daily life of internet users. In this regard, Weibo service providers' shifting from featuring celebrities' Weibo accounts in 2010 to highlighting Weibos about government affairs and people's livelihood in 2011 seems very natural.
According to Sina's statistics, there are currently 18,132 Weibo accounts of government agencies on Sina's Weibo site, with Guangdong's government Weibos increasing at a monthly rate of 32.5 percent. On Tencent's platform, Shanghai Government's News Office joined Tencent's Weibo in November 2011, attracting 270,000 followers in 2 days, and its first Weibo was forwarded by 13,000 internet users. On December 20, Hubei People Weibo Service Department, as China's first province-level Weibo aggregation platform for people's livelihood and governmental affairs, joined Tencent's Weibo, bringing more than 400 Hubei government agencies' Weibo accounts to provide service to Tencent's Weibo users. Li Yuxiao, deputy chief editor of qq.com, said on the "2011 Tencent Weibo People of the Year Award" held recently that Tencent currently had 18,500 Weibos of government affairs, and that "government Weibo will remain Tencent's long-term strategy" in the future.
Integration with portals, expanding marketing platform
Zhang Chaoyang, chairman of the board and CEO of Sohu recently announced the industry's first "Weibo Copyrights Protection Convention", implementing the Weibo Writers Contract System starting from January 1, 2012. Sohu will commission a professional team of lawyers to provide legal services against behaviors that infringe the copyrights of contract writers, and support and promote intellectual products, such as books and videos that are derived from the writers' Weibo contents. Zhang Chaoyang said that one important reason for this is that "Sohu will make use of the strength of its entire media platform to develop Weibo".
In China, the Weibo business is led by main portal sites. For them the commercial values of Weibo lie in: first, increasing user stickiness by opening their platforms and expanding contents; and second, expanding their marketing platforms through integration of services and increasing their overall revenue by breaking the segmentations between their existing services, such as news, video, blogging, and even e-commerce.
Tencent's partnership with CNTV (China Network TV) is a case in point. Tencent suggests that it will bring its open-source Weibo system, Qzone, and search engine to carry out full-scale mobile business collaboration with CNTV, and make use of its social networking, entertainment, and payment products to help CNTV to establish a compound interaction system that integrates Weibo, network socialization, real-time searching, video interaction, and paid downloads. Liu Chun, chief editor of Soho.com, suggests that in Sohu's Olympic Strategy in 2012, Sohu will combine its video report and Sogou pop-up windows with its Weibo that has a large number of users, to conquer the market with an integrated "Sohu +" strategy.
