The following is another interesting article from Iresearch detailing the important market segments in the fast-growing China internet ad market.
http://www.iresearchgroup.com.cn/html/Consulting/online_advertising/DetailNews_id_71983.html
2008年1月1日 星期二
3Q 2007: China Internet Ad Market
Iresearch has a very telling article on China's internet ad market growth stats during 3Q 2007. The takeaway from this research report is that sponsored search is growing fast and accelerating. It has the highest growth rate (yoy 100%; )eventhough it is still just 27% of the entire pie vs. internet banner ad market share of 45%. Sina and Sohu's market share of the entire China internet ad market is shrinking as sponsored search market growth lead by Baidu(100% growth rate) accelerate and QQ is gaining banner ad market share with an astounding 80% growth rate during 3Q 2007.
Link to Iresearch article.
2007年7月1日 星期日
Sohu's Sensational Comeback
On last Friday, June 29, 2007, Sohu's stock price reached a new 52-week high, at $31.99 PPS, up $1.85 or 6.15%. Sohu's 52-week stock chart looks awesome now, going from $25.79 to $31.99, or 24% one year return.
For longer term, over the last 2 years, Sohu's stock price has gone up from $21.94 to $31.99, or 45.80%, or for a 23.00% average annual rate of return.
It is time for some perspective and ask some interesting questions if you missed the Sohu boat or if you happen to be still on the Sohu. Below is what a fellow investor asked.
Sohu game driving stock? (Not rated) 1-Jul-07 07:56 am
Author: drugsman12 on Yahoo Finance
I wish i had never sold. I used to be most loyal sohu shareholder. But was too scared to hold because of falling market share and piss poor conference calls that offered no hope. 3 bad earnings reports later and stock is 35% higher. Looks like the theory of selling into Olympics will turn out to be a good one.
Reply:
The take-away lesson learned here is to focus on long-term prospects (i.e. Sohu's exclusive sponsorship to 2008 Beijing Olympic), rather than short-term quarter-to-quarter profit and PPS. Sohu's management, specifically CEO Charles Zhang, has significant (27%) ownership in the company. Therefore, management's interest is aligned with the interests of shareholders. If you are a patient long-term and visionary investor, you should see that Sohu is sacrificing short-term profitability for the benefit of long-term shareholder value as well as sustainability and competitiveness of the company. You don't have to look any further than Sohu's list of acquisitions and initiatives to be able to tell that Sohu management is hard at work to do just that.
Acquisitions:
1. Chinaren.com - China's No. 1 Alumnus Network, ala facebook,
2. 17173.com - China's No. 1 online gaming site
3. Focus.cn - China's No. 2 real estate website
4. Goodfeel - China's leading WAP
5. Go2Map - China's leading online mapping service
6. 21 East - Software solution for online music content and distribution management
Internal Development:
1. Sogou.com - Search Engine with 4.6% market share
2. Tian Long Ba Bu - Sohu internally developed MORGG; consitently ranked top 5 downloaded online game since its open beta launch in May, 2007.
3. Sogou PinYin - very successful Chinese character input system.
4. Sohu Blog - has 10 million registered users
5. Sohu Web 2.0 - Sohu passport that connects Chinaren, Sohu email, Sohu photo, and Sohu blog.
6. Sohu media player - provided online video during 2006 World Cup and will provide services for Sohu's Olympic game video delivery and Sohu video blogging product.
7. Sogou's Super Girl Singing competition- expect another event this November.
In conclusion:Sohu management is hard at work to plough back its profits and reinvest in its business for future growth through acquisitions and internal developments. In the long-run it will pay off in terms of increased market share, revenue, and profits. Always look at things in perspective and for the long-term (2 to 5 year horizon)
Author: drugsman12 on Yahoo Finance
I wish i had never sold. I used to be most loyal sohu shareholder. But was too scared to hold because of falling market share and piss poor conference calls that offered no hope. 3 bad earnings reports later and stock is 35% higher. Looks like the theory of selling into Olympics will turn out to be a good one.
Reply:
The take-away lesson learned here is to focus on long-term prospects (i.e. Sohu's exclusive sponsorship to 2008 Beijing Olympic), rather than short-term quarter-to-quarter profit and PPS. Sohu's management, specifically CEO Charles Zhang, has significant (27%) ownership in the company. Therefore, management's interest is aligned with the interests of shareholders. If you are a patient long-term and visionary investor, you should see that Sohu is sacrificing short-term profitability for the benefit of long-term shareholder value as well as sustainability and competitiveness of the company. You don't have to look any further than Sohu's list of acquisitions and initiatives to be able to tell that Sohu management is hard at work to do just that.
Acquisitions:
1. Chinaren.com - China's No. 1 Alumnus Network, ala facebook,
2. 17173.com - China's No. 1 online gaming site
3. Focus.cn - China's No. 2 real estate website
4. Goodfeel - China's leading WAP
5. Go2Map - China's leading online mapping service
6. 21 East - Software solution for online music content and distribution management
Internal Development:
1. Sogou.com - Search Engine with 4.6% market share
2. Tian Long Ba Bu - Sohu internally developed MORGG; consitently ranked top 5 downloaded online game since its open beta launch in May, 2007.
3. Sogou PinYin - very successful Chinese character input system.
4. Sohu Blog - has 10 million registered users
5. Sohu Web 2.0 - Sohu passport that connects Chinaren, Sohu email, Sohu photo, and Sohu blog.
6. Sohu media player - provided online video during 2006 World Cup and will provide services for Sohu's Olympic game video delivery and Sohu video blogging product.
7. Sogou's Super Girl Singing competition- expect another event this November.
In conclusion:Sohu management is hard at work to plough back its profits and reinvest in its business for future growth through acquisitions and internal developments. In the long-run it will pay off in terms of increased market share, revenue, and profits. Always look at things in perspective and for the long-term (2 to 5 year horizon)
2007年6月6日 星期三
Sohu's TL is Ranked High for the 3rd Time in 3 Weeks!
Sohu's Tian Long Ba Bu(abbreviated as TL) is clearly catching fire! TL, with 534,179 downloads, is ranked number 4 behind Netease's XYQ, with 572,293 downloads, on Xunlei's top 10 most popular download for the week ended June 3, 2007. Number 5 is Nine City's WOW with 487K downloads and Number 5 is Zheng Tu with 455K downloads.
According to Iresearch.com.cn, most of the top 10 popular download online games are old-timers from last year. TL, being a new 2007 MMORG, is the only exception. It is an indication that online game players' population growth has slowed and intense online game market share competition is starting among the new games and old games. Clearly, old popular games continue to attract more new players because switching cost is high and word-of-mouth effect, being a powerful tool for online games, clearly favors the dominant MMORGs, which have massive user base in the millions giving them tremendous first mover advantage.
2007年6月3日 星期日
Sohu's Narrowing the Gap with Sina
June 3, 2007. Sohu shareholders should be happy for the 1Q 2007 results. As it is the first indicator in the past 4 quarters that Sohu online brand advertising revenue is starting to narrow the gap with that of Sina.1st Quarter is seasonally a weak quarter because of Chinese New Year. Among the three portals, online brand advertising revenue for Sina and Netease all experienced declines. But Sohu's online brand advertising revenue grew during 1Q 2007 to $25,600 from 24,900 in the previous quarter, effectively narrowing the gap with Sina.
Now Sohu's online brand advertising is about 80% of that of Sina. From the beginning of 2007, Sohu has raised its advertising rate. More importantly, Sohu's exclusive 2008 Beijing Olympic sponsorship will have a strong positive effect on its efforts to capture a bigger share of the online advertising market as we get closer to August 2008. The value of Sohu's online brand advertising has been growing as advertisers begin spending more advertising money as the 2008 Beijing Olympic approaches.
All three portals in China will experience a higher rate of online advertising sales growth in the coming months. Sohu's exclusing 2008 Beijing Olympic internet sponsorship will strengthen its ability to capture a greater share of the online advertising market. At the same time, Sina online brand advertsing revenue will reach new heights as well to extend its solid leadership position and strong brand.
Shanda is going to buy Ask Tao?
June 3, 2007. Shanda Interactive (Nasdaq: SNDA) is considering to buy Ask Tao, a popular MMORG(http://www.iresearch.com.cn/html/online_game/detail_news_id_44731.html) to strengthen its online game research and development capability.
Asktao has a cumulative search total of 10 million since inception, according to Baidu Top game ranking. It has 650K PCU according to published numbers.
It will be interesting to know how much an online game property like this will be worth in the private market if and when Shanda buys it. It will provide a basis in evaluating how much Sohu's TLBB will be worth. BTW, I think if TLBB is commercially very successful, Sohu should consider spinning it off in an IPO. That way Sohu can raise the necessary capital to grow its business to the next level without suffering too much share dilution. It will also create a way to help compensate the TLBB team adequately for the excellent job they did for TLBB online game.
Another recent development on the M & A front is the purchase of Hang Zhou Tian Chang by E-finet Group in Hong Kong. Tian Chang is the developer of 3-D online games, DaTang and DaTang Fantasy, neither is ranked in the top 50 online games by Baidu. It also has 3 other 3-D games in the pipeline. The deal was valued $20 million USD. http://www.iresearch.com.cn/html/online_game/detail_news_id_43983.html
2007年6月2日 星期六
How to Calculate TLBB's Peak Concurrent User(PCU)
June 2, 2007. Peak Concurrent User(PCU) is defined as the number of players simultaneously online playing a particular game at peak times. It is a metric used to determine the popularity of a particular online game. There are a lot of curious inquiries regarding what TLBB's PCU is since Sohu has not yet published the PCU for TLBB. So I will attempt to calculate it based on a set of assumptions as stated below.
Aproach A - Comparative Analysis using SUN's Published Numbers
To caculate TLBB's PCU, I think inception-to-date(Beta Tests) cumulative count of game searchs on Baidu is perhaps an accurate indicator of the level of popularity among game players.
From 4/4/2007 to 5/29/2007(the period during which TL first had a unlimited final closed beta test and then had an open beta test):TL had 2.31 million searches from Baidu.
From 4/18/2007 to 5/29/2007(SUN started open beta on 4/18; I don't have any search figure for SUN prior to its open beta):SUN had 2.09 million searches from Baidu. Based on the above, according to Baidu, TL's lead over SUN is fairly narrow, or about 13% more search than SUN.
Calculation:400K PCU claimed by SUN(http://sun.the9.com/news/main/index_2.shtml) multiplied by 113% is 452K PCU for TL game. Does my calculation sound reasonable? or is it too conservative. It depends on how accurate is SUN's claim for 400K PCU for its game.
Approach B - Using Server to Calculate PCU
The following factors come into play:
1. Number of servers
2. Maximum User Capacity per Server
3. Server Utilization rate during Peak Times
I would estimate as follows:
Number of server X Maximum User Capacity per Server X Utilization Rate = PCU
166 X 3500 X 65% = 380K
Finally, using the average of the two approach, I get 416K PCU for TL. Of course, my numbers are subjective because if I change my assumptions, I can get widely different numbers.
Below is an article on the Man behind Sohu's TLBB on 17173.com:
http://news.17173.com/content/2007-06-01/20070601211411732,1.shtml
Another article on Sohu's TLBB estimate from 17173.com
http://news.17173.com/content/2007-06-01/20070601181957573.shtml
An article on Sohu's TLBB esimate from a fellow Sohu investor:
http://chinese-net-gaming-stock.blogspot.com/2007_05_01_archive.html
Aproach A - Comparative Analysis using SUN's Published Numbers
To caculate TLBB's PCU, I think inception-to-date(Beta Tests) cumulative count of game searchs on Baidu is perhaps an accurate indicator of the level of popularity among game players.
From 4/4/2007 to 5/29/2007(the period during which TL first had a unlimited final closed beta test and then had an open beta test):TL had 2.31 million searches from Baidu.
From 4/18/2007 to 5/29/2007(SUN started open beta on 4/18; I don't have any search figure for SUN prior to its open beta):SUN had 2.09 million searches from Baidu. Based on the above, according to Baidu, TL's lead over SUN is fairly narrow, or about 13% more search than SUN.
Calculation:400K PCU claimed by SUN(http://sun.the9.com/news/main/index_2.shtml) multiplied by 113% is 452K PCU for TL game. Does my calculation sound reasonable? or is it too conservative. It depends on how accurate is SUN's claim for 400K PCU for its game.
Approach B - Using Server to Calculate PCU
The following factors come into play:
1. Number of servers
2. Maximum User Capacity per Server
3. Server Utilization rate during Peak Times
I would estimate as follows:
Number of server X Maximum User Capacity per Server X Utilization Rate = PCU
166 X 3500 X 65% = 380K
Finally, using the average of the two approach, I get 416K PCU for TL. Of course, my numbers are subjective because if I change my assumptions, I can get widely different numbers.
Below is an article on the Man behind Sohu's TLBB on 17173.com:
http://news.17173.com/content/2007-06-01/20070601211411732,1.shtml
Another article on Sohu's TLBB estimate from 17173.com
http://news.17173.com/content/2007-06-01/20070601181957573.shtml
An article on Sohu's TLBB esimate from a fellow Sohu investor:
http://chinese-net-gaming-stock.blogspot.com/2007_05_01_archive.html
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