About this Blog

The purpose of this blog is for my personal use. It serves as my personal diary as I investigate Chinese internet/gaming companies for investment purpose. If you have any comments or disagreement, please give me feedbacks.

Thursday, December 20, 2007

China Mobile and Sohu are top two Olympics brand in China

My last Olympics related post can be found here:


Just came across this news today.


According to a Baidu's report, China Mobile is number 1, Sohu 2nd, Lenovo 3rd, and Samsung is the 4th most respected Olympics brand.

Others like Mcdonalds is 15th, Adidas 18th and Microsoft can't even crack the top 20.

Baidu compiled the report based on four categories, press coverage, government help, individual users’ respectability, and composite score. The final composite score is a composite of the first three scores.

China Mobile is number 1 in both press coverage and government help. It is the 2nd most respected brand by average individual Chinese.

For Sohu, it has a composite score that gives it the number 2 ranked company regarding Olympics. It is only number 5 in both press coverage and government help. But its strength comes from the average Chinese users. Overwhelming individual Chinese users regard Sohu as the number 1 most respected brand with respect to Olympics. That catapults Sohu into the number 2 ranked company in China (regards to Olympics).

For Lenovo, it is number 3 in all three categories. Thus it gets a composite score of the 3rd ranked most respected Olympics related company in China.

According to the Baidu report (can be found in http://2008.baidu.com), among all internet sites and portals, Sohu did a much better job in brand awareness for Olympics-related activities.

Sometimes, research reports from China can be deceiving or can be paid for by individual company. But I think this is different. Baidu is a direct competitor to Sohu (through Sogou), there is no reason for Baidu to pump Sohu's success. Thus, I believe the authenticity of this report.

As we get closer to Olympics, average Chinese users will gravitate toward the brand they respect and trust the most and that is Sohu (in Internet) and China Mobile (in Wireless). I think we are going to see acceleration in ad revenue from Sohu as the Olympics gets closer. Sohu is going to grab market shares from the likes of Sina, Netease, QQ, and Baidu. In the wireless area, we are probably going to see the same thing. That is China Mobile is probably going to gain more market shares from its competitors.

For the first three quarters in 2008, we are probably going to see some shift in favor of Sohu and China Mobile.

Tuesday, October 9, 2007

NTES announced the delay of XY2 to XY3 players’ migration

About 8 hours after my last post (which can be found here: http://chinese-net-gaming-stock.blogspot.com/2007/10/netease-will-start-to-develop-xy2-again.html ), NTES announced that the players migration will be delayed.

NTES’s link is below:


From my last post, I predicted that the migration will still occur, but it will happen at a much later date. I was right! 8 hours after I posted my predictions, NTES announced that the player migration from XY2 to XY3 will be delayed and will happen about 6 months from now. The migration will not be mandatory. The player can choose to migrate to XY3 or stay at XY2. But the migration will only happen once. XY2 will continue to be in operation even after the migration.

It will be interesting to see the progress of both games in the next few weeks. I would expect some major game playing features additions for XY3 in the next couple of weeks. Both XY2 and XY3 will probably consolidate many servers while adding new servers at the same time. It will be interesting to follow the server statistics for both games.

Monday, October 8, 2007

Netease will start to develop XY2 again

My previous post on XY3 can be found from below:


Previously, NTES had said that they will stop the development of XY2 and devote all their effort on XY3. Now they have changed their mind and will start to develop XY2 again. From the following article, NTES will start to develop XY2 again.


I will translate the article below:

1. NTES will consolidate servers.

2. NTES will completely modify the gang warfare systems.

3. NTES will develop new tasks and plots.

4. NTES will develop new playing environment and play areas.

5. NTES will develop new playing PvP features (Players vs. Players)

6. NTES will develop the cross-servers battleground.

7. NTES will develop new gang-warfare features.

From reading between the lines, I think I can make the following observations:

  1. By consolidating servers, NTES is indicating that they will start to keep on developing XY2 and try to get the lost players back.
  2. Almost all the features they will be developing are geared for high-level players. It looks like they are not going to extend the players developments. As a result, I don’t think they will extend the maximum levels.
  3. Most of the features they want to develop are for those players who had already reached the maximum levels.

Frankly, it is a surprise to me. But I don’t think it means XY3 is a failure. Personally, from observing the servers statistics, I think XY3 is doing fine and is growing again.

I think it is probably the case that no matter how much you plans, there is always something new that will catch you by surprise. There are reasons why most game companies won’t do what NTES attempts to do with the XY2 to XY3 transition.

When a XY2 player character is being transitioned to the XY3, he automatically becomes a high level (for example, level 160) player. But at this point, XY3 development team only developed up to level 100. If NTES forced XY3 development team to develop all the plots and tasks needed for the players to get to level 160 in such a short time. It most likely means substandard products.

Based on the observations I have, my speculation is that the XY2 to XY3 transition will still occur, but it will probably not be any time soon. They will probably develop XY3 slowly and methodically to the high player levels. But for the mean times, a lot of existing XY2 players are sitting on the side line playing other games and waiting to get transitioned to XY3, NTES want to get these players back.

NTES will get these players back by adding new PvP contents to the old XY2. On the other hand, NTES won’t increase the maximum players’ levels of the XY2 much (thus it won’t force XY3 to increase their maximum players’ levels).

Another advantage of keeps on developing XY2 is to make XY2 closer and closer to XY3. One of the major complains of the XY2 players is that XY3 is too different from XY2. Rather than developing the XY3 closer and closer to XY2 and going backward, now NTES can develop XY2 closer and closer to XY3. In 6 months or 1 year, when the XY2 is substantially close to XY3, a lot of XY2 players will be willing to transition to the new game.

It will be safe to say that, for the near term (the next 6 months), XY3 won’t be on the same level of the XY2 at its maximum height. However, it is entirely possible that the combination of XY2 and XY3 would have more players than the old XY2 during its apex.

I will have to carefully observe the server statistics in the next few weeks to see the following trend:

Will XY2 grow again? Will XY3 continue to grow?

Thursday, October 4, 2007

Chinese Internet Pinyin Input system War Status

The last time I talked about this subject is all the way back in April 2007. The 2 parts article is as follows:



That was when Google got caught with their hands in the cookie jar. Sohu developed a Chinese Internet Input system called Sogou Pinyin. Google stole their technology and was caught.

At the time, I thought Sohu shall make a big deal out of it and even go to the length of suing.

Sohu did try to make a PR battle to milk their product.

But surprisingly, they didn’t push for Sogou search engine. They pushed the Sogou Pinyin system.

It seems they valued Sogou Pinyin system more than they valued Sogou Search engine. That really puzzled me.

First, we all know how much profit a great search engine can bring. Secondly, the Pinyin system is going to be free. There is no way Sohu can ever charge for it.

In addition, there is no way you can put ads on it. Users wouldn’t tolerate it.

Interestingly, both Google and Tencent seem to believe in this type of product.

Google Pinyin method is continually being worked on. Actually, Google is doubling their effort to coming out with patches and upgrade to make their product better.

Now, Tencent is going to come out with their QQ Pinyin soon. From the early reviews, it is clear that Tencent had spent a lot of effort to develop this product.

Sohu is continuing developing the Sogou Pinyin. They just came out with the version 3.0 final beta. The final version should be out any day.

The following is a link of a comparison review between the Sogou Pinyin v3 beta and QQ Pinyin Beta:


The result is really not that surprising. QQ is an excellent product considering it is brand new. Actually, it is not even a version 1.0 product. But still, it is behind Sogou Pinyin in pretty much every aspects.

I can’t find any survey on this segment. But from anecdotal evidence, it seems it is a two headed horse race between Sogou and Google, with Sogou Pinyin (possibly significantly) ahead.

But QQ Pinyin could be a big threat to Sogou Pinyin. As the dominant instant messaging platform, QQ Pinyin could be on every computer in China by default.

For Sogou Pinyin to stay ahead, Sogou have to have functionalities significantly ahead of QQ Pinyin for average users to stick with Sogou.

Finally, why are all these big shot companies spending so much effort on a product that would never make any money?

I don't really know. But I can speculate...

First, it has some tangential benefit. A user might want to customize the Pinyin so it includes individualized characters (such as his or her name), his preferred skin, etc. To do that, the user has to get a Sohu user name and password. This Sohu user name can then used across all Sohu products (Sohu’s PC games, Sohu websites, etc.). Thus, it become easier to use other Sohu products. That is, the Pinyin method become a gateway for a new user to use Sohu's other products.

Since it is required (at least highly preferable) that users is connected to the internet, who is to say that the characters the users typed in are not being send back to a Sohu database. In addition, who is to say that these Pinyin system won't send where the users being back to a Sohu database (it might actually provide some useful functions to the users. As more information is sent back to the company's mainframe database, it allows for the predictive alogorithm to more accurately customize for that particular user. It might result in more accurate prediction of what the users might type later).

A database like that could be extremely useful to a company like Sohu because it gives them a snapshot of the behavior of the Chinese internet users. In addition, if they want to sell these information (as long as they don’t keep track of individual user’s behavior), I think it will be an extremely profitable business.

Again, the above is purely my speculation. This input system war reminded me of the browser war between Netscape and Microsoft back in the 90s. Microsoft won that war, but they never really monetize the Internet Explorer. It will be interesting to see who will be the winner of the Chinese input system war, whether the winner can monetize the product, and how can it be monetized?

Tuesday, October 2, 2007

Status on TX2

My previous post on TX2 is as follows:


On 9/25/2007, to celebrate Chinese moon festival, TX2’s design team gave a 12 point brief description of the new TX2.

As you remember, TX2 was in the middle of open beta before it is yank back into development again. The chief designer was replaced and the whole development team had been revamped. From what I understand, a lot of old team are still there, but they added many new members.

The link to the new info on TX2 is as follows:


I attached the original text in Chinese and my translation as follows:











新的灵兽系统主要是将坐骑作为一个长期陪伴玩家游戏的宠物存在。它不能帮助玩家战斗, 但可以给玩家强力的属性加成,甚至是新的技能,给玩家快速的移动,还可以通过级别的增长带来外形的不同变化,甚至还可以牵着自己的灵兽到处遛遛和别人的坐 骑比拼一下谁的比较华丽。想象一下,你将一个灵兽蛋慢慢的孵化、喂养,最终成为了一只可以自由飞行的全身战甲的神兽或者全身被云雾笼罩的仙兽,伴随你在大 荒世界中四处与妖魔战斗,这个过程的体验将会非常有趣。至于我们将开放的灵兽数量暂时卖个关子,不过大家可以放心的是绝对有足够丰富的种类供大家选择。


城市战争在二测开始时暂时不会有,因为这次调整涉及大量底层内容的调整例如装备结构、 经济系统、任务系统等,所以我们会将势力相关的多人玩法放在这些基础内容稳定以后再放出。请大家相信,光是这些基础的个人玩法都能够大家玩上很长一阵子 了。紧接着还会有资料片等等内容。我们有了一测时候多人玩法所积累的经验,不日我们再次推出的势力、团队玩法一定会让大家满意的。










2.其 实大家所关心的风格问题不用太多担心的,开发组不会将天下贰变为外国游戏,例如大家所谈到的一些使用了某某元素很像哪国的东西等等,在游戏制作中更多的考 虑是游戏性,世界上的元素全部变成了可创造和利用的对象,但绝不以为着我们走向西方了。在天下贰中大家看到的还是我们本土的文化和感人的大荒故事。














本帖最后由 不见长安 2007-9-25 17:07 编辑


The following is my brief translation:

  1. Skill systems will be completely reworked, especially the close-combat system.
  2. The storyline will be completely rewritten. There will be tremendous amount of tasks in the storyline.
  3. Talks about the pet, horse, or other animals. Some may be able to fly.
  4. There will not be castle siege during the open beta. Shortly after the commercial operation, there will be an expansion pact. Castle siege system won’t be ready until after that.
  5. The biggest change from the current (1st stage open beta) system is the economy system.
  6. Talks about the life skill system.
  7. Talks about how to use mouse and keyboard for game control.
  8. The game is reworked with the latest version of Bigworld engine, version 1.8.
  9. It will give more chance for the users to use different types of clothes.
  10. Player characters will have more facial animation.
  11. The special emphasis is on game engine resource optimization. Every piece of software code was written with this in mind.
  12. Expect (hope) to have the 2nd stage of open beta by the end of the year. There will be a short close beta before that.

If you recall from my previous article:


I mentioned that NTES shall give the new TX2 designers 9 to 12 months to revamp the game. If the new TX2 goes open beta at year end, that means commercial operation around February. That will be about 9 months, as I had hoped.

The old TX2 is centered around gang warfare and castle siege. I said it would be a niche game. I said I hope the TX2 could be a WOW clone instead and thus cater to the main stream players.

From above, the castle siege won’t be ready well into commercial operation. The new TX2 will have a complicated and novel like main storylines. In addition, TX2 will have many side quests. From the way it goes, it does seem like they are positioning TX2 as a WOW clone. Again, they are doing what I had hoped.

I am a little surprised that they are reworking the game engine. I didn’t think they would have enough time. That is a lot of work for such a short time.

One big problem they faced before is that the game was too computer intensive that only players with fast computer can play. This is clearly the emphasis for the new TX2 development. This basically means the whole computer code have to be revamped. Together with the new game engine, hopefully, they can solve this problem once and for all.

Because this problem is mostly caused by the fact that the player computer needs to reflect thousands of players movement, two other factors that would help the new TX2. One year later means more players will have more updated computers. In addition, as TX2 adds more side quests. These side quests are basically just single player game in disguise and will not contribute to players congestion.

A side benefit is that now the players can have vastly different equipments and costumes. A fantasy world of 5000 players with 5000 different costumes is much harder on the computer than a fantasy world of 5000 players with the same costume.

It was one of the major complaints by the players that they can’t have many choices of character costumes. Now, it looks like this will be fixed.

From the way the design team is going, it has the making of a major game. China needs a WOW-clone. It looks like TX2 is going to be one.

Now, the only thing that can set TX2 back is that it will most likely be a paying game. With all the free-to-play games on the market, life will be very unforgiving for a paying game.

The next 6 to 9 months is going to be the make or break time for NTES. They just came out with a major expansion pact for XYQ. XY3 just went into commercial operation. Most likely before the end of the year, XY3 will start the XY2 to XY3 conversion.

Then, by the end of the year, TX2 will go into open beta with commercial operation 1 to 2 months afterward. TX2 will be positioned to compete directly with WOW.

By about the same time, we will probably see NTES’s first free-to-play game, Fly for Fun 2 (FF2). Most likely FF2 will go into open beta and commercial operation in the late 1st quarter 2008.

In the 2nd quarter 2008, we would most like see the open beta for the next NTES’s major game, DT2.

It won’t surprise me that by the 2nd half of next year, we will see NTES with 3 or 4 major hits.

By the way, there are major news on XY2 and XY3. I hope I will have the time to write them up in the next few days.

Thursday, September 27, 2007

CNNIC 2007 Search Market Survey

My previous article on search is regard to a search market survey done by CIC. The link is as follows:


CNNIC just release its 2007 Search engine survey. It is their third years where they did this survey. I don’t have all the information yet. But the main summary can be found here:



I compile the data into 3 tables. The first table is the people’s first choice for the search engine in both 2007 and 2006:

1st Choice
























The second table compile the Brand Awareness data for each search engine. Note that I only have 2006 data. If anybody have the 2007 data, please let me know.

Brand Awareness
















For this survey, they break down the cities they surveyed into three tiers. The following table gives the breakdown of Baidu vs. Google for the three tiered cities:

1st Tier Cities

2nd Tier Cities

3rd Tier Cities









If we compare this result with the survey done by CIC, there are some interesting points that can be made:

Baidu – For both surveys, Baidu is getting stronger (69.5% for CIC and 74.5% in CNNIC). The search engine war in China seems to be over.

Google – For the CIC survey, users loss seems to be stabilizing (from 24.1% in 2006 to 23% in 2007). But the CNNIC survey indicated continued major users loss (25.3% in 2006 to 14.3% in 2007). The possible explanation is that CIC survey only pools the 1st tier cities. The user loss may have stabilized for the 1st tier cities, but it accelerated for the 2nd and 3rd tier cities.

Yahoo – Major user loss as indicated by both surveys. For CIC, it went down from 5.2% to 2.3% . For CNNIC, it went down from 4.8% to 2.1%. For the CNNIC, it had went down to the fourth search engine, behind Sogou.

Sogou – Again, there is a discrepancy by both surveys. For CIC, there is a major user loss, it went down from 3.2% to 1.8%. But for CNNIC, the user base has basically stabilized. It went down from 3.2% to 2.8%. A possible explanation is that users in the 1st tier cities has stop using Sogou. But that is countered by more users from the 2nd and 3rd tier cities started using Sogou as their first choice.

Others - Soso and Sina uses Google’s search engine. Ntes’s Yodao may be too little too late.

Summary – It looks like the search engine war is basically over, and Baidu is the winner. It has to be a humiliating defeat for Google. There is always a place for an English search engine in China. But the day for Google to challenge is basically over.

It is basically game over for Yahoo. They have to be the biggest loser for this year’s search engine war.

For Sogou, they don’t seem to be doing that bad. They may have jumped up to the third place. But it is not much of a price considering they are only 2.8%. But I still think they may have one last hurrah left, next summer’s Olympics. If they keeps on putting man powers to develop their search engine technology and build some new features only for the Olympics related search, they may be a good position to grab some users next summer. For example, if they can convince Chinese users that they have a 5 or 10 minutes advantage for Olympics related scoreboard or stories, many Chinese users will give them a shot. Besides, China’s internet is so big, there are places for three search engine to exist.

For others, the game is basically over. It may be too little too late for Ntes and Tencents.

Wednesday, September 26, 2007

Quick update on XY3 and XYQ

My last article on XY3 and XYQ can be found here:


As I predicted, XYQ’s new expansion pact was released on 9/25/2007. See the following link for the official announcement:


On that date, the number of searches on Baidu went up by more than 100%. However, it was not reflected on the server count the same date. It is to be expected since 9/25/2007 is a Tuesday. Again, this is another demonstration that Baidu's statistics only tell us about the amount of curiosity. It is really the server count that matters.

The upcoming National day holiday would most likely tell us more, but I do expect a nice pickup. The timing is perfect for this release of XYQ expansion pact.

For XY3, I am starting to become confident on the longevity of this game. During this weekend, in preparation for the upcoming National day holiday, XY3 is going to add 7 new servers. They are going to add 3 on the upcoming Friday and 4 on the coming Sunday. It will make the total server counts 138. The official link is as follows:


I had seen the estimate of 50% to 60% retentions rate from open beta to commercial operation for XY3 from quite a few wall street analysts. I never think it is possible. It might be true 2 or 3 years ago. But ever since the flood of free-to-play game in the market in recent years, it will be lucky for a paying game to achieve a retention rate of 20%.

For XY3, my rough estimate is about 30%. It might disappoint a few wall street analysts, but I consider it a good start.

But most importantly, NTES is adding tremendous amount of new content and the game is growing again.

At this point, XY3 has 131 servers. But it is NOT a 131 server game. It is really a 70 (my rough estimate) server game. There are two types of servers, open beta servers and local servers.

There are about 115 open beta servers. These are the servers that are open since open beta. These servers (except for a few) are dying. These servers have enough players that they could be consolidated into roughly 50 healthy servers.

Then, there are the local servers. Most of these servers are opened after the commercial launch. There are 16 in total. They are basically full most of the date and NTES can’t add enough local servers fast enough to meet demand.

The 7 new servers NTES planned to add this weekend are of course the local servers.

Therefore, at this point XY3 is a solid 70 to 80 servers game. Just for comparison sake, XY2 has 273 servers and XYQ has 430 servers.

But XY3 is growing. Most importantly, it has a major ace in its sleeve, the conversion from XY2 to XY3 hasn’t started yet.

XY2 is a game with 273 servers. It is a game with a PCU of 592k. It is an old game (> 5 years). For every one current player, there are at least 10 older players who no longer play the game. The amount of players who had played XY2 is tremendous.

Every one of these players, older or current players, have play characters in XY2. They can all be converted into XY3 and becoming high level players instantly in XY3.

At this point, the design team in XY3 is adding tremendous amount of content every week so XY3 is complete enough and with good play balance so the conversion can take place.

It will probably be one to two months before the conversion can take place. But when that happens, we may be talking about a quantum jump of double or triple in size.

Tuesday, September 25, 2007

Sina starts pay book club

Recently Sina had started to charge fees for services that are free for most Chinese websites. They are going to start putting advertising on their blogs. They are starting to charge for European soccers. They are starting to monetize for legal music download. Now, on 9/21/2007, they are going to start charging people for viewing e-books and e-novels. See the following link:


The link to Sina books is as follows:


On the top part, there are two links, one goes to the free books and another one goes to the books that requires fee. If one clicks the link that goes to the free books section, one would get the following:

As you can see, there are 33419 books that are free to be viewed. Another interesting point can be drawn is that most of the most popular books in this section are the erotic books. The most popular free book has 171.992900 million clicks.

If one click on the link that goes to the books requires fee, one would get the following:

There are 178 books that only paying members can read. At this point, since Sina just started this service, there aren’t large numbers of title yet. Most of the titles in this section are Chinese KuFu novels. The most popular title has 4.848329 million clicks.

At this point, I don’t think Sina will make much out of this service.

It is interesting to see that Sina is going against the common perceptions. E-books, Songs, and videos (European Soccers) are easily pirated product. Sina seems to make a calculated decision that the time is right to go against the established trend.

If China does get serious in combating piracy, Sina will be in a great position to be in the dominating position. Or maybe Sina will find a way to make money by using modified form of e-commerce. Either way, I am sure Sohu and Ntes are watching carefully.

Wednesday, September 19, 2007

China’s Internet Market Survey

On 9/17/2007 – China IntelliConsulting Corp (CIC) published the survey results based on users in three of China’s most important cities, Beijing, Shanghai, and Guangzong. The result speaks well for Sina and of course, Sina is all over this news.

The link is as follows:


The result is more clearly shown in the following link:


For the search market,

9/2006 9/2007


















For the portals:


















The following article gives the name recognition of the search engine


Search Engine Name Recognition






























First, the result gives a snapshot of the users preference for the three cities in the east coast. There maybe difference between the cities in the east coast and west coast. But more importantly, this survey doesn’t take into account of rural population.

In addition, some “independent” survey is not very independent at all. But I don’t know CIC and therefore can’t verify whether it is biased or not.

A quick summary:

For the search market:

Baidu is doing really well. Google went down from last year but went up from 6 months ago. All the smaller search engines are getting smaller.

For Sogou, it may have an extremely small market share (1.8%), but it does have a very large name recognition (27%). It may not be the 1st choice for many users, but it is probably the 2nd or 3rd choice for a lot of users.

It strikes me that Baidu is really running away from the field. Google is a very distant second. Yahoo and Sohu’s Sogou may have a fighting chance to survive if the top two stumbles.

For the portals:

The result shows that Sina is increasing its distance from Sohu. The numbers for Sohu’s other properties (such as 17173, Focus, Chinaren, etc.) are included in Sohu’s number.

It is a little surprising in that Sohu had been pretty hot recently. Again, if rural population and west coast cities were included, Sohu won’t be fairing this badly. Sina had a reputation for users with higher education levels. Thus, it will have an inherent advantage for this survey.

But the trend is confusing as well. A possible reason could be that Sina had its blog, youtube, TV stations ready a good 6 to 9 months earlier than Sohu. Sohu just started these services and it hasn’t catch up to Sina’s head start yet. In addition, the effect of the Olympics hasn’t been felt yet.

In summary, Sina and Baidu have to be declared the winner at this point. Google is making a small comeback. But Google is not able to take market share away from Baidu. For Yahoo, it has to be disappointing in both Search engine and portal. For Sogou, it needs to keep on updating its technology and user friendliness. It still has an ace in his hand, the Olympics. For all other search engines, it maybe too late for them. Netease’s new search engine is still not out yet, but it may be a few years too late.

For the portals, Sina is sitting pretty. Its head start in coming out with blog, youtube, and TV stations, give it a competitive advantage. But Sohu has all of these now. In addition, Sohu seems to have an inside track on the Olympics. The game is not over by any means. Netease got to develop these web2.0 and video functions if its still want to stay in the game. China can support three major portals. Both Sina and Sohu are here to stay, if Netease screws up, then another will take its place.

Monday, September 17, 2007

Sohu – Video – TV stations opened

In April this year, I did a 6-part articles on the state of video development for China’s major portals. That article is here:


On 9/6/2007, Sohu started Sohu TV:


The link to Sohu TV is at:


Again, I am not able to capture the moving video in the screen capture. But the one being circled are the TV stations. If you click on one of them, you would get the following:

The left hand side has the TV stations, the middle is the TV program, and the right hand side is the schedule for the particular TV channels one is picking.

At this point, Sohu had signed up 49 TV stations. Most of these TV stations are also present for the similar service provided by Sina.

It seems to me that Sohu has more TV channels.

The good thing about these TV channels are that because they uses P2P technology, there are virtually no overhead.

Unlike these embedded video that requires lots of servers and bandwidths, P2P technology uses users’ PCs and phone lines.

For very little money, Sohu is getting a lot out of these TV channels. At this point, there is no ads present. It will be easy for Sina or Sohu to put some text ads on top or bottom of the video window. But to be real effective, Sina and Sohu had to figure out a way to take out the original TV ads and insert their own ads. (I am sure the TV stations will be fine with that as long as they got a cut of the revenue). But that is probably a year or two from now.

At this point, as far as the number of video products are concerned, I would say Sohu is now on par with Sina (if not more). But I am sure Sina is busying adding more contents, it will probably a two headed race.

Both of them have full function blogs. The blogs are anchored by a you-tube like service. The combination of blogs and you-tube videos give both Sina and Sohu a competitive advantage to China’s blog companies and China’s you-tube companies.

Sohu and Sina’s TV channels will take a large byte out of programs like PPstream or PPlive. If Sina and Sohu can keep on signing up more domestic TV channels (especially the big one), they will probably dominate the video aggregator business.

This development further confirmed my belief that both Sina and Sohu will start to mutate into a fundamentally different type of companies.

I can foresee that after the Olympics, both companies will mutate from a text based companies into a video based companies. It means the cost of entry will be so high, it will be extremely difficult for other competitor to get in.

As a video company, it will attract ads from more types of companies.

As they become the content providers, they will hold tremendous leverage in the upcoming 3G mobile phone contest. China Mobile might want to be a monopoly and kill off all the middle men, but it doesn’t generate contents.

Both Sina and Sohu had a lot of unpleasant experience in being a Wireless Value Added Service (WVAS) provider. It will be extremely difficult for WVAS players to survive, but as original content providers, and with the start of 3G in China next year, Sina and Sohu can re-enter this field with a bang!

In addition, by combining both the blog and you-tube like services, as well as other services such as photo album, music boxes, etc, both Sina and Sohu will probably starts to kill off all the blogs companies and you-tube companies in China.

These will eventually represents two new areas (blog and you-tube) of growing revenue sources.

As Sohu TV and Sina’s TV channels start to fill up, both will start to act like TV/Video aggregators. A user in Shanghai can watch Shangdong TV or Guangdong TV through Sina or Sohu. Eventually, the ads for traditional TV’s will start to go to both companies. Again, another new growing revenue source.

Finally, for the S and V channels for Sohu and SinaTV, these self-generating TV channels gives both Sohu and Sina the ability to generate TV program contents themselves. They are starting the movie and TV production studio. If some of the shows are successful, they might even be able to sell these shows to the traditional TV companies.

As both companies starts to mutate, it needs a grand entrance to show off all the new capabilities. What can be grander than the 2008 Beijing Olympics?

2008 will be a great year for both companies because of Beijing Olympics. But I think the Beijing Olympics will serves as the showcase for both companies. As more companies (through Olympics) start to realize that both Sina and Sohu had become truly multimedia companies, the real exponential growth will start in 2009.


A test for now