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, April 30, 2009

Sohu: full speed into Internet Video – part 1. more IP protection in China

One can find my last post on the state of video industry here:

This is the first part of a 2 part article. From the above article, one can find the internet video industry is dominated by the young startups. The traditional portals such as Sina and Sohu can’t compete at all. Tencent fares better because it can rely on its powerful QQ instant massager to help push its new products. But still, Tencent is an also-ran.

But the real reason that the portals are not doing well is because the lack of IP protection.

From the following article:

While it is easy for the young startups to broadcast unlicensed video contents (TV, Movies), it is starting to be difficult for the portals to do so. Therefore, the portals are in a major disadvantage.

But China starting to emphasis IP protections for its own video contents. Many TV stations and movie studio in China are starting to enforce their own right, the petulant might have move to the side with more money.

In this case, the portals definitely hold all the cards. Sohu has more money than they know how to spend, it will benefit them the most. But Sina, Tencents, and Ntes can benefit as well.

In the above article, Sohu is busy buying up contents from Chinese TV stations and movie studios.

Again, this may be a case of great long term plus and short term pain.

The following more articles shed more lights on this subject. But it is late and I am not going to talk about them.

Sohu actually sued three Chinese internet video companies. Tomorrow I will talk about that in the second part of this article.

China's Internet Advertising Market Survey by Nielsen

You can find my previous article on the survey of China's Internet advertising market here:


I guess it that time of the season where all the survey shops come out with their survey result for the 1st quarter. Nielsen and ChinaRank jointly conducted the survey for China's Internet Advertising Market. One can find the article below:


I like this survey because it breaks out the month by month survey results. It can clearly show the trend. For March 2009, China's Internet Advertising market has revenue of $1.14B. That number is an increase of 61.6% year over year (YoY).

The following plot has the revenue by month from January 2008 to March 2009:

I will tabulate the data below:



































It is a little hard to believe the survey result for December 2008. I think that was too strong. But still, it is clear that there is a very drastic decline from 4Q2008 to 1Q2009. Within the three months of the 1Q2009, February 2009 was so weak you have to go all the way to a year ago to find one weaker. In addition, the data also showed that there is a very strong pick up in March 2009. There is an amazing 61% pick up from February 2009 to March 2009.

This survey results pretty much confirmed the other three surveys conducted by three other survey houses. We are probably going to see pretty nasty 1st quarter results.

On the other hand, even though it is still too early to tell, but tt will probably follows by a very strong V-shaped pick up in the 2nd quarter.

Addendum: Somebody mentioned that I interpreted the data incorrectly. The weakness of the 1st quarter was due to seasonality factor (i.e. Chinese New Years). Note that Chinese New Years occurs in February in 2008 and January in 2009. The logical conclusion shall be that the weakest one shall be on January 2009 because of Chinese New Year. But that is not the case.

He has a point. Seasonality has more of an effect than general economic conditions. If we use the year over year comparison, we will have an increase of +2.4% in January 2009, +18% in February 2009, and 46% in March 2009. I don't have the year over year number for the 4th quarter 2008. Therefore, it is possible that February 2009 is not the lowest point. It is possible that the lowest point was some month in the 4th quarter 2008.

Personally I still think February 2009 is the lowest point. But I don't have enough data to verify that.

But regardless whether the low point is on 4Q2008 or February 2009, what is not debated is that the March survey result indicated the start of an acceleration of revenue growth.

Wednesday, April 29, 2009

1Q2009 Internet advertising month to month update

One can find my last review on surveys of China's internet advertising market here:


The above article talks about results of 3 surveys. Today I find more details on one of the survey. That article provides month by month breakdown of the top 8 areas of China's internet advertising. I think that information is extremely important. One can find the article here:


One can find the plot below:

The above plot provides a 6 months trend (from October 2008 to March 2009) for the top 8 areas of China's Internet advertising market. The 8 areas are Internet Service, Transportation (it is probably Automobile), IT products, Real Estate, Fashion (Clothing), Stock Market, Communications (it is probably mobile phones), and Food and Beverage.

From the above plot, one can the general trend line. Starting out with October 2008 as the strongest of the 6 months shown in the plot, it has a dip in November 2008. But it follows with a strong increase in December 2008. It is followed by a very steep decrease in the next two months. February 2009 formed an absolute bottom. But then it is followed with a very strong pick up in March 2009.

There are some anecdotal evidences that April is even stronger. If that is the case, we probably had already passed the bottom of the V shape for China's internet advertising market.


A test for now