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.
On 1/21/2009, Analysys International published a survey on the most popular video and audio web sites for China』s internet café users. The article can be found here:
The following plot list the market share of all the major video web sites for China』s internet café:
From the above plot, one can find the market share number for all the major web sites:
Todou: 46.8%
Youku: 44.3%
56: 10.2%
Ku6: 9.0%
QQ Video: 7.5%
Tencent Broadband: 5.1%
6: 4.2%
Youtube: 3.3%
Sina: 3.2%
Sohu: 2.1%
Analysys Internation also performed the survey for the most popular music web site frequented by China Internet Café users:
From the above chart, one can get the market share data for the major music web sites:
Bidu Music: 57.4%
QQ 163: 16.6%
Sogou Music: 12.8%
Gougou Music: 11.8%
From the above survey results, one can make some observations. For videos, it is basically a 2 horses race. Todou and Youko dominates. Tencent is coming on fast. Its two services (QQ video and Tencent broadband) together accounts for 12.6%. Since it is being pushed by its powerful QQ internet messaging service, there is no doubt its market share will keep on climbing.
Youtube is a non factor in China. China』s other portals, Sina and Sohu, are also non factors.
But I don't think China』s video war is over by any means. Running a video sharing web site is very costly business. At this point, no video web sites are making money. Given the global financial crisis, those non portal players are vulnerable for bleeding cash too fast. It will be interesting to see how this battle play out.
For the music business, Bidu dominate because it is the dominant search engine in China. Tencent is doing well because its can use its powerful QQ internet messaging service to push any services it wants. Sogou music search is strong because it has very good reputation among Chinese users.
I don't know much about Analysys International. I had seen quite a few survey results from Analysys on various subjects on China』s Internet industry recently. I would like follow their surveys to see if their surveys are accurate.
The following is the survey result from Analysys International:
One can find the revenue and year over year growth rate in the following plot:
From the above plot, the revenue and YoY growth rate for 2008 can be listed:
1Q2008: 2.11084 billion and 54.5% growth rate
2Q2008: 2.80750 and 73.5%
3Q2008: 3.343 and 72.4%
4Q2008: 3.543 and 67.3%
If their survey is correct, we shall be seeing an incredibly strong 4Q2008 advertising revenue for SINA, SOHU, NTES, FMCN and BIDU.
Note that we have Olympics for the 2Q and 3Q. The 4Q2008 survey results are almost on the same level as those Olympics quarters. Even assuming 4Q2008 is a normal quarter, it is an amazing survey result. Now, considering that 4Q2008 is when the global financial crisis occurs, this result is a little hard to believe.
We will see how this survey results stack up when China』s internet companies report their 4Q2008 results.
The following is a survey for 2008 China』s search market. It is from Analysys International. What is interesting is this is published before any companies published their 4th quarter revenue. Therefore, we can calculate BIDU's revenue estimate based on this survey. One can find the survey in the following:
The following graph list the revenue and year over year growth rate for China』s search market:
From the above graph, the total revenue for 4Q2008 is 1.52577 billions rmb. It had a YoY growth rate of 62.2%.
The next plot has the market share data for all the search engines in China
I will list the data below:
BIDU:62.2% (was 59.3% in 2007)
Google: 27.8% (was 23.4% in 2007)
Yahoo: 5.8% (was 11% in 2007)
Sogou: 0.9%
Zhongsou: 0.9%
Sina: 0.4%
Ntes: 0.4%
Soso: 0.6%
Others: 1.0%
Now, we are able to calculate the Bidu 4Q2008 revenue.
The total search revenue for 4Q2008 is 1.52577 billion. We have an exchange rate of 6.842 as of today. Bidu's market share is 62.6%. Thus, Bidu's 4Q2008 revenue is 1.52577*0.626/6.842 = 0.13871 = 138.71 millions in US dollars. This is the search revenue. Bidu typically adds 0.2 millions for others. Therefore, the total revenue is 138.73 million for 4Q2008.
The 4Q2007 revenue was 78.3 millions. Therefore, the 4Q2008 revenue of 138.7 millions represents a 77.1% YoY increase.
Yahoo finance site's analysts' estimate for the 4Q2008 is 132.48M. See the following:
Therefore, from this calculation derived from Analysys International's survey, we shall see a nice revenue surprise.
Now, in terms of overall search market, Bidu is doing very well. So is Google. Yahoo is losing ground badly. Everybody is basically at a noise level.
At this point, it is a race between 2 horses. I think the race is almost over. Others are just too far behind to catch up unless there are other factors at work. But I do think that 「other factors」 are going to be online soon.
I think there are two dark horses. One is Tencent's Soso search engine. At this point, soso uses google search. Therefore, Tencent is not pushing this service hard. But Tencent is developing its search engine. Once it is developed, it will be pushed by Tencent's powerful QQ IM service.
Another dark horse is the Sohu's sogou search engine. Sohu didn't push its Sogou search engine during the Olympics because it has a much more powerful weapon at its disposal. That weapon is called Sogou Chinese Input Pinyin method. That weapon is ready now and the battle is starting. I will spend some time talk about this exciting new development.
But other than these two dark horses, I think the search war in China is basically over.
