Rumor: Sina will IPO its Weibo division early next year (9/22/2013)

One can find my last Sina related news here:

Last Sina related article

There is a rumor today that Sina will let its Weibo division go on IPO early next year. The following two articles talks about it:

Article 1 (in Chinese)

Article 2 (in Chinese)

I don't know how reliable is this rumor. But those two web sites are somewhat reliable.

If this is true, this will be great news considering that Twitter is going to IPO. Sina could probably get a good reaction from Wall Street by hopping on Twitter's coat tail.

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China's 3 Telecoms vs. Tencents, part 2. It doesn't look good for Tencents

One can find my last post on this subject here:

My Last Post

Well, it is not looking good for Tencents and its awesome killer application, WeChat. Today, the head of the Ministry of Industry and Information Technology (MIIT) of China gave hints that he is going to charge money for users who uses WeChat.

See the following article (in Chinese):

MIIT Minister Interview

In the article, the minister of MIIT gave the typical politician double talk on the subject. He said that " It is reasonable for the Telecom operators to charge WeChat users money. But we have to make sure there is no monopoly situation and to protect Tencents."

MIIT is the foremost government agency for this area. Unless, Tencents can convince the Premier or the President, it is looking more likely that Tencents is going to be forced to charge users fees for using WeChat.

Note that it is entirely possible that the telecom operator can develop similar product but won't charge users money (or gave discount rate), it could meant the end of WeChat.

I am not predicting the end of WeChat. But Tencents is definitely in for some struggle.

For Sina, it could meant a great opportunity to cut into Tencents lead in this area.

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China's 3 Telecoms vs. Tencents, part 1. Is Tencents in trouble?

In the past two years, two significant developments occurred in China's internet industry. One is Weibo by Sina and another is WeChat by Tencents.

Both introduced incredible functions and are revolutional to both the online and mobile internet. This article is about Tencent's WeChat.

WeChat is the closest thing to Facebook in China. It is probably the only thing developed by China that is unique (Sohu's Sogou Pinyin Input system is another, but that is in a different league).

It is getting even hotter than Weibo. But Tencent's WeChat might just hit the nerve of entrenched government state own companies.

WeChat started in online internet. Since China's online industry is largely private, competitors can only defeat WeChat by providing better products. None is successful so far. But as WeChat starts to branch out to the mobile world, it gets right up to the state monopolies and their government friends.

The three Chinese mobile state own companies are China Mobile, China Telecom and China Unicom. When WeChat starts to expand to the mobile internet, it starts to gobble up products (Wireless Value Added Products) sold by the three state own companies. The three telecom companies are not happy. But they are not good at developing new products. However, they are good at conducting monopolistic practices.

There are a lot of rumors recently that talked about how the three companies are going to attack Tencent's WeChat. Some article below:

3 Telecom operators vs. Tencents

I don't have time to go through all the rumors (which I think are trial ballons floated by the 3 telecom companies). But one most hideous approach is to force Tencent's to pay the three telecom.

Imaging two companies competing. Company A built a superior product. Company B is not capable. But Company B has "connections". So Company B force Company A to pay Company B some money any time a user uses Company A's product.

I though even in China, this is too much. But I guess not. Today, an official from NDRC said, in an official news article, that WeChat shall charge users money.

Now, this is significant. NDRC is National Development and Reform Commission and it fall directly under the State Council. State Council is the administrative organ in charge of all internal affair in China. It is headed by Premier (China's number 2 guy).

The article where the NDRC official said that WeChat shall not be free:

People Daily article

At this point, Tencent's Wechat is in a very dangerous place.

This might also affect Sina's Weibo. But for Weibo, it could go either ways. If the Telecoms leaves Weibo alone, it might just give Weibo a chance to expand into WeChat's space. Then Weibo would truly be a super product (it is already a super product). But if Telecoms wants to target Weibo, it could also spell trouble for Sina. But overall, I think the chance of Telecoms attacking Weibo is very low because the nature of Weibo itself (it is hard to write Weibo messages from mobile phone).

Tencent has powerful friends itself. So this is not the end of it. I will follow this since this could complete change the landscape of China's internet industry.

end.

Sina starts major Weibo advertising

My last post on Sina is here:

My last Sina post

Sina had been trying to make money from Weibo. But so far, it had proved to be hard going. It made 21.3M from Weibo in the last quarter. It is not insignificant, but considering how much influence it had, it is pitiful.

Sina had some brand advertising on weibo. On the right hand side of Weibo, it had some advertising. But most users completely ignore them. People go to weibo to read messages. But if Sina can make advertising as part of the message, it could make tons of money.

From the following post:

Sina to start promoted news fee advertising

Starting today, 3/15/2013 , Sina is going to start the promoted news feed advertising system. The cost will be CPM = 5 RMB per thousand impressions.

By 3/18/2013, average Weibo users will be seeing these ads.

This is a high risk high reward move. This will disrupt Weibo users habit. They will get to see a lot of messages that they didn't want. Worst yet, Sina's Weibo has a strong number 2 player right behind it, the Tencent Weibo.

If Sina doesn't play this right, it could lose it all to Tencent.

On the other hand, if Sina doing it right, then this will be the start of real major monetization.

I don't know what is the right way to do it. Netease seems to figure out how to manage high risk high reward maneuvers. 4 or 5 years ago, when NTES wants to upgrades its number 3 game XY2 and transition to XY3, it forced players to migrate to XY3. Players revolted and NTES relented. It kept both games and vast majority of players stayed in XY2 (even though XY3 is a much better and more modern game).

Recently, NTES increased the gaming fee of its number 1 game and number 3 games, (XYQ and XY2), as well as XY3, by 50%. Players revolts just as strongly. There is no explanation, no discussion with player representatives. NTES just pretended nothing had happened, except it now charge players 50% more. A month later, all player demonstration and revolt dissipated.

Clearly, NTES had figured out a way to truly gauge how much players are willing to suffer.

So far, I am not sure SINA had figure it out. In the next couple of months, I will check my Weibo account to see how disruptive is this new advertising system and how much does the users complain.

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