Investors in China's tech sector will struggle to stay in their seats this week amid a flurry of earnings announcements in the online games and e-commerce sectors.
Back-to-school season is a tough time for China's online game operators because students are on the move and their attention is scattered away from World of Warcraft raids into less scintillating subjects like algebra. Therefore, game analysts expect to see some seasonally light September user growth numbers among the big operators this quarter.
We haven't talked about online multiplayer games in a while, so here's a quick recap. There are basically two revenue models in China: online game operators have traditionally maintained subscription accounts for players, who recharge periodically using cheap, time-denominated cards purchased from Internet cafes. This is the revenue model with which watchers of Vivendi's (V) Blizzard Entertainment's World of Warcraft (WoW) phenomenon are familiar. Several big online game operators, led by Shanda Interactive Entertainment, Ltd. (SNDA) have more recently moved their aging games to a free-to-play model, sustaining the games' popularity and allowing operators to sell "virtual items," which enhance game play -- and which can be just as addictive as the games themselves.
Shanda is due to announce quarterly earnings on Thursday. Analysts believe that Shanda's recently launched Archlord game is bringing new users to its platform, as well as providing a new venue for players who are leaving Shanda's older games like World of Legend, which was one of the earlier online games to hit China and is still one of the most popular. Investors will also look for evidence of a recovery from Shanda's wandering strategic plans, which have led the company into an awkwardly-executed entertainment console foray, at the expense (some say) of its pipeline of future licensed game content.
Rival operator NetEase.com, Inc. (NTES) will report earnings on Monday. NetEase is notable for developing its major games in-house; extending the profitability of hugely popular games likes Fantasy Westward Journey and the still kicking Westward Journey 2. Relieved of the burden of Hollywood-esque licensing fees for game content, NetEase enjoys the flexibility to invest in its own R&D, with varying results (NetEase's recent Datang game has been kind of a flop). NetEase also operates the healthy Internet portal business that, in a previous life, made the company a dot-com star. The recent trending-up of advertising expenditures in China is leading investors to look more closely at NetEase and other portals like Sina Corp. (SINA), Sohu.com Inc. (SOHU) , Baidu.com Inc. (BIDU) and a host of upstart community-based sites.
The9 Limited (NCTY) , of course, operates WoW in China. In fact, that's really all the company does, so far; almost 100% of the company's revenue is derived from this global juggernaut. Last week's rumors about The9 possibly acquiring online music game site 9you were either an indicator that The9 is looking to put some of its cash to work diversifying its revenue base (which would be a good thing), or an obvious ploy by 9you to bolster its valuation hopes in the lead-up to its rumored Nikkei IPO, by cuddling up to the hottest operator in town.
And never underestimate Hong Kong-listed Tencent Holdings Ltd., operator of the omnipresent QQ instant messaging platform. Also the subject (on both sides) of more or less constant acquisition rumors with the likes of 40% Yahoo!-owned ( YHOO) Alibaba and eBay Inc.'s (EBAY) China unit, Tencent operates the online games QQ Fantasy and HX Online, both of which are top games by virtue of their connection to QQ. I keep waiting for Tencent to start selling cars or microwaves or something (at which they would no doubt succeed, as with everything else), but perhaps they are too smart for such silliness.
TOM Online Inc. (TOMO), like Tencent, has a good sense for what entertains China's Internet users. Like many of the more successful sites, tom.com focuses on pop entertainment, music, celebrity gossip, sports news, shopping, etc. TOM seems to be pretty handy with cross-promotion, having recently launched, for example, a concert tour of college campuses that is integrated with its online music platform and its mobile music services.
When Tom announced Q2 results they also guided down for Q3, based on projections of significant negative impact from new China Mobile Ltd. (CHL) policies that restrict the wireless services on offer from Tom and other portals and specialists. But there is some evidence that the impact of the new rules has not been quite as painful as expected, and investors have also seen Tom's advertising revenue from its Internet portal grow rapidly in recent quarters.
Career site 51job, Inc. (JOBS) and dominant online travel site Ctrip.com International, Ltd. (CTRP) will also report earnings this week. Following the recent acquisition of 25% of Zhaopin.com by Australia's Seek Ltd., most of China's Internet job search sector is spoken for. 51job, 40% Monster Worldwide Inc. (MNST) - owned ChinaHR, and a raft of startups in the career services space will duel over users and advertising revenues as their businesses develop over the next few years, but the surge in young Internet population and a tight employment market leaves plenty of room for a few big players.
Source:佚名