Microblogs battle in China

15 March 2011

BEIJING: Competition is intensifying in China's microblogging sector, with major players like Sina, Sohu and Tencent fighting for attention.

Sina unveiled Weibo, a site broadly similar to Twitter, in August 2009, and it has now reached 100m users, prompting suggestions it could be spun off into a separate unit.

"That's this company's engine, so it should be the focus, because for our company to grow, we have to focus on the future. I believe this is the future of the company," Charles Chao, Sina's ceo, told Forbes.

"I don't think we have a plan to spin off right now, but obviously we will do what is the best to develop this product, in terms of making it can grow faster independently going forward."

"So we do not have a plan to spin off, but obviously if we think this is in the best interest to unleash the value and also for that platform to grow better, then we cannot rule out that possibility in the future."

A recent enhancement to Sina Weibo is a geo-location tool, as originally pioneered by US firms like Foursquare, and adapted for Facebook Places.

"Weibo represents one of the top five most important web entities in China and with the mobile check-in service, we believe Sina is moving to control the real-time web in China," said Gene Munster, a senior analyst at Piper Jaffray.

Sohu, a rival online operator to Sina, is seeking to strengthen its position in this category, attempting to integrate news, dating and updates from celebrities to achieve such a goal.

"There is a real war of the microblogs going on," Charles Zhang, Sohu's chief executive, said in an interview with the Financial Times.

A key factor shaping the industry's evolution is that all the featured organisations are leveraging ideas from elsewhere, rather than generating new systems.

"The game here is completely different from the US. There, one company, like Facebook, would start a new business model and then another, like Twitter, would start something else," Zhang argued.

"But here, Sina copied Twitter first and then we all followed in copying. So there is no technological barrier."

An additional issue, experienced by Web 2.0 platforms well beyond China, is taking these free-to-use services into profit.

Zhang argued the three biggest sites will need to hold a roughly equal share of user numbers before successful monetisation occurs, and projected this event may happen in 2012 at the very earliest.

"Then, everyone will sit down and say, now let's make some money," he said.

Tencent, China's biggest internet specialist by market capitalisation, already runs a leading instant messaging portal, QQ, boasting 630m active accounts.

Its Tencent Microblog – a rebranded version of Taotao, which began beta testing in 2007 – can also claim over 100m users.

However, data reveals Sina's audience is typically more engaged than any other, as visitors generally dedicate greater amounts of time to browsing its pages measured against their counterparts.

"I believe Sina will probably be far ahead in the Chinese market in the future because it has made the microblog its core strategy," says Deco You, an analyst at iResearch.

"Tencent's microblog is little more than a roadblock meant to check Sina."

According to figures from the China Internet Network Information Center, 63m netizens, or 14% of the connected community, were using microblogs at the end of last year.

Data sourced from Forbes/Financial Times; additional content by Warc staff