Online Video and SNS the Most Widely Used Applications on Smartphones in China; Services are Showing Encouraging Monetization Potential

Wall Street Transcript

67 WALL STREET, New York - May 14, 2013 - The Wall Street Transcript has just published its Internet Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Increased Mobile Content Traffic - Chinese Online Monetization Trends - Internet Infrastructure and Services Consolidation - Social Networking Economics -

Companies include: Sina Corp. (SINA) and many more.

In the following excerpt from the Internet Services Report, an expert analyst discusses the outlook for the sector for investors:

TWST: In which categories of Internet usage - IM, search, music, news, games, e-commerce, etc. - do you currently see the best opportunities in China? Which are the companies that offer the applications that Chinese Internet users want the most and therefore are positioned for growth?

Mr. Hellawell: The two areas that continue to evolve rapidly from a pure user growth stage to a platform monetization phase are online video and social advertising. Video viewing and participation in SNS platforms are two of the most popular activities on the Chinese Internet. Several platforms have built out highly engaging offerings over the past few years, boast very high engagement levels and are now monetizing very handsomely, usually through advertising.

Leaders in online video are Youku (YOKU) and Tudou, while successful players in SNS include Sina (SINA) and Tencent (0700.HK). These services are moreover showing encouraging potential as China's Internet access goes mobile. Video and SNS apps are amongst the widely used applications on smartphones.

TWST: You believe the traditional mobile value-added services business faces structural and cyclical challenges in 2013. What are the biggest challenges on each of those fronts?

Mr. Hellawell: The MVAS category, which China's Internet companies have broken out as a component of reported revenues over the past several years, are actually not the rapidly growing revenue sources that are driving many of the large Western Internet models in their latest growth spurt as their users expand smartphone usage.

They are instead largely SMS-based services, which have grown in the feature phone era over the past 10-plus years. The switch to smartphone usage has generally pressurized these business models as users come to favor apps usage and more...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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