Visits of Baidu entertainment exceeds 10 million
According to the latest data from iUserTracker, monthly visits of Baidu entertainment reached 10 million since its launch in Jan, 2008. Users of Baidu entertainment are mainly of young people with low incomes.

The launch of Baidu entertainment channel can increase the traffic and meet young users requirements. But has little contribution in attracting ads. According to iResearch, Baidu will improve user experience to make entertainment channel an important one. And advertisers haven¡¯t realized media value of Baidu entertainment channel yet.

iUserTracker- User Structure and Behavior of Baidu Entertainment and Financial Service in Feb. 2008

According to the latest data from iUserTracker, since the launch in Nov, 2007, monthly visits of Baidu financial channel maintains at 2 million. Its users are mainly aged over 36 with high education level and high incomes, which helps financial channel to attract many advertisers, especially advertisers in financial, insurance, automobile and real estate industries.

iResearch believes that the launch of Baidu financial channel is to attract users with high consumption power. User stickiness is the key point for Baidu financial channel. Monthly viewing duration of Baidu financial channel has exceeded 3 minutes by now.

Services for young users bring traffic

Young users are fantastic in entertainment news and can bring large number of visits. But these traffics are of low business value, and lack of proper profit model is needed.

Services for users aged between 25 and 35 are stars

For users aged between 25 and 35, who are regarded by advertisers because of high consumption power, Internet is their first media at office. These people are in an important stage of life and pay much attention in work, real estate, marriage, parenting and shopping. New medias should improve information of above industries to increase user stickiness and attract more advertisers.

Services for users over 35 are of great potential

Users over 35, who are of high incomes, don¡¯t frequently use new medias. But services they are interested in are of high business value, such as financial, trade, travel, health and luxury.

Business Value of Users by Age for New Medias

Fierce competition in user scale
As the transaction keeps fast growing, competition in user scale is also very fierce. According to Alipay, there user amount has reached 58 million in 2007, and tenpay¡¯s user amount exceeded 30 million. Since the policy is not clear now, all third-party service providers are doing all they can to expand user scale and lay strong foundation for market.

User stickiness needs more recognition
iResearch believes that in addition of user scale, user stickiness also needs to be improved. According to the latest data from iUserTracker, a continuous netizens behavior monitoring software, of all the financial services, financial news service was high in terms of unique visitors, monthly visits per user and viewing duration. The user stickiness is high. User stickiness of services like online payment and online assurance are low comparatively.

From comparing user stickiness of all online financial services, It is obvious to find that online payment service¡¯s user stickiness needs to be improved. The third-party payment market competition will become more rational in 2008. At the same time of product innovation and service quality improvement, expanding user scale and improving user stickiness have became the most important problems for domestic third-party payment service providers.

Winning factor changes from scale to service
According to iResearch, when user scale reaches a certain level, user loyalty, user activity and product reputation will play more important roles. As the growth of transaction volume and user amount, user management and custom service quality became important in long term. Judging from the recent market dynamics, Alipay has renamed its customer center to customer satisfaction center. The winning factor of third-party payment market is changing from scale to service.

Snowstorm and Spring Festival pulled down visits to C2C

Visits to C2C decreased 55.7% to 904 million. Spring Festival is the low season of C2C service. And the snow storm before Spring Festival leads to the logistics paralysis. The dual impact of snowstorm and holidays leads to the decline of monthly visits of C2C.

Financial news service is gradually weaken

Monthly visits to financial news decreased 24.6% to 1.81 billion. According to data from iResearch, visits to financial news keeps increasing in 2007, as the result of prosperity financial market. Monthly visits reached 2.64 billion in September, while the number is only 1.02 billion in January. But the stock market entered a period of adjustment. The public concern to financial market also declined. So visits to financial news decreased to 1.81 billion in February.

High season of online recruitment is coming

Monthly visits of online recruitment increased 15% to 243 million in February. According to data from iUserTracker, high season of online recruitment is in March and October to December. The coming of high season leads to the growth of visits to online recruitment during Spring Festival. iResearch believes that visits to online recruitment will have a greater growth in March.

According to the latest financial results of Ctrip, total income reached 383 million RMB in Q4, an increase of 10.7% sequentially, or 58.3% YOY. The total income keeps increasing in 2007, and the annual income increased 54.1% YOY to 1.29 billion RMB.

Balanced room reserving and ticket booking business

According to the annual report, iResearch found that 51.2% of Ctrip¡¯s income was from room reserving business, while 40.3% was from ticket booking business. All the other businesses only covers 8.6% of its total income.

According to iResearch, room reserving business is Ctri¡¯s main source of income, but its share decreased from 57.0% in Q4, 2006 to 51.2% Q4, 2007. Share of ticket booking service is increasing gradually and reached 40.3% Q4, 2007.

According to latest data from iUserTracker, total visits reached 86.12 million Q4, 2007, almost the same as Q3. iResearch believes with the impact of Spring Festival Travel Season, visits will continue to increase in Q1, 2008, while the growth rate will slow down because of the snow storm.

Sina’s income from online advertising increased 43.2% YOY to 50.1 million dollars. Meanwhile, online advertising income occupies 70.9%, instead of 47.5% in Q1, 2006, of Sina’s total income, which pushed Sina’s online advertising income increased 41.5% to 169 million dollars in 2007.

Income from wireless value-added business decreased slightly with the impact of change of mobile operators’ polices and increase of marketing cost for IVR.

Looking over Sina’s structure of total income, it’s easy to see that online advertising is the main reason for its growth of total income. According to iResearch, the development of Sina’s online advertising business mainly due to following two reasons:

Increase of advertiser amounts

According to latest data from iAdTracker, an online ads monitoring system from iResearch, Sina’s advertiser amount increased significantly, which directly promotes the performance of Sina’s online advertising business.

iAdTracker data shows that Sina’s advertisers mostly concentrated in real estate, automobile and IT product industries. Advertisers from these three industries accounts for 64.1% of all Sina’s advertisers and in keeping growing. Besides, advertisers from financial service, food and decoration industries are increasing rapidly.

Increase of traffic and user stickiness
iResearch believes that the large amount of loyal and sticky users is one of the main reason for the growth of Sina’s advertiser amount. The latest from iUserTracker shows that main channels’, especially blog’s, financial news’s and IT news’s, viewing duration is increasing steadily. iResearch believes that the increase of viewing duration reflects the increase of user stickiness. Increase of traffic and user stickiness provided a solid foundation for Sina’s online advertising business.

According to latest data from 2007-2008 China Online Banking Industry Research Report to be released by iResearch, China online bank transaction reached 24580 billion RMB in 2007, that’s an increase of 163.1% sequentially.

Active financial market promotes the development of personal online bank
Enterprise online banking transaction, which increased 157.6% to 23000 billion RMB in 2007, accounts for over 90% of online banking transaction. However, personal online banking is also remarkable. According to iResearch, personal online baking transaction increased 284.6% sequentially to 1580 billion RMB.

iResearch’s study shows that the active financial market has great impacts in personal online banking transaction. During the past two years, the stock market has accelerated the development of personal financial market including funds, notes, stocks, which obviously increased personal online banking transaction. Thanks to the market opportunity, banks improved their products and services, as well as security. All these factors made personal online banking transaction increased much faster than enterprise online banking. iResearch estimated that share of personal online banking transaction will increase steadily and is expected to exceed 10% in 2009.

Opening up of domestic financial market will intensify online banking competition
According to data from iUserTracker, a continuous netizens behavior monitoring software, netizens are paying more attention to online banking service. Online banking user amount keeps growing quickly in 2007. The popularity of online banking service will attract more concern and investment from both domestic and foreign banks.

By interviews with experts, iResearch found that developing online banking business has became an important strategy of most commercial banks. Banks increased investment to online banking business because of its low-cost and convenience. Besides, the rapid growth of China’s e-business and online payment industry also accelerated the development of online banking business.

Meanwhile, with the cancellation of regional and business restrictions to foreign banks, foreign banks development in China has entered a new stage. Online banking, as an advantage business to domestic banks, will achieve rapid growth with its advanced products and services and became a strong competitor.

Paid search keeps its market share while image ads declined

Image ad, which accounted for 45.3% of Chinese online advertising market is the main online ad form in Q3 2007, while paid search ranks the second, keeping its share. Image ads and paid search occupy 72.5% of the market, while text link ads, rich media ads, classified ads, email ads and video ads remains relatively low market share. According to iResearch, market share of image ads will decline and paid search¡¯s market share will increase next year. The gap between the two leading ad forms will be narrowed and their leadership will not be threatened in short term.

Since Q1 2006, market share of image ads, text link ads and classified ads trends to be decline while market share of paid search and rich media ads trends to be increase. In Q3 2007, YOY growth rate for Baidu and Google, the two main search engine in China, are both over 100%, becoming a bright spot in China online advertising market. YOY growth rate for three brand advertising based portals, Tencent, Sina and Sohu, were stable at 80%, 30% and 20%.

iResearch believes that the impact of golden week holidays was notable and the adjustment of Labor Day Golden Week next year will be bound to impact the development of online travel booking market.

Ctrip expands revenue share and Mangocity accelerates development
Ctrip continues expands its market share of revenue, reaching for 57.0%, while eLong’s market share decreased to 13.8%. Some smaller operators, such as manggocity, gained rapid growth relying on abundant tourism resources.

According to iResearch, online travel booking is closer to traditional industry compared to other internet industries and has more demands of offline resources.

Adjustment of Golden week impacts online travel booking market
After studying the market size and operators development, iResearch thinks that air ticket, hotel reservations and holiday, especially long-term holiday, products booking increased significantly during Golden week. In 2008, shorten of Labor Day Golden Week will have great impact to operators relies heavily on long-term holiday products, especially abroad travel products. Their revenues will be decreased due to the adjustment. While to the whole industry, the adjustment will decrease the revenue proportion of holiday products. And the air ticket and hotel booking market will be more monopoly.

iResearch advises that Chinese online travel booking operators adjust their product subject, enrich short-term products to face the adjustment of Labor Day Golden Week. According to iResearch, though the adjustment of Golden Week will have certain impacts to the whole industry, operators still have a buffer period to optimize product structure and improve profit ability due to the coming of Olympic Games. Generally, China online travel booking industry will maintain a steady and rapid growth.

Users of 19-40 years old with junior college or above degrees are more concentrated in e-commerce services. And user Profile differs among different e-business services:

Females favor C2C while males favor B2C
Of all the e-commerce services, female users are more preferred to C2C platform and online ticket booking. Contrarily, male users are more preferred to B2C and B2B platform.

C2C users are younger
Most concentrated users of C2C platform are those aged between 19 t0 30. The older, the lower the TGI value is. While 36-40 years old users are more concentrated in B2C and B2B platform, with the TGI value of 105 and 109.

B2C Users are of higher education level than C2C users
Of all B2C users, TGI value increases with heightening of education level. Users with master or above degrees are the most concentrated. On the contrary, C2C users are mostly of high school and college degrees. Users of online ticket booking are also with high education level. The TGI value of users with master or above degrees reached 168.

Sales are most concentrated in B2B platform
Teachers are concentrated in B2C services, the TGI value reached 112, while sales are more concentrated in B2B platform, with a TGI value of 120.

According to data from iResearch’s ‘Online Game Quarterly Report Q2, 2007′, the market size for online game was 2.65 billion and the biggest 5 companies’ income accounts for 72.6% of the market. Now there’re about 150 companies in online game industry in China, with 5 million revenues a quarter on average. Although the situation is grim, opportunity still exists. Compare with more than 10 million netizens, there’re only 100 million online game users, so online game market has great potential.

Since there’re for Kingsoft in the field of application software and Kingsoft has successfully developed and launched JX online series, iResearch believe that developing online game business is the best choice for Kingsoft.

Kingsoft doesn’t form a core competitiveness in online game yet

According to Kingsoft operation and products, iResearch believes that Kingsoft is strong in innovation and research and development capabilities while weak in operation capability. Kingsoft once said that they would learn from Nintendo to develop popular games and attract users do not play games. With this concept, Kingsoft launched CO online which was easy to operate and became a successful game for new players. But the game lacks of core competitiveness to attract players to stay. Unengaging tasks and boring conversations make the game a common one.

Although quality is a flaw for Kingsoft’s development, but the biggest constraints is its operation capability. iResearch advised that strengthen operation team is the first problem to be solved after IPO.

IPO provides fund for expanding R&D team

Kingsoft said that fund will be used for software personnel recruitment and strategic acquisitions after IPO. Considered of experience and profit, online game will still be the core business after IPO, but the research love knot and lack of operation capability restricted Kingsoft. So iResearch believes that the fund from IPO will be used to game development and the possibility of buying games is rare.

To sum up, Kingsoft is transferring to game operation company from a software company. From business and income distribution structure, online game business is important to Kingsoft. To some extent, without online game business, Kingsoft would not IPO successfully.

Kingsoft will focus on online game business after IPO. In the fierce competing industry, Kingsoft is not in inferior position in technology. iResearch advises Kingsoft to strengthen its operation team building and marketing service to form 2-3 core products.