SubscribeTencent to Acquire Comsenz?
There has been rumor on the market that Tencent will invest $10 million into Comsenz, the leading social softwares developer in China since May. It is said the new investment will take over the stakes held by Google China. Today, a report on Sina said Tencent will acquire Comsenz instead of just investment.
Comsenz, well known for its popular BBS software Discuz!, offers free full-range social softwares for hundreds of thousands of China’s small websites, including BBS, CMS, SNS, microblogging and other softwares. Why there are so many small BBS in China, one of the most important reasons is because of Comsenz and its Discuz!.
Why Tencent will be interested in Comsenz? To acquire Comsenz, Tencent can take advantage of broad user base of Comsenz, whose websites can potentially make a large-scale affiliated websites network, covering tens of millions of Chinese netizens. By working closely with Comsenz’s software, it can benefit Tencent’s new search engine Soso.com to compete with Baidu, and build an affiliation network for Tencent’s online ads. For Comsenz, working with Tencent will help to monetize traffics of those small websites.
It is reasonable for Tencent to make such investment. Actually, PHPWind, a head-to-head competitor of Comsenz has been acquired by Alibaba in 2008.
3 Reasons Why Tencent’s Qzone, the Largest Social Network in China, is a Failure
（This is a guest post by Kai Lukoff. Kai Lukoff is an analyst at BloggerInsight and an editor on China Social Games. Follow Kai on Twitter @klukoff. You can find more information on China Social Game at the end of this post. )
Qzone, “the largest social network in China,” and Tencent’s other SNS (QQ Campus and Xiaoyou), are failures for three reasons:
- Squandered Opportunity: Chinese internet giant Tencent was enviously positioned to dominate social networking, but blew its chance. QQ Campus failed. Xiaoyou is far behind the competition. Qzone does not reach any new demographics.
- The Site’s Design and Features are Lousy: The Qzone website is an unintuitive eyesore. Its applications are of poor quality and frequently inaccessible.
- Is Qzone Really No. 1? Tencent’s claim of 305 million active users is highly suspect; even its classification as an SNS is questionable. Its competitors are encroaching upon its core user base of young teens.
Does this mean Tencent will soon collapse? Absolutely not.
Qzone is Tencent’s “Windows Vista”
Tencent with Qzone is like Microsoft with Windows Vista: a near-monopolist that thrives despite a terrible product and lack of vision.
Microsoft remains massively profitable despite releasing a terrible OS and missing out on all the new innovations (mobile, mp3 players, search, and social networking) that its competitors have seized upon (Apple, Google, and Facebook). Microsoft suffered from a stifling, dysfunctional corporate culture.
Benjamin Joffe, Tencent expert and CEO of internet market research firm +8*, told China Social Games:
Tencent is definitely not the best in terms of products or innovation – similar to Zynga in that sense – but their ability to deliver a ‘good enough’ mass market service and integrating it within their ecosystem is impressive.
Tencent is certainly massively profitable: 2009 revenues, just announced, were 1.82 bn USD, though it’s unclear what portion of the “internet value-added services” is attributable to Qzone.
Like Microsoft, Tencent will continue to profit in spite of the junk it produces. But Qzone does dampen Tencent’s star, opens the door for its SNS competitors (RenRen and Kaixin001), and questions its corporate culture.
#1 Squandered Opportunity
Tencent’s had awesome resources for building a social network:
- Instant user base. QQ Messenger has 485 million active users, which Tencent uses to cross-promote new services, like Qzone, on young Chinese netizens.
- High brand awareness. QQ is the first introduction to the internet for most Chinese.
- Many complementary sites. QQ Games, for instance, could be beautifully integrated with Qzone, but is instead poorly slapped together.
- Regulatory environment experience. As an early internet giant, Tencent knows how to reach the right government contacts and manage user-generated content.
- Financial capital. Tencent has deep, deep pockets.
In addition, Tencent had long aimed to expand from its core demographic of young teens to include a more mature audience. Social networking was clearly the perfect chance to do so.
Despite all these advantages, Tencent squandered the opportunity. Qzone never gained an audience beyond young teens. Instead, RenRen, which completely copied Facebook (as Tencent also could have done), attracted the student demographic. Kaixin001 has snapped up the valuable white-collar demographic with a simple, user-friendly site.
Most damningly, even users who start on Qzone almost all “graduate” to the other networks. In September of 2008, Tencent finally tried to retain users with QQ Campus, which failed and is now shut down.
In June 2008, Tencent finally responded with the SNS Xiaoyou (classmates), but the site has virtually the same lousy interface as Qzone, except with a decent skin. The apps and games are even fewer and lesser than those on Qzone. The first five times I tried to join Xiaoyou, I was rejected because “The system is busy, please try again later.” Competent websites optimize splash pages to convert users; Tencent is clearly not concerned with such trivialities. It’s a fitting illustration of the embarrassingly poor quality of Tencent’s SNS properties.
“The system is busy, please try again later.” A warm welcome to Tencent’s Xiaoyou SNS.
In addition to Tencent’s failure to expand, anecdotal evidence suggests RenRen is encroaching upon young teens, Tencent’s traditional turf.
Tencent saw the social networking trend coming from across the Pacific Ocean, but still blew its chance. Tencent had all the advantages in the world, so resources were not the issue. The problem was Tencent’s poor execution and strategy.
Most Chinese internet experts likely disagree with my assessment of Qzone as a “failure” though, or at least with the degree of disappointment. Benjamin Joffe comments, “Considering Tencent is already reaching everybody with its IM service and Qzone started off as a blogging service, its revamping into a social network does not seem that bad… I am not sure what you would measure Qzone’s success or failure against, but in terms of reach it seems fine to me.”
Announcing ChinaMode Winners
After two weeks of public vote, ChinaMode Awards 2009 have received 121446 votes. We are now happy to announce the winners of the first ChinaMode Awards in each 7 categories.
- Best Internet Applications: Taobao, Google, Baidu;
- Best User-Experience Applications: Google Chinese search service, Sogou Pinyin Chinese Input Method, Alipay;
- Most Promising Applications: Google Music, Sina Microblogging, Douban FM;
- Best Mobile Applications: Mobile QQ, UCWeb, Fetion;
- Best Overseas Internet Applications: Twitter, GMail, Youtube; (a detailed analysis on this results on Mobinode）
- Tech Person of the Year: Kaifu Lee, Han Han
- Best BBS/Online Forum: Tianya.cn, Baidu Tieba, Mop
Since ChinaMode Awards are organized by 14 popular tech bloggers in China, it is possible that a high percentage of the voters are regular readers of these blogs, which can not represent the general profile of China’s netizens.
Douban Raised $10M in Series B
Douban, a symbol of web 2.0 services in China, announced its $10 million series B financing today. The new round is led by Trustbridge Partners, and co-invested by its existing investor Ceyuan Ventures, who invested in $2 million in 2006.
Douban started from a social networking sites for book lovers, movie lovers and music lovers in 2005, when hype of web 2.0 just began. When people talked about web 2.0 in China, they will talk Douban. Since its inception, Douban is always one of my most favoriate Chinese websites, and I’m also an active user of Douban. Douban’s newest major product development is the release of Douban Radio, which is an personalized online music streaming service powered by a recommend engine to tailor the music just for you. (You can check our previous reports on Douban here)
Currently, Douban’s main revenue source is online advertising, some big brands are Douban’s advertisers already. For Douban Book, it also gain revenues from affiliation with Dangdang, Amazon Joyo and other book ecommerce sites.
Congratulations to Douban and Bo Yang. I strongly believe that Douban can lead to something bigger.
[Event] Third Digital Future Symposium Beijing
The post is to introduce an event which our readers might be interested in. The post is drafted by the event organizer.
The Digital Future Symposium (DFS) is a highly successful event first launched in 2007 by the CENTRE FOR CONTENT PROTECTION (CCP). It has conducted successful events in Japan, Singapore, India and Malaysia. Every year, it attracts hundreds of key industry players in the field of content distribution and content protection.
Established in 2007, CCP is a consortium committed to shaping Asia Pacific’s digital future through innovative technologies that provide secure ways for consumers to enjoy anywhere, anytime access to their favourite movies and television programs.
This year, the DFS comes to China, Beijing, in a breakthrough event that aims to bring Chimedia content owners and distributors together to explore new business solutions and opportunities for digital distribution in China and the region.
It targets content owners, producers, technologists, content security companies, Internet businesses, academics, and anyone else in the media and technology industry.
The theme for this year’s DFS, to be held on 24th March at Novotel Peace Beijing, is “Technology, Internet and Content Business”. Major topics to be covered include Internet Distribution and New Media Business in China, Technology, Standards, and Content Protection.
All agendas, updates, and registration information are available at CCP’s website.
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- The Internet in China, whitepaper by Information Office of the State Council of China. http://is.gd/cSY3D
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