INSIDE TENCENT WEIBO

0700.HK

TENCENT’S MICROBLOG

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Tencent Introduction

•  Tencent is one of the three dominant BAT (Baidu-Alibaba-Tencent) firms on the Chinese internet, with strong leadership in social and gaming.

•  Social: The glue of Tencent’s huge userbase are its social services, especially its dominant IM application, QQ Messenger.

•  Gaming: Tencent monetizes users via micro-transactions in games and other services.

•  QQ Messenger is the hub from which Tencent builds up its other products including games, search, portal, e-commerce, mobile, social networks, and microblog (Tencent Weibo).

•  Tencent’s QQ Messenger is China’s most popular IM software. Tencent claims that QQ Messenger has more than 674 million “active users”, although Analysys market research estimates that unique active users is closer to one-third of that number (~225 million).

•  Tencent (0700.HK) was founded in November 1998. As of May 2011, Tencent’s market capitalization was over $50 billion.

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“If Facebook is the world's social graph, then QQ is China's social graph.”

－Chinese IT Blogger Bo Hong (also known by the alias Keso)

Tencent Weibo: Another Spoke In Tencent’s Social Hub In US terms, Tencent’s social hub is as if AIM, MySpace, Facebook, and Twitter were owned by one company, and all cross-promoted and synced to each other. Tencent has “locked-in” a huge userbase via the social graph of QQ Messenger.

Tencent Pengyou (Real-name SNS)

Tencent Weibo (microblog)

QQ Messenger (IM)

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Qzone (Nickname SNS)

Tencent Weibo is another spoke on Tencent’s social hub. Whereas Sina Weibo is gaining new users for Sina, Tencent is primarily channeling existing users to a new service.

= Messages sync by optional setting

Service is accessible via a dedicated tab:

KEY

= Tencent Weibo

= Qzone

= Pengyou

= Messages sync by default

Image by

= Status updates by optional setting

Tencent Weibo is available inside of every one of Tencent’s major social products, indicating that it’s assigned top-priority

* Status updates + “shares” sync by default; photos + diaries are optional

*

External links

Tencent spins a tangled web of cross-promotion and syncing

Microblogging in China

Infographic Source: CIC Data (www.cicdata.com)

•  The first generation of microblogs in China (Jiwai.de, Fanfou, Zuosha, etc.) gained modest popularity but faced severe regulatory constraints due to the sensitive nature of media sites in China. Fanfou was shut down by the government for over a year.

•  It was not until Sina Weibo exploded in popularity in 2009-2010 that microblogging became a hot service in China.

Tencent Weibo Key Facts (March 2011)

•  Registered users: 160 million*

•  Monthly active users: 93 million*

•  Monthly posts: 10 billion*

•  40% of users register for Tencent Weibo accounts via QQ Messenger.

•  12 celebrities have over 10 million followers on Tencent Weibo (many celebrities are

pre-selected as accounts to follow by default)

•  Tencent Weibo is available inside of every one of Tencent’s major social products,

indicating that it’s assigned top-priority •  Post to Tencent Weibo: Via QQ Messenger, Qzone, and Pengyou

•  Read Tencent Weibo Posts: Via QQ Messenger, Qzone, and Pengyou

•  * = Activity on any Tencent social site is often synced to others by default, but the user is counted as active on both services.

User numbers therefore likely overestimate the true level of activity.

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2005.4 2008.6 2009.1 2010.4 2010.9 2011.1 2011.4

Qzone launched

as a blogging platform, primarily using nicknames

Qzone personal center launched (transformation towards a social network)

Xiaoyou launched, a real-name SNS for college students

Tencent Weibo

launched

Pengyou launched, a real-name social network open to all

Xiaoyou merged into Pengyou

Tencent Weibo reaches 160 million registered users and 93 million monthly active users

Timeline of Tencent’s Social Networks

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QQ Messenger was launched in 1999. Tencent has since used that application’s social graph and traffic to launch two social networks (Qzone and Pengyou) and one microblog (Tencent Weibo).

USERS: Sina Weibo vs. Tencent Weibo

Other major Chinese internet firms such as Baidu (NASDAQ: BIDU), Sohu (NASDAQ: SOHU), and Netease (NASDAQ: NTES) also have microblogs, but they lag far behind Sina and Tencent.

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Users: 140 million registered 160 million registered* 93 million active*

Demographics: Primarily white-collar urban. Elite-based, started with many celebrities and media figures.

Users drawn from Tencent’s userbase, so are tend to be from 2nd and 3rd tier cities and below.

User Acquisition: Primarily new users for Sina, though most users are familiar with Sina’s brand and portal site. Some also use Sina’s blogging platform.

Primarily existing users of Tencent’s other social services (QQ Messeneger, Qzone, Pengyou). Tencent Weibo may increase user stickniess for Tencent and fights off Sina otherwise poaching from its userbase.

Market share by users: (Dec 2010 iResearch)

57% 22%

Market share by browsing time: (Dec 2010 iResearch)

87% 9%

*Note: Tencent’s user numbers likely overestimates the true level of activity on Tencent Weibo

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Feature Comparison Launch 2009.08 2010.04

Open Platform 2010.07 2010.12

Weibo Groups 2010.12 N/A

Sync with MSN 2010.03 N/A

iPhone Version 2010.01 2010.05

Android Version 2010.01 2010.05

iPad Version 2010.10 N/A

IM Version 2011.03 2011.05

Source: Mirae Asset, iChinaStock Research

Neither Sina nor Tencent has yet figured out a very successful way to monetize their microblog service, and both remained focused on user growth at present

FEATURES: Sina Weibo vs. Tencent Weibo

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1st tier cities

2nd tier cities

3rd tier cities

4th and below

•  China’s war of the weibos may not be a winner-take-all market. Sina is entrenched with urban elites while Tencent controls a huge segment of mass market users.

•  In traditional social networks, for example, Tencent is a leader with Qzone and Pengyou, but has lost urban elites to Renren, Kaixin001, Douban, and increasingly Sina Weibo.

•  2nd and 3rd tier cities are key battlegrounds as each is aggressively trying to expand beyond its traditional audience.

•  It will likely be challenging, but not impossible, for Sina Weibo to make progress in lower-tier cities. It is likely near-impossible for Tencent Weibo to capture urban elites. Social networks tend to spread outward from a core of elites.

Urban Elites

DEMOGRAPHIC DIVIDE: Sina Weibo vs. Tencent Weibo

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Chinese IT blogger, Bo Hong (also known by the alias Keso), comments:

“Only one firm is capable of becoming China's Facebook: Tencent. The two (Facebook and Tencent) may be dissimilar in outward appearance, but the core of each is closely related: the social graph… Sina Weibo is too close to being a form of media, to the point of being removed from people's daily lives. To the populations of third and fourth tier Chinese cities, it's still very foreign. In terms of users, Tencent Weibo has already surpassed Sina Weibo. In terms of traffic, the two are also close. But in terms of media influence, it will be very difficult for Tencent Weibo to surpass Sina Weibo.”

FUTURE: Sina Weibo vs. Tencent Weibo

A Look Inside Tencent Weibo

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t.qq.com

Weibo Set-up I

The default setting is to follow all a user’s QQ Messenger friends on Tencent Weibo.

Tencent uses its existing social graph to populate Weibo.

Weibo Set-up II

Send Qzone status updates to Weibo

Send QQ status updates to Weibo

Recommend my Weibo to my QQ friends

Show my latest Weibo posts to my friends

Invite your QQ Messenger friends to Weibo

Invite your email contacts Weibo Email contacts come from QQ Email or Qzone

Homepage Before Log-in

Post Weibo

Recommended Users

Homepage After Log-in

Weibo Feed Like Sina Weibo, Tencent Weibo

is far richer than Twitter’s minimalist microblog. It allows embedded pictures, videos,

emoticons, and threaded comments. And one can express

FAR more in Chinese than English in 140 characters.

Original post with picture

Hashtag

Animated emoticons Repost of original weibo with added

comments

Click to see all 153 reposts and comments

Weibo Re-Post

Like Sina Weibo, re-posting on Tencent Weibo is far richer than

Twitter’s minimalist microblog. It’s more similar in form to status updates

on Facebook, though posts are visible to all.

Add: hastag (topic) | @ user | emoticon

Re-post and comment #1

Original post (with picture embedded)

Share to Qzone

|| @ user comment #1 (added by default when “re-post” is selected) New (second) comment on this weibo post

Weibo Events

Weibo Applications

QQ Messenger – Posting to Weibo IM Default Page Weibo on QQ Messenger

External links to QQ services (opens in browser) Includes Qzone, Weibo, Mail, etc.

Toggle between QQ services (opens in QQ Messenger) IM | Groups | Weibo | Recent Contacts

Weibo

QQ Messenger friends

QQ Messenger status of user is his latest Tencent Weibo

Weibo Feed

Post Weibo

Qzone – Posting to Weibo

Opens Weibo directly on the same page

Indicates new Weibos to read

Friend trends (default Qzone feed)

Qzone status update syncs to Weibo by default

Qzone “friend trend” feed is populated with content from Weibo friends—even

if never added in Qzone

QQ user name and ID

Weibos sync to Qzone

Qzone-Weibo setup

Blogs in Qzone sync to Weibo

“Shares” in Qzone sync to Weibo

Photos in Qzone sync to Weibo

Status updates in Qzone sync to Weibo

Qzone –Weibo Setup

These two are checked by default, so Qzone content is sent to Weibo. These then count as “active” Tencent Weibo users

Pengyou – Posting to Weibo

Opens Weibo directly on the same page

Indicates new Weibos to read

Default is for Pengyou status update to send to Qzone, but Weibo, and QQ Messenger (status update) may also be

selected

Post Status Update

Pengyou – With Weibo Inside

By selecting the Weibo tab in Pengyou (see previous slide) the entire page is turned into the Tencent Weibo, without shifting to Weibo’s t.qq.com domain

Post Weibo

Post from Qzone

Post from Pengyou

Your Posts

Weibo – Content from Qzone, Pengyou, etc.

Tencent spins a tangled web of cross-promotion and syncing. Many users may be intentionally “active” by accessing Weibo via other Tencent social services or unintentionally active because services are synced by default.

ABOUT ICHINASTOCK Snowball Finance is a financial media platform that includes two sites. One is iMeigu.com, a Chinese-language site that covers all US-listed stocks. The other is iChinaStock.com, an English-language site that covers Chinese stocks listed in the US. Each site provides stock quotes, business news, and analysis. Snowball Finance has also established my.iMeigu.com, a Web 2.0 platform for global investors to share news and insights on stocks they follow. Snowball Finance also publishes the iChinaStock 30 Index, a representative sample of Chinese stocks on the NYSE and NASDAQ.

© March 2011 iChinaStock

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