The world’s biggest SNS website Facebook is now valued close to millions of billions of dollars, leaving many old Internet companies far behind. Many believe that once Facebook issues IPO, its value will exceed that of Google (NASDAQ: GOOG) ($180 billion).
Inspired by the success of Facebook, almost all Chinese Internet icons have a dream of being the Chinese Facebook. Some of them have close to that dream and some others fails. But in general, there has yet any Chinese SNS site that enjoy the same dominance as Facebook does in the United States. Let’s take a look at who would win at last.
Renren.com is the SNS website Renren (NYSE: RENN) owns. In 2002, Joseph Chen founded China Interactive Corporation that provides wireless value-added service. It later hanged its name to Renren in December 2010. Renren.com originated from Xiaonei.com, a campus-based social networking site established by Wang Xing in 2005. In 2006, Xiaonei.com was acquired by China Interactive.
In August 2009, Xiaonei.com was renamed Renren.com, initiating its expansion from schools and universities to white collar workers and wider populations. In 2010, the website’s registered users outnumbered 100 million and it claimed itself as “the biggest real-name SNS website in China.”
Renren.com’s profit models cover almost all major profit models nowadays, including Internet advertising, e-commerce, Internet games and Internet value-added services. The following graph shows quarterly revenue from different business.
Source: Renren files to SEC
Renren.com’s profit models cover almost all major profit models nowadays in China. Revenue from advertising accounts for the biggest percentage. Revenue from e-commerce claims a small percentage and is calculated into other Internet value-added services.
As the pioneer among SNS sites in China, Renren took the initiative and once occupied the leading position in China’s SNS market. Through acquisition and connection to Renren.com, Renren Games, Jingwei.com and Nuomi.com, Renre managed to form a complete SNS ecosystem that integrates socialisation, leisure, business and shopping.
But with the rise of Sina (NASDAQ: SINA) Weibo and Tencent’s entry to the market, Renren was tremendously impacted. From change of number of users, we can see that it is growing at an ever slowing speed.
Source: Renren’s files to SEC
Also, Renren.com was not able to retain users who have graduated from universities just as Facebook does. In fact, not only does Renren.com face loss of the graduate population, but many students that have not yet graduated are seized by Sina and Tencent, a trend which can be seen in the following Google Trends graph.
In China, another previously promising SNS website is Kaixin001.com, establish by Cheng Binghao in 2008. As of now, registered users number reached 117 million, most of them are white collar workers.
But Kaixin001 popularity is fading way. Relying on popular games such as Stealing Vegetables and Grab Parking Spaces, Kaixin001 became the then largest SNS website in China. But it is now impacted in both contents sharing and games.
First of all, the rise of weibo has impacted all tradition SNS contents. Weibo has now become the most popular platform for hot public topics. In the meantime, with weibo merging into acquaintances’ relation network and the homogeneity in contents sharing among weibo and SNS, the two are engaged in an ever increasingly fierce competition. Relying on its contents of higher quality, weibo is winning the battle.
Compared with Renren.com, Kaixin001.com is more dependent on social games. But due to their short life cycle, after the gold period immediately after being released and without many quality games introduced afterwards, games on Kaixin001.com do not perform very well.
In addition, many domestic open platforms are springing up, such as QQ open platform. These platforms can accommodate more users and traffic and thus many social game developers are attracted to them, leaving Kaixin001.com much difficulty in developing high quality social games. The following graph shows Kaixin001.com’s Alexa traffic decline.
From the beginning of 2010 to August 2011, Kaixin001.com’s number of average daily users dropped about 65% and is still dropping. And during the same period, weibo was gaining more and more popularity.
Since the start of the website, Kaixin001.com’s was not based on acquaintances’ relation network but based on the popularity of one or two games. This has contributed to its success and fall as well.
3. Tencent Buddies
Tencent Buddies used to be QQ Alum introduced in 2008. Like Renren, QQ Alum was renamed Tencent Buddies in Januray this year in order to breach limit on target populations. In July, Tencent Buddies was renamed again to Pengyou.
Depending on QQ’s thousands of millions of installation volume, Tencent can obtain super market capability without connecting to search engines or other websites. Buttons on QQ’s client software, all kinds of pop-out boxes and existing socialisation products like links on QQ Space have imported a large number of users. It is not hard to understand that Tencent Buddies boasted one million users in merely a hundred days after its launch.
According to Beijing-based research firm Analysys International, Tencent Buddies experienced rapid development thanks to QQ’s excellent importing ability. It ranked the third among China’s SNS websites, after Kaixin001.com and Renren.com. But judging from average number of webpages browsed and length of stay, both of which are just half of those of the other two, its activity is far less than Kaixin001.com and Renren.com.
Due to the relationship among Tencent products, users of Tencent Buddies go there because of the acquaintance’s relations, a mode closer to that of Facebook. But relying QQ IM’s 600 million active users and QQ Space’s 500 million users, Tencent’s series products have actually become the biggest social network in China. A research report by Goldman Sachs believes that Tencent Buddies have more chances to become China’s Facebook.
4. Sina Weibo
Sina Weibo established the leading position on the initiative it took and rich experience of running media. Though evolved beyond Twitter, Sina Weibo establishes user relations through information flow, unlike Facebook’s style of generating information flow via user relations.
Recently, Sina Weibo conducted an internal test on the new version. In appearance, it has strong SNS attributes and it like a hybrid of Twitter + SNS.
The transformation of Sina Weibo to a social network is significant. The vast difference between social media and social network can be reflected in the value of Twitter and Facebook, “billions of dollars” comparing with nearly “one thousand billion dollars”. But this does not mean that Sina Weibo will become China’s Facebook.
Charles Chao, Sina CEO, said during an interview that weibo was not going to be the Facebook but it will be added with more Facebook-like functions. Comparing with Facebook, Sina Weibo has advantages in social celebrities, stars and viewpoints but is weak on contents concentration of relatives, colleagues and friends.
A Goldman Sachs report points out that weibo is a social network platform with low participation rate because weibo consists of relatively weak relationships. Some users get together due to some common interests and some users follow their friends and acquaintances. But this loose social network is just an accessory to the behaviour of visiting a weibo website, rather than the users’ main purpose. Most users treat visitation to weibo as a supplement to core social network activities, instead of the first choice of searching for and getting into touch with friends.
Sina Weibo bears some shallow social network attributes, but it mainly exists as a social media platform, not a social network.
Establish in 2004 by Yang Bo, Douban.com first emerged as a review website with people’s reviews and comments on books, movies and music. In the meantime, it provides information of various activities and service functions including making friends with similar interest. Douban is a quasi-SNS website that integrates Blog, making friends and grouping. More like Myspace if i can say.
Unlike traditional social networks which form a network of acquaintances, Douban connects people through contents with common interests. Judging from the styles, Douban has some attributes of facilitating friend making like social networks, but it focuses more on comments on music, books and movies.
Douban also has thousands of groups of common interests and posts many intra-city activities, based on which a social relation link is formed and some general social network attributes can be seen. It can be said that Douban began with comments, gather together users with similar interests, and enhance loyalty through the social networks formed thereafter.
On each of Douban webpages, there is brand advertisement. But Douban limits advertising to some extent in order to keep its simple style. So there is not much room for revenue growth in this area.
Another profit model is to direct traffic to e-commerce websites and movie websites based on its huge user base and share the profit. When users enter Dangdang (NYSE: DANG) through Douban, Amazon.cn, for example, it will share profit with them.
In the intra-city activities, there is large amount of group-buying information. Douban also directs traffic into these group-buying websites and shares profit with them. In the meantime, Douban cooperates with many companies to promote all kinds of discounted coupons and business activities.
Besides this, there is a large number of links to Taobao uploaded by groups, through which various kinds of Taobao online stores can be accessed. Douban also gets part of the profit from CPS effective advertisement.
Among major SNS website profit models, Douban does not have value-added services such as opening a VIP account to have privileges. Nor has it entered the field of online games. It has not open many third-party platform application. Judging from the profit model, Douban is still in the process of obtaining clients and there is much room for the revenue to grow.
Besides the above mentioned big SNS websites, there are many other different types of SNS websites in China, such as Jianghu and Bai.sohu. But they have small market shares and basically the same forms and functions. The follow graph shows the market shares of Chinese SNS websites in 2011 Q1
Under the double pressure of homogeneous competition and the rise of weibo, SNS websites have started their transformation, with 51.com as a typical one. As one of the earliest SNS websites, 51.com has transformed into a provider of stable and safe date storage.
Renren.com announced in June to cooperate with RGF, Japan’s largest human resources and media group, to build a romance-seeking website. With widespread homogeneity among SNS websites, how to win the battle against others? A possible choice is to enter the vertical social field.
With the popularity of smart phones, LBS-based social applications have drawn many start-ups. But on their way to the next Facebook, there are skirmishes in the market as well as fierce battle against Tencent Message. Currently, nobody can tell anyone of them will become the Chinese social superpower.
But who will be the dominating Facebook in China? Renren? Tencent Buddies? Sina Weibo? We already have QQ, Qzone, Sina Weibo, etc. Maybe we don’t need a China’s Facebook anymore.
The article was first published in Chinese on iMeigu.com by Frank. Translated by iChinaStock.com.
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