Fame and Fortune
For a long time, three giants have dominated China’s internet space, i.e. Alibaba, China’s largest e-commerce platform company, Tencent, China’s largest social network and online gaming company and Baidu, China’s largest internet search company. Is it “winner takes it all” or are there growth opportunities for other companies? The answer is positive after my recent company visits in China two weeks ago.
Spun off from SINA, China’s leading internet media company in 2014, Weibo is a social media platform (twitter + Instagram + live video streaming + e-commerce) with more than 300 million active users in China, second behind Tencent. What began as Twitter like microblogging service in 2009 has now evolved into a platform that serves up news, latest fashion trends and even a gateway to other e-commerce portals. Weibo differentiates itself from competitors such as Tencent by specializing in delivering a high portion of celebrity-oriented content, which it sees as essential to user engagement. Key Opinion Leaders (KOLs), the latest evolution of Weibo, are essentially Instagram style home grown celebrities who have gained significant followings in the Chinese blogosphere. What's exciting about Weibo is that it has leveraged KOLs to become the nexus of major internet platforms in China. Ultimately this means that there is mutual benefit from the growth of all these companies and Weibo is able to bind them into one ecosystem. Most importantly, most of the KOLs in China choose to interact with and monetize their fan bases through their Weibo accounts. This leads great credibility to the sustainability of the KOL phenomenon for Weibo. For 2016, Weibo’s revenue was up 37 percent year-over-year, advertising and marketing revenue was up 42 percent and net income increased 211 percent over the same period. With the increasing adoption of social media advertisement and live video streaming by its more than 300 million users, monetization of Weibo is expected to improve further more.
Veronica Yu, Senior Portfolio Manager Asia & Japan Equities