Sina’s latest earning report showed a loss of $13.7 million, as the company continues to invest heavily into Weibo business, it’ll under big pressure to monetize its Weibo offering. The portal site did try by implementing social gaming and virtual currency last year with little outcome. And now comes it’s new approach, Weibo VIP membership.
Less Attractive Offerings
The Weibo VIP membership costs RMB 10 per month or 108 for annual subscription. VIP member’s privileges include: a) exclusive identity recognition including VIP icon and templates; b) able to follow more than 2000 users; c) more powerful mobile features like friends’ birthday reminder and follow users by texts; d) security improvements.
However, it seems to me that the features aren’t attractive enough. A survey about “what privileges do users really want” conducted by Weibo showed people prefer functions like background music and animated icon, while none of these are supported for now.
Weibo Takes a Page from QQ
In the field of online advertising, Sina enjoyed being top player with huge revenue for a long time until this Q1 Tencent took the lead with $85.8 million versus Sina’s $78.5 million.
How come Sina is losing the edge? Dong Xu from Analysys International thought that,”Sina is very good at media operating, and its advertising section is still at a growing trend. However, compared to Tencent’s all-around strategy and marketing strength, Sina only focuses on its portal business and now Weibo. Tencent can gain profits from ads on portal sites, the B2C site Paipai.com and social networks like Qzone.”
While for Sina, investment on Weibo is increasing quickly from US$ 110 million last year to an expected 160 million this year, and this makes the loss even bigger.
Sina Weibo announced 324 million billion registered users as of this May, while 9% of which are active users. A recent survey showed that 2.5% users are willing to pay for a Weibo membership. So with its huge user base, the potential revenue seems not very bad at an estimated RMB 87.4 million annually.
Take it slow in monetizing
This new approach of paid membership is just one of Weibo’s latest monetizing strategies. In H2 of this year, Sina will release a social advertising system and new games. Charles Cao, CEO of the company said that “In general, game platform is not our main concern this year, we are expecting at long-term revenue.” The advertising system seems to be the key business model; Cao revealed that in the future Weibo ad’s expense will base on CPM, click rates and effectiveness.
“Weibo is not just competing with Tencent’s microblog, but with the whole penguin community. But Sina really needs to enrich its advertising channels first.” Dong Xu also pointed that Sina Weibo’s situation is really seen, so is its dilemma.
Social networks’ business models have always been a hot topic. About 80% of Facebook’s revenue comes from web display ads. And as to Tencent, games and Internet value-added services represented 80% of the revenue. Sina Weibo is more like a news media to many users right now, which varies from Facebook or Tencent. How to find its own business model remains a mystery.