image:newhua.com

You’d not feel surprised that the top two most-searched queries on Baidu are Taobao and Q-zone, but that 4399 is in third position on Baidu’s 2012 top ten search list, may be unexpected.

4399.com, or 4399 Small Games, is one of the most popular small game portals in China, especially among kids. As kids have limited knowledge on using the Internet, a typical scenario you’d see a kid access 4399 is: step one, turning on a PC; step two, clicking open the Internet Explorer, which is still widely adopted in China; step three, typing in “4399” into the search box on the landing page — chances are Hao123 or any others with Baidu as the default search service; step four, clicking open the search result with 4399’s logo Baidu returns; the last step, clicking open a game.

Baidu also knows how frequently any key word is searched that it is promoting its own game portal in the search result page returned for 4399.

4399.com, under a company named Xiamen Youjia, was launched in 2004 by Li Xingping, a legendary figure in China’ s internet history. He is best known as the founder of Hao123, the once most-used browser start-up page which was acquired by Baidu in 2004. Cai Wensheng, one of the first angel investors in China internet industry and a serial entrepreneur, jointly built it as company president and helped it become one of the most prominent small game portals.

In the first half of this year, the company’s revenues increased 129.81% to 487mn yuan ($78.5mn), with 186mn yuan ($30mn) in profit, according to China Press and Publishing Journal (article in Chinese). Most money is from web games, or browser games, that ARPU is much higher than traditional flash games. Although a large number of kids use 4399 as their only destination for online games, they don’t contribute much in terms of revenue. It is estimated its full-year revenues will reach 1bn yuan ($161mn).

4399, actually, has a lot in common with Hao123 — both are about lists of links, with the former carrying games while the latter holding website links. One of the reasons that Mr. Cai would like to work with Mr. Li was he was also a believer in this model. Mr. Cai built a Hao123 clone, 265.com which was acquired by Google China in 2007, and tried to buy Hao123, only finding Baidu preempted him. It became a proven model: till this day, almost all the revenues of Qihoo’s happen on its hao.360.cn, a Hao123 copy, from advertising spending on link placements and paying users who visit web games from there. It seems Chinese users still like, or need, this convenience or really don’t care about the design of a start-up page.

Cai believes that Li understands grass-root users and would make a website neat — by the standards back then — and easy to use. He considered moving the company’s headquarters to Beijing, but finally decided to keep it in Xiamen, the capital city of Fujian province, for “in big cities like Shanghai or Beijing, it’s easy to neglect demand from users in second- or third-tier cities” .

The domain names they adopted represents Chinese Characteristics in China’s internet historyMr. Cai is also known as a domain name peddler in the early days that some existing well-known domain name, such as qiyi.com, were bought from him. People back then thought it’s easier to remember numbers as domain names. What’s true is kids remember 4399 well.