NetDragon Websoft Inc. (HK: 777) announced that its board was considering the feasibility of the proposed spin-off and the separate listing of its mobile internet business, or 91, on the GEM of Hong Kong Stock Exchange, and would wait for the approval of the Stock Exchange and the final decision of the board.
Both CEOs of NetDragon and 91 made it clear that 91 would go public as an independent body no later than 2013. NetDragon’s CEO, Liu Luyuan, expected 91 would have a market cap at IPO bigger than NetDragon’s, HKD 1 billion, back in November 2007.
NetDragon acquired 91, as an iPhone software managing tool, in 2008, and made its whole mobile division renamed 91 Mobile later. To tap into the Android surge, the company launched HiMarket and Hiapk, an Android app store and Android-related news site, respectively, in 2011 that didn’t take long to become one of the largest online Android communities in China.
91’s two major revenue sources, mobile games and advertising, contributed 40% and 53% of its total net income, respectively, in Q3, 2012, as disclosed by Hu Zeming, CFO of NetDragon and CEO of 91. The rest is from paid apps. When it comes to revenue, the mobile gaming business increased ten times year-on-year and advertising revenue increased three times in that quarter. Hu expected the total revenues of 91’s in 2012 would be over 300 million yuan ($48mn).
91 Mobile Phone Assistant
Shortly after Apple released the App Store in June 2008, Xiong Jun, founder of 91, wrote an app for users of jailbroken iPhones to organize apps. Later he started collecting apps and offering them in the app. Only two months after the launch in 2008, 91 Mobile Phone Assistant was acquired by NetDragon.
91 Mobile Phone Assistant soon became a must-have app for Chinese iPhone users. It had three million users in early 2010 that accounted for over 90% of jailbroken iPhones in China (Back then there was no official channels selling iPhones in mainland China).
As a well-recognized app platform had been built, the company started launching self-developed apps that were also well received.
Android App platform
When Android quickly caught on, 91 launched an Android platform, Hiapk, among a bunch of others. Then the most well-known one wasn’t 91’s, but Gfan. But 91 caught up soon. Hiapk offers users Android apps, both of third parties and the self-developed, and custom ROMs.
Since a majority of mobile services are still seeking monetization approaches, 91 is one of the successful in terms of revenue, although a big chunk is from mobile games. The gaming business grows faster than the other two services in terms of both popularity and revenue, according to its CEO.
Most games on the platform are from third-party developers that 91 takes revenue cuts. Though 91 also self develops games, less than 10% of gaming revenues is from the self-developed, as disclosed by 91 management.
With a large number of user base, the monthly revenues generated by third-party games surpassed 10 million yuan in the past July, according to Tony Ho, vice president of 91, and ARPU of paying game players were 252 yuan ($40).
91 has become a well-recognized brand and developed a couple of well-known sub-brands, such as 91 Panda Reading — a mobile reading platform, and iBaby — an app platform for kids that also launched a custom kids’ tablet by partnering with a third-party manufacturer.
But what 91 offers isn’t the kind that would cost users anything to switch to another service. Plus, competitions, including AppChina, Wandoujia and Gfan, out there aren’t minor. Even the founder of 91 Assistant and the founding leader of its Android platform, who went off and build their own businesses, are challenging their former employer’s iOS and Android services, respectively.