Renren, the Chinese social networking service reportedly will be spinning off its gaming arm for independent IPO. The spinoff may come as early as this September, and then Renren will get started with the IPO process.

 It’s not something unforeseeable as the Beijing-based company’s latest earnings report showed that in Q1 2012 it incurred a loss of more than US$ 13.6 million. It’s advertising business showed a sign of slowdown, however, it’s gaming business upped  90.7% from a year earlier, largely thanks to its ongoing efforts in developing new browser-based games and mobile games. Just like what the company’s CFO said at it’s conference call, “gaming business turned to be the highlight in this season while our monetization ability has been effectively improved with the growth of mobile traffic”.

 If we compare Renren to Tencent, we’ll find that in last quarter gaming represents more than half (55.1%) of Tencent’s revenue while gaming also contributes 54.5% to Renren’s last quarter revenue. Though both being seen as the top-rank SNS in China, their social-related ads hasn’t really picked up yet. Tencent launched a self-service social ad platform lately while ads bought through the platform will be placed on QZone and Pengyou, both are Tencent’s major SNS initiatives. As for Renren, if we look at its revenue breakdown, it now looks more like a gaming company.

Dr. Gang Lu - Founder of TechNode. He's a Blogger, a Geek, a PhD and a Speaker, with passion in Tech, Internet and R'N'R.

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