Inside Tencent | 2009 Edition

+8 | Plus Eight Star Ltd | 200908

8 Questions amp Answers on the Worldrsquos

Most Successful Online Community

0

10

20

30

40

50

60

70

0 200 400 600 800 1000 1200

ldquoThe Worldrsquos Most Lucrative Social Network

Chinarsquos Tencent Beats $1 Billion Revenue Markrdquo

(March 2009)

ldquoFor Chinese IM Portal Tencent The Money Is In

Micro-Transactionsrdquo (March 2009)

ldquoIt was a trip 5 years ago to China where I met with

Tencent when they were private that led me to

come back and invest into Second Life So one of

the reasons wersquore ahead of the crowd from a digital

item type business model is because we were over

there paying attentionrdquo

-- Bill Gurley General Partner (June 2008)

ldquoTencent Reaches New Heights in Virtual Goods

Salesrdquo (March 2009)

The Times Are A-Changing

Attention Threshold=

1 billion dollars

About Tencent

bull Tencent is Chinarsquos largest Internet company by revenue and profits

bull It is centered around an IM service named QQ It also offers games mobile search etc

bull This QampA based on our ldquoInside Tencentrdquo report highlights some key points of its success

Its IM Service Looks Like That Buthellip

Itrsquos a Blend of Many More Things

Q1What Were Tencentrsquos Revenue in 2008

Over US$1 Billion amp 40 Net Margin

0

10

20

30

40

50

60

70

0 200 400 600 800 1000 1200

Revenue (US$ million)

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

Note Mixi Gree and DeNA are Japanese social networks Both Gree and DeNA are purely mobile

Q2How Much of It Was From Users

90

0

10

20

30

40

50

60

70

0 20 40 60 80 100

Revenue from users

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

US$1 Billion From lt10 Users

147 mln paying mobile users

314 mln paying web users

892 mln registered IM accounts (2008)

298 mln Internet users in China

Avg 3 QQ accounts per Internet user

377 mln are active accounts

Revenue

About 8 of QQrsquos active accounts bring revenue

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

ldquoThe Worldrsquos Most Lucrative Social Network

Chinarsquos Tencent Beats $1 Billion Revenue Markrdquo

(March 2009)

ldquoFor Chinese IM Portal Tencent The Money Is In

Micro-Transactionsrdquo (March 2009)

ldquoIt was a trip 5 years ago to China where I met with

Tencent when they were private that led me to

come back and invest into Second Life So one of

the reasons wersquore ahead of the crowd from a digital

item type business model is because we were over

there paying attentionrdquo

-- Bill Gurley General Partner (June 2008)

ldquoTencent Reaches New Heights in Virtual Goods

Salesrdquo (March 2009)

The Times Are A-Changing

Attention Threshold=

1 billion dollars

About Tencent

bull Tencent is Chinarsquos largest Internet company by revenue and profits

bull It is centered around an IM service named QQ It also offers games mobile search etc

bull This QampA based on our ldquoInside Tencentrdquo report highlights some key points of its success

Its IM Service Looks Like That Buthellip

Itrsquos a Blend of Many More Things

Q1What Were Tencentrsquos Revenue in 2008

Over US$1 Billion amp 40 Net Margin

0

10

20

30

40

50

60

70

0 200 400 600 800 1000 1200

Revenue (US$ million)

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

Note Mixi Gree and DeNA are Japanese social networks Both Gree and DeNA are purely mobile

Q2How Much of It Was From Users

90

0

10

20

30

40

50

60

70

0 20 40 60 80 100

Revenue from users

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

US$1 Billion From lt10 Users

147 mln paying mobile users

314 mln paying web users

892 mln registered IM accounts (2008)

298 mln Internet users in China

Avg 3 QQ accounts per Internet user

377 mln are active accounts

Revenue

About 8 of QQrsquos active accounts bring revenue

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Attention Threshold=

1 billion dollars

About Tencent

bull Tencent is Chinarsquos largest Internet company by revenue and profits

bull It is centered around an IM service named QQ It also offers games mobile search etc

bull This QampA based on our ldquoInside Tencentrdquo report highlights some key points of its success

Its IM Service Looks Like That Buthellip

Itrsquos a Blend of Many More Things

Q1What Were Tencentrsquos Revenue in 2008

Over US$1 Billion amp 40 Net Margin

0

10

20

30

40

50

60

70

0 200 400 600 800 1000 1200

Revenue (US$ million)

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

Note Mixi Gree and DeNA are Japanese social networks Both Gree and DeNA are purely mobile

Q2How Much of It Was From Users

90

0

10

20

30

40

50

60

70

0 20 40 60 80 100

Revenue from users

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

US$1 Billion From lt10 Users

147 mln paying mobile users

314 mln paying web users

892 mln registered IM accounts (2008)

298 mln Internet users in China

Avg 3 QQ accounts per Internet user

377 mln are active accounts

Revenue

About 8 of QQrsquos active accounts bring revenue

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

About Tencent

bull Tencent is Chinarsquos largest Internet company by revenue and profits

bull It is centered around an IM service named QQ It also offers games mobile search etc

bull This QampA based on our ldquoInside Tencentrdquo report highlights some key points of its success

Its IM Service Looks Like That Buthellip

Itrsquos a Blend of Many More Things

Q1What Were Tencentrsquos Revenue in 2008

Over US$1 Billion amp 40 Net Margin

0

10

20

30

40

50

60

70

0 200 400 600 800 1000 1200

Revenue (US$ million)

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

Note Mixi Gree and DeNA are Japanese social networks Both Gree and DeNA are purely mobile

Q2How Much of It Was From Users

90

0

10

20

30

40

50

60

70

0 20 40 60 80 100

Revenue from users

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

US$1 Billion From lt10 Users

147 mln paying mobile users

314 mln paying web users

892 mln registered IM accounts (2008)

298 mln Internet users in China

Avg 3 QQ accounts per Internet user

377 mln are active accounts

Revenue

About 8 of QQrsquos active accounts bring revenue

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Its IM Service Looks Like That Buthellip

Itrsquos a Blend of Many More Things

Q1What Were Tencentrsquos Revenue in 2008

Over US$1 Billion amp 40 Net Margin

0

10

20

30

40

50

60

70

0 200 400 600 800 1000 1200

Revenue (US$ million)

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

Note Mixi Gree and DeNA are Japanese social networks Both Gree and DeNA are purely mobile

Q2How Much of It Was From Users

90

0

10

20

30

40

50

60

70

0 20 40 60 80 100

Revenue from users

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

US$1 Billion From lt10 Users

147 mln paying mobile users

314 mln paying web users

892 mln registered IM accounts (2008)

298 mln Internet users in China

Avg 3 QQ accounts per Internet user

377 mln are active accounts

Revenue

About 8 of QQrsquos active accounts bring revenue

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Itrsquos a Blend of Many More Things

Q1What Were Tencentrsquos Revenue in 2008

Over US$1 Billion amp 40 Net Margin

0

10

20

30

40

50

60

70

0 200 400 600 800 1000 1200

Revenue (US$ million)

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

Note Mixi Gree and DeNA are Japanese social networks Both Gree and DeNA are purely mobile

Q2How Much of It Was From Users

90

0

10

20

30

40

50

60

70

0 20 40 60 80 100

Revenue from users

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

US$1 Billion From lt10 Users

147 mln paying mobile users

314 mln paying web users

892 mln registered IM accounts (2008)

298 mln Internet users in China

Avg 3 QQ accounts per Internet user

377 mln are active accounts

Revenue

About 8 of QQrsquos active accounts bring revenue

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Q1What Were Tencentrsquos Revenue in 2008

Over US$1 Billion amp 40 Net Margin

0

10

20

30

40

50

60

70

0 200 400 600 800 1000 1200

Revenue (US$ million)

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

Note Mixi Gree and DeNA are Japanese social networks Both Gree and DeNA are purely mobile

Q2How Much of It Was From Users

90

0

10

20

30

40

50

60

70

0 20 40 60 80 100

Revenue from users

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

US$1 Billion From lt10 Users

147 mln paying mobile users

314 mln paying web users

892 mln registered IM accounts (2008)

298 mln Internet users in China

Avg 3 QQ accounts per Internet user

377 mln are active accounts

Revenue

About 8 of QQrsquos active accounts bring revenue

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Over US$1 Billion amp 40 Net Margin

0

10

20

30

40

50

60

70

0 200 400 600 800 1000 1200

Revenue (US$ million)

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

Note Mixi Gree and DeNA are Japanese social networks Both Gree and DeNA are purely mobile

Q2How Much of It Was From Users

90

0

10

20

30

40

50

60

70

0 20 40 60 80 100

Revenue from users

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

US$1 Billion From lt10 Users

147 mln paying mobile users

314 mln paying web users

892 mln registered IM accounts (2008)

298 mln Internet users in China

Avg 3 QQ accounts per Internet user

377 mln are active accounts

Revenue

About 8 of QQrsquos active accounts bring revenue

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Q2How Much of It Was From Users

90

0

10

20

30

40

50

60

70

0 20 40 60 80 100

Revenue from users

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

US$1 Billion From lt10 Users

147 mln paying mobile users

314 mln paying web users

892 mln registered IM accounts (2008)

298 mln Internet users in China

Avg 3 QQ accounts per Internet user

377 mln are active accounts

Revenue

About 8 of QQrsquos active accounts bring revenue

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

90

0

10

20

30

40

50

60

70

0 20 40 60 80 100

Revenue from users

Op

era

tin

g P

rofi

t M

arg

in

wwwplus8starcom

US$1 Billion From lt10 Users

147 mln paying mobile users

314 mln paying web users

892 mln registered IM accounts (2008)

298 mln Internet users in China

Avg 3 QQ accounts per Internet user

377 mln are active accounts

Revenue

About 8 of QQrsquos active accounts bring revenue

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

US$1 Billion From lt10 Users

147 mln paying mobile users

314 mln paying web users

892 mln registered IM accounts (2008)

298 mln Internet users in China

Avg 3 QQ accounts per Internet user

377 mln are active accounts

Revenue

About 8 of QQrsquos active accounts bring revenue

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Q3What is Tencentrsquos Market Valuation

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

US$26 Billion (August 2009)

bull Tencent is listed in Hong Kong since 2004

bull DeNA Gree and Mixi in Japan are all listed for over 1 billion USD

bull Facebookrsquos valuation varies between US$3 and US$15 billion

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Q4How Does Tencent Compare to

Leading Internet Companies in China

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Revenue 2008 of Leading Companies

97

370

1047

429 452 468522

439

0

200

400

600

800

1000

1200

Kongzhong Sina Tencent Sohu Net ease Baidu Shanda Alibaba

Web

Portal

Mobile

content

IM Portal +

Games

Online

games

US$ Million

Search

engine

Online

games

Only B2B

e-commerce part

wwwplus8starcom

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Q5What Is Tencentrsquos Revenue Split

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Value-Added Services Dominate

bull Year 2008 US$1047 millionndash Internet VAS 719 million

ndash Mobile VAS 205 million

ndash Ads 121 million

ndash Net Profit 412 million (394)

bull 1H2009 US$788 millionndash Internet VAS 594 million

ndash Mobile VAS 133 million

ndash Ads 57 million

ndash Net Profit 330 million (419)

Internet VAS69

Mobile VAS20

Ads11

Internet VAS76

Mobile VAS17

Ads7

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600

Game Revenue in 2008US$340 million (3 in China)

Note The size of the bubble represents the game revenue

The profit Margin for Tencent game and NetEase is taken as the one of the whole company

wwwplus8starcom

Game Revenue 2008 (mln USD)

Pro

fit

ma

rgin

20

08

(m

ln U

SD

)

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Q6What are Tencentrsquos Key Services

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Most of Internetrsquos Money-Makers

bull Social networking

ndash Instant Messaging

ndash Blogs (200 mln reg)

ndash Social network

ndash ldquoTwitterrdquo service

bull Games

ndash Casual games

ndash MMO

ndash Virtual pet (5 revenue maker for Tencent)

bull Search engine

bull Mobile services

ndash Mobile portal (1)

ndash Mobile client

ndash Mobile browser

bull E-commerce

ndash E-commerce platform

ndash Payment system

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

From IM to Internet GiantInternet services

QQ Pet

Q Zone

QQ Online Storage

QQ Search

QQ Email

Internet Portal

QQ Show

QQ AlbumQQ Games

QQ Membership

QQ MusicQQ Live

QQ Love

QQ Dating

Wireless services

Super QQ QQ Notice

QQ Mobile WAP Mobile

E-commerce services

Tenpay

C2C service

In addition to mass market services QQ activities cover online advertising

QQ

IM

Q7What Kind of Business Models is

Tencent Using

Leveraging Virtual Currencies

Content-based SMSOnline identities

QQ Show Qzone QQ Pet QQcom

25 G

MMS WAPhellip

QQ Games

Casual MMORPG Search

Fee-based IM

Mobile QQ

Fee-based IM

Premium QQ QQ XingIM Client-end

WVAS

(Wireless value-added service)

IVAS

(Internet value-added service)Advertising

Mobile Voice VAS

IVR+CRBT

Others

Dating e-card e-magazinehellip

Personalization value-added

( Fee-based revenue)

Interactivity

( Traffic-based revenue)

Free services to encourage users to join the community

(QQ IM QQcom WAP portal QQ Grouphellip)

SNS

Avatar-Related Virtual Goods

Connecting Games With IM amp SNS

Q8What Do Experts Think of Tencent

Could Tencentrsquos Model Work Outside ChinaPretty sure it works

Virtual goods already

started with Playfish

Zynga etc Habbo in

Finland uses the same

avatar modelOlivier GLAUSER

Managing Director

Steamboat Ventures

For sure in Asia and the gap is

not so large with the West

Offer something appealing and

people are always willing to

pay small amounts for it

Western SNS are already

learning but not fully exploiting

the potential

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

It is not new in Asia Korea and

Japan are earlier than QQ The

concept is even more advanced

in mobile than in Internet Ring

Back Tone (RBT) can be

regarded as a precursor for the

avatar on Internet as the

fundamental is the same self-

expression

Yong LV

Investment Director

SK Telecom China

Yes people need

differentiation and self-

expression It is the

same in China and the

West

Jim LEE

General Manager

EA Mobile

The idea comes from

Korea so not entirely

Chinese And yes I

believe it will spread

Other Experts Interviewed In our Research

Leo WANG

Founder

Mobile 20 Forum

Jim LEE

General Manager

EA Mobile

Gang WANG

Vice President

Sina

Xing WANG

Founder

Xiaonei Hainei Fanfou

Brian RU

Senior Analyst

Matrix Partners

Zili REN

Founder

Appleap

Project Manager

China Mobile

Olivier GLAUSER

Managing Director

Steamboat Ventures

Gang LU

Founder

Mobinode

Yong LV

Investment Director

SK Telecom China

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

Catherine CHAN

IR General Manager

Tencent

Kaiser KUO

Digital Strategy Director

Ogilvy China

Tangos CHAN

Editor

China Web 20 Review

Alex LIANG

CEO

Picacom

Dr Song LI

CEO

Digu Zhenai

Buddy YE

CEO

Wangyou Media

Wayne SHIONG

Partner

WI Harper

2008

2009

Dirk HE

Senior Manager

Huawei

+8Wish to Know More

Get The Full Report

bull Complete report

ndash Company-wide license | US$5000

ndash PDF 284 pages

ndash infoplus8starcom

bull Not sure yet Check the free sample

ndash wwwplus8starcom

bull Selection of clients of the 2008 edition

Leveraging Virtual Currencies

Content-based SMSOnline identities

QQ Show Qzone QQ Pet QQcom

25 G

MMS WAPhellip

QQ Games

Casual MMORPG Search

Fee-based IM

Mobile QQ

Fee-based IM

Premium QQ QQ XingIM Client-end

WVAS

(Wireless value-added service)

IVAS

(Internet value-added service)Advertising

Mobile Voice VAS

IVR+CRBT

Others

Dating e-card e-magazinehellip

Personalization value-added

( Fee-based revenue)

Interactivity

( Traffic-based revenue)

Free services to encourage users to join the community

(QQ IM QQcom WAP portal QQ Grouphellip)

SNS

Avatar-Related Virtual Goods

Connecting Games With IM amp SNS

Q8What Do Experts Think of Tencent

Could Tencentrsquos Model Work Outside ChinaPretty sure it works

Virtual goods already

started with Playfish

Zynga etc Habbo in

Finland uses the same

avatar modelOlivier GLAUSER

Managing Director

Steamboat Ventures

For sure in Asia and the gap is

not so large with the West

Offer something appealing and

people are always willing to

pay small amounts for it

Western SNS are already

learning but not fully exploiting

the potential

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

It is not new in Asia Korea and

Japan are earlier than QQ The

concept is even more advanced

in mobile than in Internet Ring

Back Tone (RBT) can be

regarded as a precursor for the

avatar on Internet as the

fundamental is the same self-

expression

Yong LV

Investment Director

SK Telecom China

Yes people need

differentiation and self-

expression It is the

same in China and the

West

Jim LEE

General Manager

EA Mobile

The idea comes from

Korea so not entirely

Chinese And yes I

believe it will spread

Other Experts Interviewed In our Research

Leo WANG

Founder

Mobile 20 Forum

Jim LEE

General Manager

EA Mobile

Gang WANG

Vice President

Sina

Xing WANG

Founder

Xiaonei Hainei Fanfou

Brian RU

Senior Analyst

Matrix Partners

Zili REN

Founder

Appleap

Project Manager

China Mobile

Olivier GLAUSER

Managing Director

Steamboat Ventures

Gang LU

Founder

Mobinode

Yong LV

Investment Director

SK Telecom China

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

Catherine CHAN

IR General Manager

Tencent

Kaiser KUO

Digital Strategy Director

Ogilvy China

Tangos CHAN

Editor

China Web 20 Review

Alex LIANG

CEO

Picacom

Dr Song LI

CEO

Digu Zhenai

Buddy YE

CEO

Wangyou Media

Wayne SHIONG

Partner

WI Harper

2008

2009

Dirk HE

Senior Manager

Huawei

+8Wish to Know More

Get The Full Report

bull Complete report

ndash Company-wide license | US$5000

ndash PDF 284 pages

ndash infoplus8starcom

bull Not sure yet Check the free sample

ndash wwwplus8starcom

bull Selection of clients of the 2008 edition

Avatar-Related Virtual Goods

Connecting Games With IM amp SNS

Q8What Do Experts Think of Tencent

Could Tencentrsquos Model Work Outside ChinaPretty sure it works

Virtual goods already

started with Playfish

Zynga etc Habbo in

Finland uses the same

avatar modelOlivier GLAUSER

Managing Director

Steamboat Ventures

For sure in Asia and the gap is

not so large with the West

Offer something appealing and

people are always willing to

pay small amounts for it

Western SNS are already

learning but not fully exploiting

the potential

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

It is not new in Asia Korea and

Japan are earlier than QQ The

concept is even more advanced

in mobile than in Internet Ring

Back Tone (RBT) can be

regarded as a precursor for the

avatar on Internet as the

fundamental is the same self-

expression

Yong LV

Investment Director

SK Telecom China

Yes people need

differentiation and self-

expression It is the

same in China and the

West

Jim LEE

General Manager

EA Mobile

The idea comes from

Korea so not entirely

Chinese And yes I

believe it will spread

Other Experts Interviewed In our Research

Leo WANG

Founder

Mobile 20 Forum

Jim LEE

General Manager

EA Mobile

Gang WANG

Vice President

Sina

Xing WANG

Founder

Xiaonei Hainei Fanfou

Brian RU

Senior Analyst

Matrix Partners

Zili REN

Founder

Appleap

Project Manager

China Mobile

Olivier GLAUSER

Managing Director

Steamboat Ventures

Gang LU

Founder

Mobinode

Yong LV

Investment Director

SK Telecom China

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

Catherine CHAN

IR General Manager

Tencent

Kaiser KUO

Digital Strategy Director

Ogilvy China

Tangos CHAN

Editor

China Web 20 Review

Alex LIANG

CEO

Picacom

Dr Song LI

CEO

Digu Zhenai

Buddy YE

CEO

Wangyou Media

Wayne SHIONG

Partner

WI Harper

2008

2009

Dirk HE

Senior Manager

Huawei

+8Wish to Know More

Get The Full Report

bull Complete report

ndash Company-wide license | US$5000

ndash PDF 284 pages

ndash infoplus8starcom

bull Not sure yet Check the free sample

ndash wwwplus8starcom

bull Selection of clients of the 2008 edition

Connecting Games With IM amp SNS

Q8What Do Experts Think of Tencent

Could Tencentrsquos Model Work Outside ChinaPretty sure it works

Virtual goods already

started with Playfish

Zynga etc Habbo in

Finland uses the same

avatar modelOlivier GLAUSER

Managing Director

Steamboat Ventures

For sure in Asia and the gap is

not so large with the West

Offer something appealing and

people are always willing to

pay small amounts for it

Western SNS are already

learning but not fully exploiting

the potential

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

It is not new in Asia Korea and

Japan are earlier than QQ The

concept is even more advanced

in mobile than in Internet Ring

Back Tone (RBT) can be

regarded as a precursor for the

avatar on Internet as the

fundamental is the same self-

expression

Yong LV

Investment Director

SK Telecom China

Yes people need

differentiation and self-

expression It is the

same in China and the

West

Jim LEE

General Manager

EA Mobile

The idea comes from

Korea so not entirely

Chinese And yes I

believe it will spread

Other Experts Interviewed In our Research

Leo WANG

Founder

Mobile 20 Forum

Jim LEE

General Manager

EA Mobile

Gang WANG

Vice President

Sina

Xing WANG

Founder

Xiaonei Hainei Fanfou

Brian RU

Senior Analyst

Matrix Partners

Zili REN

Founder

Appleap

Project Manager

China Mobile

Olivier GLAUSER

Managing Director

Steamboat Ventures

Gang LU

Founder

Mobinode

Yong LV

Investment Director

SK Telecom China

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

Catherine CHAN

IR General Manager

Tencent

Kaiser KUO

Digital Strategy Director

Ogilvy China

Tangos CHAN

Editor

China Web 20 Review

Alex LIANG

CEO

Picacom

Dr Song LI

CEO

Digu Zhenai

Buddy YE

CEO

Wangyou Media

Wayne SHIONG

Partner

WI Harper

2008

2009

Dirk HE

Senior Manager

Huawei

+8Wish to Know More

Get The Full Report

bull Complete report

ndash Company-wide license | US$5000

ndash PDF 284 pages

ndash infoplus8starcom

bull Not sure yet Check the free sample

ndash wwwplus8starcom

bull Selection of clients of the 2008 edition

Q8What Do Experts Think of Tencent

Could Tencentrsquos Model Work Outside ChinaPretty sure it works

Virtual goods already

started with Playfish

Zynga etc Habbo in

Finland uses the same

avatar modelOlivier GLAUSER

Managing Director

Steamboat Ventures

For sure in Asia and the gap is

not so large with the West

Offer something appealing and

people are always willing to

pay small amounts for it

Western SNS are already

learning but not fully exploiting

the potential

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

It is not new in Asia Korea and

Japan are earlier than QQ The

concept is even more advanced

in mobile than in Internet Ring

Back Tone (RBT) can be

regarded as a precursor for the

avatar on Internet as the

fundamental is the same self-

expression

Yong LV

Investment Director

SK Telecom China

Yes people need

differentiation and self-

expression It is the

same in China and the

West

Jim LEE

General Manager

EA Mobile

The idea comes from

Korea so not entirely

Chinese And yes I

believe it will spread

Other Experts Interviewed In our Research

Leo WANG

Founder

Mobile 20 Forum

Jim LEE

General Manager

EA Mobile

Gang WANG

Vice President

Sina

Xing WANG

Founder

Xiaonei Hainei Fanfou

Brian RU

Senior Analyst

Matrix Partners

Zili REN

Founder

Appleap

Project Manager

China Mobile

Olivier GLAUSER

Managing Director

Steamboat Ventures

Gang LU

Founder

Mobinode

Yong LV

Investment Director

SK Telecom China

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

Catherine CHAN

IR General Manager

Tencent

Kaiser KUO

Digital Strategy Director

Ogilvy China

Tangos CHAN

Editor

China Web 20 Review

Alex LIANG

CEO

Picacom

Dr Song LI

CEO

Digu Zhenai

Buddy YE

CEO

Wangyou Media

Wayne SHIONG

Partner

WI Harper

2008

2009

Dirk HE

Senior Manager

Huawei

+8Wish to Know More

Get The Full Report

bull Complete report

ndash Company-wide license | US$5000

ndash PDF 284 pages

ndash infoplus8starcom

bull Not sure yet Check the free sample

ndash wwwplus8starcom

bull Selection of clients of the 2008 edition

Could Tencentrsquos Model Work Outside ChinaPretty sure it works

Virtual goods already

started with Playfish

Zynga etc Habbo in

Finland uses the same

avatar modelOlivier GLAUSER

Managing Director

Steamboat Ventures

For sure in Asia and the gap is

not so large with the West

Offer something appealing and

people are always willing to

pay small amounts for it

Western SNS are already

learning but not fully exploiting

the potential

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

It is not new in Asia Korea and

Japan are earlier than QQ The

concept is even more advanced

in mobile than in Internet Ring

Back Tone (RBT) can be

regarded as a precursor for the

avatar on Internet as the

fundamental is the same self-

expression

Yong LV

Investment Director

SK Telecom China

Yes people need

differentiation and self-

expression It is the

same in China and the

West

Jim LEE

General Manager

EA Mobile

The idea comes from

Korea so not entirely

Chinese And yes I

believe it will spread

Other Experts Interviewed In our Research

Leo WANG

Founder

Mobile 20 Forum

Jim LEE

General Manager

EA Mobile

Gang WANG

Vice President

Sina

Xing WANG

Founder

Xiaonei Hainei Fanfou

Brian RU

Senior Analyst

Matrix Partners

Zili REN

Founder

Appleap

Project Manager

China Mobile

Olivier GLAUSER

Managing Director

Steamboat Ventures

Gang LU

Founder

Mobinode

Yong LV

Investment Director

SK Telecom China

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

Catherine CHAN

IR General Manager

Tencent

Kaiser KUO

Digital Strategy Director

Ogilvy China

Tangos CHAN

Editor

China Web 20 Review

Alex LIANG

CEO

Picacom

Dr Song LI

CEO

Digu Zhenai

Buddy YE

CEO

Wangyou Media

Wayne SHIONG

Partner

WI Harper

2008

2009

Dirk HE

Senior Manager

Huawei

+8Wish to Know More

Get The Full Report

bull Complete report

ndash Company-wide license | US$5000

ndash PDF 284 pages

ndash infoplus8starcom

bull Not sure yet Check the free sample

ndash wwwplus8starcom

bull Selection of clients of the 2008 edition

Other Experts Interviewed In our Research

Leo WANG

Founder

Mobile 20 Forum

Jim LEE

General Manager

EA Mobile

Gang WANG

Vice President

Sina

Xing WANG

Founder

Xiaonei Hainei Fanfou

Brian RU

Senior Analyst

Matrix Partners

Zili REN

Founder

Appleap

Project Manager

China Mobile

Olivier GLAUSER

Managing Director

Steamboat Ventures

Gang LU

Founder

Mobinode

Yong LV

Investment Director

SK Telecom China

Leon HUANG

Product Manager

Jiapucom

Former Project Manager

Tencent

Catherine CHAN

IR General Manager

Tencent

Kaiser KUO

Digital Strategy Director

Ogilvy China

Tangos CHAN

Editor

China Web 20 Review

Alex LIANG

CEO

Picacom

Dr Song LI

CEO

Digu Zhenai

Buddy YE

CEO

Wangyou Media

Wayne SHIONG

Partner

WI Harper

2008

2009

Dirk HE

Senior Manager

Huawei

+8Wish to Know More

Get The Full Report

bull Complete report

ndash Company-wide license | US$5000

ndash PDF 284 pages

ndash infoplus8starcom

bull Not sure yet Check the free sample

ndash wwwplus8starcom

bull Selection of clients of the 2008 edition

+8Wish to Know More

Get The Full Report

bull Complete report

ndash Company-wide license | US$5000

ndash PDF 284 pages

ndash infoplus8starcom

bull Not sure yet Check the free sample

ndash wwwplus8starcom

bull Selection of clients of the 2008 edition

Get The Full Report

bull Complete report

ndash Company-wide license | US$5000

ndash PDF 284 pages

ndash infoplus8starcom

bull Not sure yet Check the free sample

ndash wwwplus8starcom

bull Selection of clients of the 2008 edition

About Us

bull Innovation Arbitrage

ndash +8 | Plus Eight Star is the leading cross-marketconsultancy on web amp mobile in China Japan and Korea

There are more ideas

outside of your country

than inside

Tom KelleyAuthor The Art of Innovation

bull Our clients

ndash We work with large companies SMEs investment firms and governments worldwide to bring them strategic advice and the best practices from advanced Asian markets

wwwplus8starcom

infoplus8starcom

httptwittercomplus8star

wwwslidesharenetplus8star

+81 | Japan

+82 | Korea

+86 | China

Telecom amp Internet

+ Added Value

High quality

Contacts

wwwplus8starcom

infoplus8starcom

httptwittercomplus8star

wwwslidesharenetplus8star

+81 | Japan

+82 | Korea

+86 | China

Telecom amp Internet

+ Added Value

High quality

Contacts