Chinese Mobile Aggregators In A Challenging Environment

There’s some excerpts here of a note that WR Hambrecht analysts James Lee and Xiaofan Zhang recently sent to clients on mobile content aggregators in China, specifically TOM Online, KongZhong, Linktone and Hurray!. All in all, it’s not a good outlook, with the analysts pointing to recent changes in carrier policies pushing revenues down dramatically, and encouraging a move away from subscription revenues to one-off sales which have lower ARPU and less repeat business.
They also think that carriers plan to sell content directly, with obvious negative effects on the aggregators, citing some examples:
Mobile Video: China Mobile and China Unicom recently signed agreements with CCTV to provide video clips of the TV station’s programs.
Mobile IM: The carriers are building in-house instant messaging applications.
Mobile Search: both China Mobile and China Unicom have apparently struck a deal with start-up Cgogo for white label services…Cgogo reportedly received a $20 million investment recently from Hong Kong tycoon Li Ka-shing. Of course, China Mobile also has a deal with Google.
The carriers are predicted to be keen to keep their customers on their own portals as much as possible, by keeping premium content inside the portal, including content obtained directly from media companies. Apparently only 15 percent of China Mobile’s data traffic goes to its mobile portal Monternet.
The note thinks that the aggregators best chance of survival lies in becoming more of a traditional media company, but notes they don’t have any experience in this.

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