Play YY: A new sample of Chinese Internet entrepreneurship

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YY CEO Lee Colling (front left second) with staff

Lead: Forbes magazine online today published a signed Tomio Geron (Tomio Geron) of the article said, although known as the "Shanzhai Big Country", but in the Chinese Internet industry, there are still some enterprises in the silent innovation. YY is one of the typical samples, the company with diversified revenue sources and unique product model to attract a large number of users, and is expected to play in the international market.

The following is the full text of the article:

Not in a hurry to go public

In the eyes of most Westerners, the Chinese science and technology industry lacks creative start-up companies. This concludes that China's main technology products are the Shanzhai versions of Groupon, Twitter and Pinterest.

But in fact, there are still a lot of technology start-ups in China that are innovating in areas that are not known to Westerners, and virtual goods from Asia are a great example. YY is a company with 310 million registered users, it is engaged in the business and the United States market has a different product. For example, Paker, a co-founder of Napster and Fanning (Sean Fanning), last week Parker a video-chat start-up company airtime and sparked widespread concern. But YY has already released a similar video chat technology.

YY was founded in 2005, its own game portal site more play network. 2008, the company launched YY Game Voice software, to facilitate players in the game to play strange or cooperate to complete the task, expand voice and text chat. But the company then broke through the gaming arena, moving into larger social networking platforms, adding streaming video and attracting 310 million registered users and 60 million-month active users.

YY co-founder and CEO Lee Colling said the company, headquartered in Guangzhou, had made a profit last year and is expected to continue to make profits this year. His pioneering partner, Lei, is a famous investor and founder of the millet phone. YY has received 95 million of dollars in investment from Morningstar Capital, Steamboat Ventures, GGV and Tiger Global partnership, but because the company is carrying more than 100 million dollars in cash, the money is not moving. There are rumors that YY is starting to prepare IPOs (IPO). Lee Colling said that this is indeed a choice, but yy is not in a hurry to go public. "It's not a hurry to go public now, because we've been profitable. "he said.

Unique business model

YY provides a wide range of voice and video content for a variety of users, covering concerts, education, fashion, sports and personal finance. Participants are usually around hundreds of people, up to tens of thousands of people. You can think of it as a virtual stadium. Karaoke is one of the most popular features of Yy, sung by one person, followed by others, and communicated through text.

What is interesting is that YY's independent channel can support 100,000 people online at the same time. YY channel total of about 1.1 million, November 2011 the highest simultaneous number of online users reached 8.45 million people. The company's 2011 voice call was 421 billion minutes long, Lee Colling, a figure that surpassed Skype at the time. YY changed the voice service, the voice from simple communication into an entertainment or educational way. "he said.

Singers, teachers and others can make money through yy virtual goods. Although many people can only earn some change, but the most popular actor yy monthly income is as high as 20,000 dollars. The audience can buy virtual roses and give them to their favorite performers, who can then turn these virtual roses into real gold and silver. With this kind of stimulation, the singer has the power to improve the performance quality. YY can help "many industries to restore their youth," Lee Colling said, "Many people know that because of the proliferation of piracy, music is difficult to make money." But if you are a talented singer or actress, as long as there is yy, there is a camera, and can surf the Internet, you can make money by acting. ”

There are many other uses for the service. For example, recently, a college student began to open a virtual classroom in yy, teach Photoshop the use of skills, YY can provide a lot of educational tools, including embedded whiteboard, and PowerPoint-like slides and video. Users can create classrooms, then customize the layout, and can set content to be public or private. Lee Colling revealed that the young man's current monthly income is more than 1.2 million yuan (about 188,000 U.S. dollars). He does not need to pay yy any fees at present. But from the second half of this year, YY plan for Education Room (or channel) to carry out commercialization measures.

Social and interest networks

Lee Colling says YY's social elements have a strong reliance on interest, which many social networks lack. "In the real world, people are divided into families, schools and co-workers," he says, "and we emphasize interest, including music, agriculture, education or medicine." "People can learn which rooms their friends are in, and then click Join."

A Chinese pharmaceutical company has a weekly meeting with YY, which includes more than 2000 sales staff. "Pharmaceutical companies need to continuously provide drug training to salespeople. "Education is a big problem, and it costs a lot of money to get 3000 people to one place," Lee Colling said. "YY has not yet developed targeted products for enterprise customers, nor has it charged special fees, but will soon deploy such measures."

When Lee Colling came to San Francisco, he gave me a demo on his cell phone when it was 4 o'clock in the morning in China, but there were still 27,000 people online on that channel. It was a karaoke channel when a man was singing and a lot of people were lining up to sing. After that, he switched to another channel, in which someone was teaching English.

The technology is not easy because it must provide real-time services to millions of of people and ensure that the infrastructure does not collapse. This is similar to Twitter, except that the content that is shared becomes voice and video. In addition, China's Internet infrastructure is not always satisfactory, and there are frequent network congestion among different carriers. Because voice communication is easier to drop-you should be able to note that speech is easier to drop than video--yy developed a technology to solve the problem. YY about 1000 employees, more than half of the technical staff, by CTO Zhaojian Leadership. He worked for WebEx and then brought his work experience to YY. If the product sector is included, the company has nearly 700 people engaged in technology and product work. This is very rare in Chinese internet companies, Lee Colling said.

Diversification of sources of income

When it comes to income, YY has many sources of income. 45% of the company's revenue comes from online gaming. They have game portals to play more web, and developers can promote their own games. When the game sells virtual goods, yy is extracted from it. The company has 40 to 50 games on the platform. YY CFO He Zhenyu said, and Sina and other portal sites are different, more play nets only focus on the game, involving game consoles, PCs and mobile and many other platforms.

YY's second largest source of revenue is the music business, accounting for about 35%. But YY does not offer downloads or online listening services like Apple itunes or Spotify, but generates revenue through virtual goods. Users can buy songs in the form of virtual goods and give them to singers on the platform. The most popular singers earn more than 20,000 dollars a month, and they often hold live concerts with their own bands. This is quite different from the conventional commercialization of American companies.

Finally, the ads accounted for yy total income of 20%, mainly through more play online display advertising and promotional activities to achieve. 4 years ago, advertising almost contributed to the company's income, but YY expanded the above income-generating channels.

The prospect of international expansion

YY did not enter the U.S. market, but Lee Colling believes that it can become a global product in the future. "We believe that YY is one of China's few products with global potential," he said, "and we believe that YY certainly has a chance to develop in the US market." It's just a matter of time. ”

The U.S. market has no similar service with YY. Although there are ustream and justin.tv such as video sites, as well as Google Hangout and airtime video chat services, but whether the user base or channel types, and yy are different. Moreover, from the diversity of income sources, these services are also less than YY.

YY's uniqueness may become a challenge, after all, in the international market, has never seen a similar product. This is similar to a mix of Skype, Zynga and American Idol. The diversity of sources of income makes it difficult for the company to understand, but it also has a predictable growth outlook because it is not limited to a single advertising revenue. The success of the company's global expansion plan remains to be seen, but the outlook for China alone is still very broad. (Ding Macro)