Sina is a company that lacks money

The development of Sina Weibo, the most important factor affecting Sina's share price, has fallen to $50 trillion since the beginning of 2011, when $80 trillion rose to $135 trillion in April.

Weibo, once let Sina this veteran portal site to see the dawn of rebirth, solid user base and active degree also provides the full imagination space for the capital market. Three years after its advent, Sina, burdened with heavy performance, came to an awkward point: the user growth rate continued to decline, operating profit in the second quarter only 200,000 U.S. dollars, down 98% year-on-year.

Previous performance pressure, after the opponent press. Sina Weibo, how to make money?

How to make money?

Sina is a company that lacks money.

Unlike the other 3 portal sites, Sina has long been the main source of revenue for advertising. and NetEase has network games, Sohu has search, input method and other business clusters, these products can bring a lot of profits, Tencent relies on QQ, become the world's most profitable internet companies.

Weibo let Sina played a turnaround, August 2009, Sina in the four major portals pioneered the microblog, this product became a life-saving grass sina. At that time, China's micro-blogging products are still in the lean period, Sina through long-term accumulation of celebrity resources and operating experience to grasp the rare market gap. As a whole, Sina Weibo has quickly become China's largest and most influential social media platform, with a user base that is 25 times times larger than it was in 2010, with a huge user base and a 60 billion-dollar valuation of Facebook at the time stimulating investor enthusiasm for Sina, Shares also climbed to a 135 dollar high.

The Sina Weibo, described as "a tall pupil" by the head of the chief, seems to have taken on one hand, giving people a huge imagination about its future, and yet not realizing its huge expectations. On the commercialization issue, Chao once claimed to be in no hurry to profit, announcing only the six possible business models of Weibo: interactive precision advertising, social gaming, real-time search, unlimited value-added services, e-commerce platforms, and digital content charges.

However, Weibo, the company-wide, raised cows without milk.

The huge flow is like a hard mining "gold mine", the most fast way of profit is still Sina's best way to make money-advertising. Sina Weibo is also committed to attracting more advertisers. After the latest microblogging V5 release, Sina has introduced a new type of advertising, business accounts can be in the fan timeline of the top microblogging, to ensure that the advertising information users see. This model is Sina Weibo from Twitter on the borrowed from, although the benefit of advertisers, but at the expense of a certain user experience.

Sina has become aware of its own profit dilemma, Sina said in its 2011 Annual report: "If our monetization efforts are unsuccessful, the investment in Sina Weibo will significantly reduce our profitability." "The precedent is Sina blog, this popular product has also brought a lot of traffic to Sina, but did not bring any real benefits."

But Sina has no other choice. In 2011, Sina has smashed 110 million ~1.2 billion dollars into Weibo. As the number of users continues to grow, Sina is also expanding infrastructure, network equipment and other inputs, is expected to spend more than 160 million dollars this year. These investments did not bring the imagined profits to Sina, Sina is still not out of the plight of only relying on advertising revenue 3 years ago, Sina's two quarterly earnings report for the first time the microblog revenue data, including micro-blog advertising revenue of 10 million U.S. dollars, accounting for Sina Group advertising revenue 10%. According to Chao in the earnings meeting, Sina Weibo's 80 advertisers, of which 75%~80% are original customers, that is, in the Portal and micro-blog has been put, which means that Weibo's new advertisers actually only 15.

The risk of excessive reliance on advertising profits is that the number of large advertisers and advertising display is limited in itself, if the flow and the number of users can not continue to grow, advertising revenue will encounter the ceiling. But Chao is much more optimistic, according to media reports, he believes that micro-blog advertising revenue growth will accelerate, and help Sina to improve the overall advertising revenue growth in the second half.

Weibo's user experience has always been in place, and zombie powder and junk information have made users enthusiastic about Sina Weibo disappearing. With the drop in new users and pressure from the profits, Sina has accelerated its currency test attempts this year.

However, from the micro-blog Membership system to the official micro-mission platform, because of the lack of accurate grasp of users and advertisers, the psychological response is not positive. On the other side of the ocean, Facebook and Twitter, which Sina has been trying to emulate, face a similar dilemma to Sina, which, despite its growing size, is equally unprofitable to investors.

In Wang Yuquan, a partner at the bank's business incubator, Sina Weibo has accumulated a large number of users, and profitability is the right thing to do. And now the commercialization is not too slow, but too fast, "the social network business model exploration is global, Sina Weibo is not suitable for the start of the business model of the temptation, but more suitable for followers."

Media or social?

"Share the fresh stuff around anytime, anywhere. ”

Although Sina Weibo has inevitably become a "social media" from the day it was born, it relies on celebrity star effects to brand and attract users, but the extremely high frequency of advertising words implies Sina Weibo's position on itself: social networking.

Internet watcher Chen Huarong told reporters: "The appeal of social networks is that there is a huge advertising business value: Facebook has more advertising revenue based on real social relationships than Twitter's ' information flow ' advertising model, and Tencent, which manages Chinese Internet users ' social networks, NET advertising revenue grew more than 70% per cent in the two quarter of 2012, with the main income coming from social platforms. ”

Sina Weibo is moving closer to Facebook and Google +, a social service project. This October 15, Sina officially on the line of the V5 version of the highly social nature of Weibo, through the release of "directed release", "Close friends" and other functions to enhance the platform's social functions, and further complete the transition from media to social direction.

Social platform more open, more grassroots, the need for strong data mining capabilities, through the user relationship, behavior data, propagation path of mining, in order to better achieve the ads and user matching. But how will Sina, a company with a strong media gene, complete its product transformation? Sina does not seem to form a unified understanding, the reporter on this series of related issues contacted Sina company PR, but as of press has not received a reply.

In Chen Huarong's view, the application of the variety is too miscellaneous is the biggest problem of Weibo, and the root cause of this phenomenon is that Sina did not want to know whether Weibo is the media or social network. Positioning of the chaos has also brought the micro-Bo fragmented product function chaos: the commercialization of micro-blog members, micro, micro-currency, community function of micro Bar, micro-bo V4 and V5 revision, such as media functions, such as micro-magazine. Sina internal staff told the "new finance" reporter, the current every micro-blogging products are in the investment phase, bringing the operating income is negligible. Wei, an Internet analyst, is doing everything to see where it can make a profit.

Inefficient management

Sina Weibo, which is not exactly the same as Twitter or Facebook, seems to be looking for a clear product direction, but inefficient internal management is another short plank of Sina's breakout.

Because of the extremely dispersed equity, Sina and Baidu, Alibaba and other Internet companies, has been a lack of a soul figure. Sina, the Zhidong era, replaced five CEOs within 7 years, until 2006, when Chao was on the stage. The CFO of Chao in the governance of Sina, the company gradually towards stability, he was very bold to define micro blog and Sina Portal as an important strategic status, successfully attracted a large amount of Internet users, but also led Sina completed the first Chinese Internet MBO (manager acquisition), So that Sina management really in the board to grasp the right of speech. However, despite being known as the most successful professional manager in China's internet industry, Chao did not promptly comb and improve the overall structure and management process of Sina.

An engineer who worked on Sina Weibo told reporters, "Sina has no tradition of research and development, within the company, operations are more powerful departments." Sina's high-level although conscientious, work overtime to very late every day, but the middle layer can only use a ' mixed ' word to describe, the job does not urge no one will do. "Leaving Sina for a few months, the unfinished work and product development of his tenure is still in a stagnant state." Another Sina product manager told reporters, "Sina internal promotion by seniority, but not by ability, this makes some product development by not understand the product of old staff leader." ”

The phenomenon also confirms the judgment of Cheng, an IT observer, two years ago: "It may now be the highest relative morale and the most cohesive phase in Sina's history." "When Sina Weibo's position was initially laid, the contradictions in management began to show." As a master of financial operations, Chao's lack of overall thinking on Sina Weibo strategy is an indisputable fact. If not from the management, product development, incentive mechanism and other aspects of Sina to continue to reform, the future of Sina will be more difficult to pull away from the opponent.

Pursuers Tencent

In Kleiner (Peng Hua Ying Venture capital Fund) management partner Zhou Wei, Sina microblogging activity is seriously declining, not only is the quality of decline, the number is also seriously declining.

Sina's earnings did not seem to support this judgment, with data showing that the second quarter of active users accounted for 10%, a total of 36.5 million people. However, the data is not alarming, Tencent, as early as the third quarter of 2011, its microblogging active users more than 55 million people. Rely on QQ This natural social relationship chain, Tencent Weibo has always attached importance to the relationship between acquaintances and social networking, its brand appeal although not as Sina, but to earn more real money. In addition, Tencent in the game, E-commerce and other aspects have a wealth of operating experience, you can and Tencent Weibo direct docking. Sina lacks the mature game and the electronic Commerce resources, also does not have the consummation payment system, based on the social Relations business model exploration, does not have the outside world to be optimistic.

Wang Yuquan that Sina's most formidable rival is Tencent: "Sina is like a weak Song Dynasty, only Sina Weibo this checkpoint, in case of loss, is likely to completely lose the position of the Internet first camp." Tencent is a valiant golden soldier, sitting games and other profitable cows, ready to return to the prairie to recuperate. "Hand QQ, micro-letter, micro-Bo and other killer applications, Tencent is waiting for Sina to make the wrong opportunity."

How to suppress competitors? Inside Sina, employees are told that Sina must be open to create an Internet ecosystem that completes the transition from a portal to a platform-oriented company. This means Sina Weibo can not be just a simple internet product, but should be a platform for many products. Separately and Sina, Tencent has dealt with Wang Yuquan said, for developers, Sina is a platform open enough, Tencent is false open, really closed. The less powerful Sina has to rely on developers, and in his plan, he hopes to build a strong ecosystem through the microblogging user platform. If successful, Sina Weibo will become the core of the many Internet applications, and create a business system with the participation of users, advertisers and Sina, and derive more business models.

But the platform was not built in a day. Since the launch of the open platform, there have been few stunning applications. Sina internal engineers told reporters, "the construction of the platform is to put a long line, fishing for large fish, in the short term, Sina will not bring a large amount of income." "At the same time, there is no inevitable link between Weibo and the platform, Sina claims that the number of applications on the open platform has more than 200,000, but reporters in the Sina Weibo application square, see the home page shows a stop in the end, such as the number of third party popular application participation in less than 120,000 people, compared to Sina Weibo's 300 million users, The user ratio is less than 0.04%.

Open platform developers have not really benefited. Developed a third party Sina Weibo client Weico, and accumulated 2 million active users of the EICo company creative director Zhang profit told the "New finance" reporter, "Weico has been a venture capital, short-term not anxious to profit, but the product itself from the Sina open platform has not received any receipts." ”

The flow of liquidity is not clear, so that the major investment banks on the valuation of Sina controversy is also very large. October 10, Credit Suisse to the Sina stock rating as "outperform", the target share price from 81 U.S. dollars to 78 U.S. dollars. Morgan Stanley gave Sina a hold-and-see rating, with a target share of 60 dollars, down more than a half from the 1.5 peak of Sina's share price.

In the face of pressure from the capital market, the company's future fate bet on Weibo Sina is now no way to go back.