Rival Chinese Internet Giants Report Higher Q3 Ad Revenues, More Users

Sina and Tencent Have Launched Competing Social Media Strategies in China

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Rival Chinese Internet giants Sina Corp. and Tencent Holdings Ltd. reported gains in third-quarter profits Wednesday, with both citing a boost from online advertising and announcing more users for their competing social media platforms.

The two companies have carved out competing strategies in China's massive social media market. Sina's Weibo is a Twitter-like service where news and views go viral fast, while smartphone users rely on Tencent's WeChat for an all-in-one mobile app resembling WhatsApp, Facebook and Instagram. Both are hugely popular, and both are being scrutinized for their monetization strategies.

"Certainly, Tencent has more sources of revenue, the largest portion of which is online gaming -- but for Sina, most of it is coming from advertising," said Xiaofeng Wang, a Forrester Research analyst.

Sina said ad revenues for the Twitter-like Sina Weibo service jumped 125% over the comparable year-earlier period, reaching $43.7 million. But much of that gain was in ad placements from e-commerce giant Alibaba, which has a new partnership with Sina Weibo, Ms. Wang said.

Sina CEO Charles Chao said its Weibo platform was "approaching the break-even line." In a call with investors, he noted that Sina has proceeded carefully as it tries to make money off the service, "conscious of striking a balance between monetization and user experience."

The results came in a quarter marked by Chinese government efforts to clamp down on some outspoken and high-profile microbloggers, which led many users to post more cautiously. Despite that, Sina's Weibo platform had 60.2 million daily active users at the end of September, up more than 11% from three months earlier.

Sina's net income grew 157% in the quarter to $25.4 million. Total revenues from ads and other sources combined were up 21%, reaching $184.6 million.

In April, Alibaba Group Holding Ltd. bought an 18% stake in Sina Weibo. The deal allows users to reach Alibaba's online shopping platforms through their Weibo microblogging accounts.

Tencent also has a microblogging platform, but its biggest competition with Sina comes from WeChat, a smartphone app whose popularity has exploded in a country where mobile internet is growing fast.

Though it just launched a mobile payment service, WeChat has put user experience ahead of money-making experiments. It sharply restricts how brands can reach out to consumers and how often. It's also less viral than Weibo – as on Facebook, people who connect there often know each other in person.

Tencent said WeChat had 271.9 million monthly active users at the close of the third quarter, up about 15% from three months beforehand.

The company reported quarterly net profit of $631 million, up nearly 20% from the year-earlier period. Its diversified revenues were $2.53 billion in the quarter, rising 34% from the year-earlier figure. Of that, online advertising jumped nearly 37% year-on-year to $226 million.

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