Tuesday, January 03, 2006

Predictions for the Chinese Internet in 2006

Interesting predictions by Bill Bishop, CEO, Red Mushroom, a Beijing-based online game studio (Co-founder and former EVP & GM, CBS MarketWatch)

1. Tencent becomes the largest Chinese Internet company by market capitalization.

2. At least one of Shanda, Netease, The9, Baidu or Sohu sees its stock trade below its IPO price in 2006.

3. Shanda decides it can use its cash better elsewhere and places out its 19.5% stake in Sina, possibly to a large Chinese telecom company. Sina is after all the second largest news provider in China after CCTV, and I believe the government would prefer to have some amount of ownership concentration in the hands of another “friendly” shareholder.

4. The Alibaba show hits some bumps. It is easier to grow revenue from $0-60M than it is to go from $60M to $250M, and at some point the CEO’s showmanship may piss off the wrong person in China.

5. Netease’s game business will slip, as the spread of free games hits their core titles and commercial operation of their 3D game is delayed at least into Q4.

6. Google China does not get much traction and ends the year with the same market share it has today.

7. The blog business becomes dominated by major portals like Sina, and the standalone blog companies still do not have compelling business models by year-end.

8. At least one major US media company makes inroads in China, but not a lot of money, licensing its video content to one of the portals and/or IPTV services.

9. Kongzhong, Linktone or Hurray sell out to Netease, Sina, Sohu, Shanda or Tencent.

10. The mobile game market in China continues to underwhelm, due to the carrier distribution bottleneck.

You can visit his blog here: Billsdue

Please let me know your own China Internet predictions for 2006. (By email or by "comments")