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Renren Expands Fast in Games
[January 04, 2013]

Renren Expands Fast in Games

Jan 04, 2013 (SinoCast Daily Business Beat via COMTEX) -- Chinese social networking website Renren Inc (NYSE: RENN) is expected to attach more importance to the field of online games in the future.

It has reported a loss-making operation for almost all quarters since 2011 except the fourth quarter of the year, in which it embraced a profit-making operation owning to a sale of a stake in domestic online travel service provider eLong, Inc. (NASDAQ: LONG). It raised more than USD 740 million through launching an IPO on the New York Stock Exchange as the Facebook of China in May 2011, becoming the biggest one among all Chinese firms that have debuted on the US stock market in terms of proceeds, and after that, it saw share price there rise sharply. The success should be mainly attributed to a concept built on Facebook, Zybga, Groupon and Linkedin, four famous Internet firms in the US currently. In detail, the concept is consisted of social networking service, game business, group-buying business, and online recruitment business.

Through Facebook Connect or the like key, over 2.5 million websites around the globe have been consolidated into Facebook since the end of 2011. The mode is expected to be extended into one similar to the AdSense of Google and through it, Facebook gathers off-platform flow largely. However, Renren does not have such an ability. Due to this, it achieved little in the fields of social networking service and online recruitment service and in 2010, it booked a profit of about USD 17.38 million, with ARPU standing at only USD 0.15, much lower than that of Tencent (SEHK: 0700) and Facebook.

In addition, more and more people log on the Internet through mobile terminals nowadays and available data shows that 50 percent of Renren users log on it through mobile terminals. That is to say it will see revenue from PC-side advertising business drop to a large extent and related loss can not be recovered through mobile-side advertising business within a short period of time. According to financial results it released for the third quarter of 2012, the revenue from online advertising business hit USD 17 million, down 13.7 percent from a year earlier. contributed to it much when it debuted on the US bourse. However, it has been proved that the group-buying unit was always negative assets of it. And in the third quarter of last year, the unit reported a loss of USD 6.2 million, accounting for 51 percent of its total.

Despite that, Chen Yizhou, CEO of it, keeps a calm attitude. In line with people close to it, it grows fast in the field of online games and game business has contributed to over 50 percent of its revenue since the first quarter of last year. And in the third quarter of the year, related revenue reached USD 24.2 million, up 120.2 percent from a year ago.

(USD 1 = CNY 6.23) Source: (January 04, 2013)

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