Weibo, WeChat Set For 2013 Showdown 微博、微信将于2013年决战
An epic battle on the Chinese Internet is shaping up for the New Year, pitting dominant social networking site (SNS) Sina (Nasdaq: SINA) Weibo against up-and-coming challenger WeChat, also known by its Chinese name Weixin. The looming battle in many ways reflects the rapid rise in China of the mobile Internet, where WeChat has found an eager new audience that likes to use SNS all the time instead of only at desktop computers where Sina Weibo dominates.
Weibo is facing a difficult future due to the huge costs it is bringing for Sina, whose profits have come under pressure due to the major resources it must devote to a service that is still largely free. By comparison, WeChat is owned by Tencent (HKEx: 700), China’s biggest Internet company and an experienced SNS operator through its older QQ instant messaging service.
But Sina could soon get a big boost if it signs a major new strategic tie-up with one of China’s Internet giants, with rumors circulating that top e-commerce firm Alibaba and leading search engine Baidu (Nasdaq: BIDU) have both expressed such interest. (English article)
Weibo is a microblogging service that is often called the Chinese equivalent of Twitter, and its meteoric rise dates back to 2009 when the actual Twitter became inaccessible to most users inside China. Since then, Weibo has added millions of subscribers every month and now has around 400 million registered users. But WeChat, an instant messaging service designed for use on mobile phones, has seen an equally meteoric rise. Since its launch just two years ago, the service has rapidly grown to recently pass the 300 million mark in registered users.
Many observers have pointed out that the two services compete for the same audience, and that their huge user bases contain big overlap. But WeChat has been steadily gaining momentum this year, in large part because it was designed for mobile use in a country where more than 70 percent of Internet users now access the web over their smartphones.
While Tencent has focused on rapidly building WeChat’s user base, Sina has shifted its focus into the more arduous task of trying to monetize Weibo with the addition of new premium and advertising services in a bid to make the unit profitable. The campaign’s progress has been slow, opening the window for WeChat’s rapid rise.
But in what could become the Internet deal of 2013, Sina has reportedly been talking with other major Internet firms about strategic tie-ups that could quickly reverse Weibo’s stalling momentum. The most talked-about deal would see Sina partner with Alibaba, allowing the latter to develop customized versions of its popular e-commerce services for Weibo’s huge audience of consumers.
If the rumors are true, many expect Sina and Alibaba could reach a deal in early 2013, offering huge potential for both sides. If and when that happens, look for the battle between Weibo and WeChat to intensify in 2013, with Sina potentially regaining some of the momentum it lost in 2012.
Bottom line: 2013 will see an epic showdown between Sina Weibo and Tencent’s WeChat, with Weibo regaining some of its lost momentum if it signs a strategic tie-up with Alibaba.
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