New game powers doubling of Sohu earnings

PUBLISHED : Wednesday, 06 February, 2008, 12:00am
UPDATED : Wednesday, 06 February, 2008, 12:00am, the mainland's second-largest internet portal, has more than doubled its fourth-quarter profit, driven by its new online game, Tian Long Ba Bu.

The company said profit rose to US$15 million from US$6 million a year earlier, as revenue grew 90 per cent to US$65 million. About 33 per cent of revenue, or US$22 million, came from the free-to-play title.

'Most of the extra revenue came from its self-developed online game Tian Long Ba Bu, which was launched last summer,' said Dick Wei, an analyst at JP Morgan.

Active paying accounts for the title, which charges players for in-game items, grew to 1.09 million from 690,000 three months earlier.

Average revenue per user rose 24 per cent to 49 yuan per month but Mr Wei expects growth to dip below 10 per cent from the next quarter.

Sohu expects revenue of US$25.5 million to US$26.5 million from its online games in the next quarter, against US$24 million this quarter.

Revenue from its core business, brand advertising, grew 46 per cent from a year earlier. Analysts expect Sohu to benefit from the Beijing Olympics-related advertising boom.

'But once the Games are over, it would shrink a bit,' Mr Wei said.

For the whole of last year, profit surged 35 per cent to US$34.9 million as revenue jumped 41 per cent to US$188.9 million. The company expects revenue in the next quarter to be between US$66.5 million and US$68.5 million.

Sohu is being sued by global music labels for copyright infringement in MP3 search services offered by its subsidiary, Sogou. A Sohu spokesman declined to comment on the case filed in Beijing on Monday.

Sponsored search contributed US$1.5 million to Sohu's revenue in the fourth quarter, compared with US$2.9 million a year earlier.

'Search [engine] is only a tiny part of Sohu's business,' Mr Wei said.