Web portal Sohu looks to video business and gaming for future revenue growth

Revenues at Sohu.com Inc’s online video business grew faster than its other businesses in the first quarter, its latest financial results showed, pointing to the next potential avenue of growth for the Chinese web portal.

Sohu Video’s revenues were US$ 50 million in the three months to March, 57 per cent higher year over year. Total revenues were US$455 million, up 25 per cent from a year earlier and down 5 per cent from the previous quarter.

Charles Zhang, chairman and CEO of Sohu.com Inc., said in a statement accompanying the results that the video revenue growth was mainly driven by faster mobile monetisation.

Nasdaq-listed Sohu has three key businesses, news, video and search engine Sougu, but analysts say it lacks a dominant focus that can drive growth, when compared with its rivals.

Its news business, Sohu Media Portal, was its original key unit, but it has fallen behind its rivals Sina, Tencent and NetEase. Sohu Media’s revenue of US$45 million in the first quarter was a long way behind the US$181.9 million of Sina’s Weibo.

Weibo, sometimes called China’s Twitter, has 275 million users and is the country’s largest social network. Tencent’s Wechat, with its Facebook and Skype like functions, has 450 million users. Sohu Media has around 200 million.

However, as competitive as Sohu video is, it is operating in a market dominated by two larger websites, Youku and iQiyi. Another fast-rising company, LeTV, is also chasing after Sohu, according to financial news website Hexun.com.

Sohu has focused on buying foreign TV shows to drive growth and was the first site in China to introduce popular American programmes such as The Ellen DeGeneres Show and House of Cards.

Zhang noted mobile games as a another area to grow Sohu Media’s business, though that would bring it into direct competition with NetEase, whose online game business is the largest and had revenue of 32 billion yuan (US$5.1 billion) in 2013.

“As the current portfolio is gradually maturing, our main focus is to bring out an abundant and diversified mix of new games, especially mobile games," he said in the statement.