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Sina warns of real-name policy backlash

2012-02-29 09:46 Global Times     Web Editor: Zhang Chan comment

Sina Corp will accelerate monetization of its microblog services this year by selling advertising space and charging for gaming services, its CEO said Tuesday, warning that a real-name registration requirement could hurt user growth and activity.

"We believe the requirement to convert existing users into verified users will have a negative impact on user activity in the short term," Cao Guowei, chief executive of Sina, said on an earnings call Tuesday.

Cao's comment was made amid dampened outlook for commercialization due to a real-name registration requirement initiated by local governments.

On Monday, Sina swung to a net profit of $9.3 million in the fourth quarter of 2011, compared with a net loss of $100 million for the same period a year earlier. But the company forecasted weaker revenue in the first quarter due to a downturn in advertising.

"Revenues from Sina Weibo will not be very significant compared with our total revenues this year, but will take off sharply in 2013," Cao said.

"Some Weibo users will choose to leave due to the real-name regulation, which will result in decreasing ad sales and diminishing profit margins for operators," said You Tianyu, an analyst at Beijing-based consultancy iResearch.

Sina's main competitor Tencent Holdings is also moving to monetize its Weibo services.

Last year, Tencent launched Microspace, an enterprise level marketing product, and Micromarket, which allows enterprise users to sell their products on line.

Currently, Sina Weibo has more than 300 million user accounts, and the number of its daily active users stays around 27 million, according to Cao.

"We plan to launch a display ad system on Sina Weibo in the second quarter, introduce a new version of the enterprise Weibo service, and charge on the game platform from the second half of this year," Cao said.

Cao also said Sina plans to invest $160 million on the Weibo platform this year, compared with no more than $120 million invested last year.

"Until now Sina Weibo has not been profitable, but Cao's plan reveals its ambitions to cash in mainly from advertisers and enterprise users," Dong Xu, an analyst at consultancy Analysys International, told the Global Times Tuesday.

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