Sina Corp, operator of Weibo, China's most active microblogging site, launched a virtual currency last week, signaling its intent to try to parlay its nearly 200 million users into a money-making business.
Sina, which is listed in New York, is now the seventh most visited website in China. It introduced Weibo to its online services two years ago to try to catch up with rivals making inroads in the Twitter-style microblogging segment of the market.
"Sina's strength was in its portal business, and its challenge is to meld its microblog users with its existing business as a whole," said Analysys International's researcher Dong Xu. "Sina needs to find ways to make money out of its huge user base, and virtual currency is its latest strategy."
Microblogging allows subscribers to post short messages and embed photos or video clips to other fellow subscribers. Twitter can't be accessed in China, leaving a gap that Sina and other Chinese microblogs have been quick to fill.
Sina's virtual currency, called weibi, is equivalent to one yuan for each unit. Users can use their bank accounts or online payment tool Alipay to top up their own weibi account.
Weibi can be used to purchase virtual goods and value-added services on the Weibo site. Currently there are no content or applications fees on Weibo, but the introduction of the new currency signals Sina's intention to move in that direction.
For Chinese white-collar workers and college students, Weibo has become an indispensable news source and a new platform to comment on hot social issues.
Sina's ambitions obviously go beyond both realms. About the same time weibi was launched, Sina introduced an online game sector, including poker and other casual card games.
On the homepage of this game sector, which only hosts six casual games now, users can see all recent activities of what your friends have achieved in the games they recently played and their own track record in games in which they have participated.
Currently no payment is needed for these casual games but with more operators joining the platform, game developers will be able to charge users for value-added services or other game props.
According to Sina Chief Executive Officer Charles Chao, there are several ways to make Weibo a money-making proposition. In a speech earlier this year, he cited the importance of precision-target advertising, real-time search functions, e-commerce, revenue-sharing with third-party software and games developers as well as payment for digital content.
There are now over 1,000 applications, ranging from fortune-telling widgets and photo-sharing software, for Sina Weibo on desktop computers and mobile phones. Most of the applications come from third-party developers.
The applications are all free, and the most popular offerings have each attracted more than 3 million users.
Weibo's official gaming platform said on Friday that developers of casual games operating on Weibo will keep all their revenue in the first year and Sina will take 30 percent of their income from the second year after their launch.
By dangling the prospect of charging for value-added applications and sharing the income with software developers, Sina is hoping to greatly expand what it has to offer users. That's important because content matters in keeping users loyal to one site.
Earlier this year, Sina launched a desktop software of microblogging that will allow users to log on and chat with friends and acquaintances, a new approach to keep users on its platform as long as possible, with interaction becoming easier with the new software.
Sina isn't the first to enter into the virtual currency realm. Rival Tencent introduced its own online currency back in 2002 and used it as a conduit for users to pay for value-added services on its QQ instant messaging and social platform Q Zone.
By 2010, value-added services contributed 15.5 billion yuan (US$2.4 bilion), or 62.4 percent, of Tencent's annual income. Hong Kong-listed Tencent is now China's largest Internet company by market value.
Getting users to pay for services and content in China is a tricky business.
Chinese customers are normally unwilling to pay for services and software or even patented content, which is one reason why pirated videos and books are so rampant.
"Tencent has been occupying most of the Chinese Internet users' online time as it has such a large user base so it is easy to launch value-added services in games and instant messaging tools for users to pay," said Hu Longfei, analyst at iChinaStock, a website that tracks Chinese stocks listed in the United States.
QQ, the instant messaging tool of Tencent and also the firm's core product, saw 674 million active users in the first quarter of this year.
"With the introduction of Sina's open platform that hosts other third party services, it is gradually becoming a new portal that users spend most of their time online everyday," Hu said.
Earlier this month, China International Capital Corp said in a research report that Sina's microblogging unit is worth around US$4 billion to US$5 billion, its value may climb to US$12 billion to US$15 billion in four to five years. The valuation was based on the prospects of Weibo's advertising income and users' payment for value-added services in coming years.
Whether Sina will be successful in turning its large user base into a money spinner from value-added services is still uncertain.
It's hard to convince users to pay unless a site offers hot choices for users. That's what Sina needs to do now - beef up content.
Xie Chunye, founder of an independent online widget developer website, said Sina's new weibi currency may spur the work of applications developers, who see Weibo as a valuable source of income for their online creations.