Iresearch-2006 China Online Game Research Report Simple Version

中国网络游戏研究报告 2006 年

Proprietary Declaration: All the pictures, tables or forms and texts in this report shall be owned by iResearch Consulting Group. Where, the ownership of part of the pictures and tables or forms without the data sources marked shall belong to the original data providers. All the information acquired by iResearch came from the public information. In case of any copyright conflicts arisen herein, please contact iResearch in time. iResearch China Online Game Research Report 2006

Contents 1. Overview of global development of online game market in 2006 ...... 3 2. Overview of online game market development in China 2006...... 5 2.1. Market size of online game in China ...... 5 2.2. User size of online game Market in China...... 6 3. Features of online game market development in China 2006...... 9 3.1. Multiplicity of the products preliminarily appeared with the casualization getting more evident ...... 9 3.2. Free operational mode of MMORPG getting increasingly mature...... 10 4. Analysis on online trading between online gamers ...... 12 4.1. Features on online trading between global online gamers...... 12 4.2. Size of online trading between global online gamers...... 13 5. Analysis on online games used by the Chinese netizens ...... 15 5.1 Situation on using game operational service websites...... 16 5.2. Using situation of the Chinese netizens on different types of game software.....19 6. Analysis on online gamers in China...... 20 6.1. Online game types once used and most often used by the Chinese online gamers of different genders...... 20 6.2. Online game types once used and most often used by the Chinese online gamers in different marriage status ...... 21 6.3. Online game types once used and most often used by the Chinese online gamers in different areas ...... 22 Content of the Report ...... 25 Figure Content of the Report ...... 27 Table Content of the Report ...... 30 Legal Declaration:...... 31

Table Content Table 1- 1 Industry size of global online game market and industry size in major areas 2003-2010...... 3 Table 2- 1 User size of online game in China 2003-2006...... 6 Table 2- 2 User size of online game in China 2007-2010...... 7 Table 4- 1 rading size on online games of platforms for online trading between the Chinese online gamers 2003-2006...... 14 Table 6- 1 Online game types once used and most often used by the online gamers of different genders...... 21 Table 6- 2 Online game types once used and most often used by the Chinese online gamers in different marriage status...... 22 Table 6- 3 Online game types once used and most often used by the Chinese online gamers in different areas...... 23 Table 6- 4 Differences in personal features of the Chinese users of online games in

different types...... 24

Figure Content Figure 1- 1 Industry size of global online game market 2003-2010...... 4 Figure 2- 1 Revenue size of online game overall market operators in China 2003-2011..5 Figure 2- 2 User size of online game in different types 2003-2006...... 8 Figure 2- 3 Penetration rate in online games of online game users in different types 2003-2006...... 9 Figure 3- 1 Rate of revenue contribution in free MMORPG operation of operators 2005-2006...... 11 Figure 4- 1 Size of online trading between global online gamers 2003-2010...... 13 Figure 4- 2 Size of online trading between the Chinese online gamers 2003-2010...... 14 Figure 5- 1 iUserTracker-2006.9-2007.1 total times of monthly visits of the Chinese netizens to the game infotmation service websites...... 16 Figure 5- 2 iUserTracker-2006.9-2007.1 total monthly visits of the Chinese netizens to the game information service websites...... 17 Figure 5- 3 iUserTracker-2006.9-2007.1 Top10 of total monthly visits of the Chinese netizens to the game information service websites...... 18 Figure 5- 4 iUserTracker-2007.1 total monthly visits of Top10 of the Chinese netizens to the game information service websites...... 19 Figure 5- 5 iUserTracker-2006.9-2007.2 total monthly times of the Chinese netizens in booting the online game software...... 20

1. Overview of global development of online game market in 2006

In 2006, the global online game industry received a rapid development, with the industry size reaching up to USD 6.5 billion, up 35% comparing to 2005. The global online game market had a slightly slow step in growth after having the high-speed growths in 2003 and 2004. iResearch Consulting Group predicted that by 2010, its size would get up to USD 12 billion.

Asian pacific area to be an important market of online game Asian pacific market is getting increasingly important in the global online game market. China and Korea have accumulatively accounted for 42% of the global market, especially in China, presenting a very rapid growth. iResearch Consulting Group predicted that by 2008, China would surpass Korea in the size of the online game market.

INDUSTRY SIZE OF GLOBAL ONLINE GAME MARKET AND INDUSTRY SIZE IN MAJOR AREAS 2003-2010 Year of Year of Year of Year of Year of Year of Year of Year of

2003 2004 2005 2006 2007 e 2008 e 2009 e 2010 e USA (USD 100 4.2 8.0 12.9 18.0 23.5 26.7 28.5 30.6 million) Growth rate 90% 61% 40% 31% 14% 7% 7% Global rate 18% 22% 27% 28% 29% 29% 27% 26% Korea (USD 5.1 6.7 10.0 14.0 18 20 23 26 100 million) Growth rate 31% 49% 40% 29% 11% 15% 13% Global rate 21% 19% 21% 22% 23% 22% 22% 22% China (USD 3.5 5.3 8.1 12.8 18 20.6 24 28 100 million) Growth rate 52% 53% 57% 37% 18% 16% 15% Global rate 15% 15% 17% 20% 22% 22% 23% 23% Global (USD 24 36 48 65 80 92 105 120 100 million) Growth rate 50% 33% 35% 23% 15% 14% 14% ©2007.1 iResearch Inc. www.iresearch.com.cn Table 1- 1 Industry size of global online game market and industry size in major areas 2003-2010

Figure 1- 1 Industry size of global online game market 2003-2010

2. Overview of online game market development in China 2006

2.1. Market size of online game in China

Revenue size of online game overall market operators in China

Continue with a high-speed growth rate, with its steps showing slightly slow

Figure 2- 1 Revenue size of online game overall market operators in China 2003-2011

2.2. User size of online game Market in China

USER SIZE OF ONLINE GAME IN CHINA 2003-2006 Year of Year of Year of Year of

2003 2004 2005 2006 Netizen size 7950 9400 11100 13700 Growth rate 18% 18% 23% Online game user 1680 2200 3700 4600 size Growth rate 31% 68% 24% Penetration rate among 21% 23% 33% 34% netizens MMORPG users 890 1200 1800 2400 Growth rate 35% 50% 33% Penetration rate among 11% 13% 16% 18% netizens Penetration rate among 53% 55% 49% 52% game users Large & medium sized casual game 550 900 1600 2200 user Growth rate 64% 78% 38% Penetration rate among 7% 10% 14% 16% netizens Penetration rate among 33% 41% 43% 48% game users Platform-based game 900 1300 2300 3000 user Growth rate 44% 77% 30% Penetration rate among 11% 14% 21% 22% netizens Penetration rate among 54% 59% 62% 65% game users Source: CNNIC，iResearch

USER SIZE OF ONLINE GAME IN CHINA 2007-2010 Year of Year of Year of Year of

2007 e 2008 e 2009 e 2010 e Netizen size 16300 19700 22900 26200 Growth rate 19% 21% 16% 14% Online game user 5700 6800 8000 9000 size Growth rate 24% 19% 18% 13% Penetration rate among 35% 35% 35% 34% netizens MMORPG users 3000 3500 3900 4100 Growth rate 25% 17% 11% 5% Penetration rate among 18% 18% 17% 16% netizens Penetration rate among 53% 51% 49% 46% game users Large & medium sized casual game 2800 3500 3900 4100 user Growth rate 27% 25% 11% 5% Penetration rate among 17% 18% 17% 16% netizens Penetration rate among 49% 51% 49% 46% game users Platform-based game 3500 4000 5000 6000 user Growth rate 17% 14% 25% 20% Penetration rate among 21% 20% 22% 23% netizens Penetration rate among 61% 59% 63% 67% game users Source: CNNIC，iResearch Table 2- 2 User size of online game in China 2007-2010

Figure 2- 2 User size of online game in different types 2003-2006

Figure 2- 3 Penetration rate in online games of online game users in different types 2003-2006

3. Features of online game market development in China 2006

3.1. Multiplicity of the products preliminarily appeared with the casualization getting more evident

Preliminary appearing of multiplicity

In the Chinese online game market in 2006, the game types became more abundant, beginning to present a situation of multiplicity. A growing number of games in different types and styles came into being and became popular. In the year of 2006, the games with the top market shares had diversified types: MMORPG had the quality European products

Copyright © iResearch Inc. 2007 9 iResearch China Online Game Research Report 2006 as World of Warcraft, the traditional Korean pickles as Legacy, and Journey, which developed the PK level-training to the extreme degree and subjected to suspicion on its fairness and being highly disputed, and more, the relaxed Fantasy Westward Journey for Q-version; Of all the large & medium sized casual online games, there were the traditional action type of Paopao Tang, the music & dance type of Vigor Dance Group, QQ Sonic and Super Dancer, as well as the SPT type of Street Hoop, PopKart, etc.

Casualization getting more evident

In 2006, the feature of scaualization was getting evident in the online game market of China. This not only reflected the quick development of the online casual game and the constant enrichment of their products, but also the more emphasis on the casual elements in MMORPG.

In recent years, the casualization getting more evident was mainly caused by the following factors: 1) Growth of the household netizens; 2) the regression of the gamers on the game nature-“To play, not to be played”; 3) Policy influence.

3.2. Free operational mode of MMORPG getting increasingly mature

In 2006, the rally of the Shanda performance and the rise of Journey and Yulgang, to some extent, verified the reality and profitability of such mode.

Figure 3- 1 Rate of revenue contribution in free MMORPG operation of operators 2005-2006

What leads to the free operation of MMORPG?

It is the Chinese online game market, especially when the MMORPG market has evolved into the buyer’s market, an environment where competition is extremely fierce. Prior to 2005, the Chinese game operators of MMORPG had the main profit-making mode of time counting with a pointcard.

Essence of MMORPG free operation

As an emergent game operational mode, the mode of free operation has predominated the markets in some countries like Korea, in which the online games are comparatively developed. A growing number of game operational companies ultimately chose to use the free way to undertake the game operation. Such kind of operational mode no longer charges fees for the online gamers, i.e. there is no more pointcard or monthly package card that counts the fees on the game consuming time. And the gamer may be able to experience the happiness brought about from the game itself in a more comfortable manner.

“Free” is not omnipotent – depending on the game itself and a trial for the operational ability iResearch Consulting Group believes that the success of a style of game depends on a number of factors (quality, feature and the service support ,etc), especially, in the present market environment where competition is extremely fierce. It is not practical to rely on “free” merely, for the free operation challenges the operational ability of the operators. Under the prerequisite of game being free and props being charged, the operators should learn to balance the relation between the game fairness (to attract more users) and promoting the props sales (to make profits). This is an important research topic in the future game operations.

4. Analysis on online trading between online gamers

4.1. Features on online trading between global online gamers

1) North America and Europe

In the North American and European areas, where comparatively e-Commerce was developed, plus online payment and credit system were perfect, the props trading between the online gamers was featured with buying game currency and the related props on the special trading sites for B2C.In addition, these two areas had a perfect economic system. Generally, a game has inside the stable and virtual universal equivalent (game currency). Basically, the gamers may conduct the trading of game currency in either online or offline way, then use the game currency to purchase other virtual props in the game.

2) Asia In Asian area, the mainstream of online games was the Korean games, stressing on the roles of virtual props. However, due to the game planning and other factors, the games had an imperfect economic system, often found to have the occurrence of “inflation” (where the “game currency” appeared with an excessively large number, and the top quality props reduced relatively). Plus that the Asian gamers tended to show off their “force” and “fortune” to realize the game value, the e-commerce means including online payment and the credit system still needed to be improved, the content of online trading was mainly the game props and the game accounts of high-class. The attributes of prop and account are comparatively special, and unable to apply the mode of batched purchase for uniformed sales similar to “game currency”.

Instead, the trading mode of C2C between users could only be used. Part of the games had the value of game currency and the functional stability that may influence the trading market of B2C. Therefore, in Asian market including China, Korea and China Taiwan, the trading modes of C2C and B2C were found to coexist, except the difference in the product types for trading. C2C was inclined to the trading of props and accounts, whereas B2C focused on the “game currency”.

4.2. Size of online trading between global online gamers

Figure 4- 1 Size of online trading between global online gamers 2003-2010

Size of online trading between the Chinese online gamers

Figure 4- 2 Size of online trading between the Chinese online gamers 2003-2010

The revenue size of the online trading platforms for the Chinese online gamers (refers the revenue size of the trading service provided for gamers) is getting growingly bigger, such as 5173, Taopao, Paipai, 88jb, with their revenue sizes respectively of USD 90 million, 27 million, 7 million and 6 million. Also, they showed an increase over 2005 of USD 30 million, 9 million, 6 million and 5 million.

Trading size on online games of platforms for online trading between the Chinese online gamers 2003-2006 2003 2004 2005 2006 ebay.com 800 1200 900 400 88jb.com 0 0 100 600 Paipai.com 0 0 100 700 Taobao.com 600 1600 1800 2700 5173 1900 4600 6000 9000 Note: Unit (10,000 USD), data was obtained through the industry interviews

5. Analysis on online games used by the Chinese netizens

Games information service: refers the websites or channels where the games information are provided, usually including different types of games from different operators. Game operational service: refers the game websites or channels build up by the game operators in attempt to popularize the games, with the contents available for the relevant games under the operators, mainly the large & medium sized games in full-screen. Casual game or platform service: refers the game websites or channels build up by the game operators in attempt to popularize the games, with the contents available for the relevant games under the operators. Usually, these games are operated based on the game platform hall. Online game: refers the game in which multiperson are playing together through the Internet access links for operation. Casual game and platform software: refers a kind of customer-end software providing the access to the related game under the operator. PC game: refers the game that can be independently operated on PC without getting access to Internet.

IResearch Consulting Group believes that from February 2007, the total times of monthly visits of the Chinese netizens to the game information service websites would have a rally along with the arrival of the spring vacation and the year-end long vacation.

Figure 5- 1 iUserTracker-2006.9-2007.1 total times of monthly visits of the Chinese netizens to the game infotmation service websites

5.1 Situation on using game operational service websites

The total monthly visits of netizens on the game operational service websites were stable, and possibly see a rally in February 2007; the monthly valid browsing time of netizens on these websites has showed an increase in January 2007.

Per capita total monthly visits to Netease games and the per capita monthly valid browsing time were both admirable.

5.1.1. Analysis on overall continuity of total monthly visits

Figure 5- 2 iUserTracker-2006.9-2007.1 total monthly visits of the Chinese netizens to the game information service websites

5.1.2. Analysis on continuity of total monthly visits to website

QQ game continued to keep the leading position of the game operational service websites on the total monthly visits. And in November 2006, it fell down to the bottom point, showing 46.61 million visits. Nevertheless, this figure was still higher than the monthly visits of any of the other websites in the same kind. From 2006.11-2007.1, QQ game basically presented a straight rise in the total monthly visits, and hitting 58.72 million times in January 2007.

Figure 5- 3 iUserTracker-2006.9-2007.1 Top10 of total monthly visits of the Chinese netizens to the game information service websites

Netease game was ranked No.1 on the list in per capita monthly visits, and followed by Gyyx and Shanda online.

Figure 5- 4 iUserTracker-2007.1 total monthly visits of Top10 of the Chinese netizens to the game information service websites

5.2. Using situation of the Chinese netizens on different types of game software

Analysis on total monthly booting times of online game software and its total running time

Figure 5- 5 iUserTracker-2006.9-2007.2 total monthly times of the Chinese netizens in booting the online game software

6. Analysis on online gamers in China

6.1. Online game types once used and most often used by the Chinese online gamers of different genders

Online game types once used and most often used by the online gamers of different genders Feature Male Female Overall N= 5825 3411 9236

Index TGI TGI Rate Online game types used in 2006 MMORPG 113 78 51% Large & medium sized casual game 99 102 56% Platform-based chess & card desktop game 99 102 92% Platform-based online fighting game 110 83 58% Online game types most often used in 2006 MMORPG 118 70 27% Large & medium sized casual game 82 130 17% Platform-based chess & card desktop game 88 120 38% Platform-based online fighting game 116 73 17% Note 1: TGI= rate of a certain featured group in the target groups/rate of the groups of the same feature in overall ×100

Note 2: Data marked in red signify TGI > 100; data marked in blue signify TGI < 100

Sample Description: N=9236, data was obtained from the online survey on over 50 websites by iUserSurvey in Nov.- Dec. 2006.

6.2. Online game types once used and most often used by the Chinese online gamers in different marriage status

Online game types once used and most often used by the Chinese online gamers in different marriage status Feature Married Unmarried Overall N= 3014 6222 9236 Index TGI TGI Rate Online game types used in 2006 MMORPG 65 117 51% Large & medium sized casual game 54 122 56% Platform-based chess & card desktop game 103 99 92%

Platform-based online fighting game 73 113 58% Online game types most often used in 2006 MMORPG 67 116 27% Large & medium sized casual game 36 131 17% Platform-based chess & card desktop game 162 70 38% Platform-based online fighting game 81 109 17% Note 1: TGI= rate of a certain featured group in the target groups/rate of the groups of the same feature in overall ×100

Note 2: Data marked in red signify TGI > 100; data marked in blue signify TGI < 100

Sample Description: N=9236, data was obtained from the online survey on over 50 websites by iUserSurvey in Nov.- Dec. 2006.

6.3. Online game types once used and most often used by the Chinese online gamers in different areas

Online game types once used and most often used by the online gamers in different areas East Cent North ern South South Northwe Northea ral ern Chin ern ern stern stern Chin Over Feature China a China China China China a all N= 1880 1956 1873 936 479 716 1396 9236 Index TGI TGI TGI TGI TGI TGI TGI Rate Online game types used in 2006 MMORPG 89 112 97 109 99 98 98 51% Large & medium sized casual game 85 109 111 102 95 85 101 56% Platform-bas ed chess & card desktop game 101 102 97 99 101 100 100 92%

Platform-bas ed online fighting game 93 102 108 107 105 93 94 58% Online game types most often used in 2006 MMORPG 93 113 98 114 101 98 86 27% Large & medium sized casual game 79 110 103 100 96 78 123 17% Platform-bas ed chess & card desktop game 118 92 85 91 97 113 106 38% Platform-bas ed online fighting game 93 88 132 95 110 94 87 17% Note 1: TGI= rate of a certain featured group in the target groups/rate of the groups of the same feature in overall ×

100 Note 2: Data marked in red signify TGI > 100; data marked in blue signify TGI < 100

Sample Description: N=9236, data was obtained from the online survey on over 50 websites by iUserSurvey in Nov.- Dec. 2006.

Differences in personal features of the Chinese users of online games in different types

The users of chess & card desktop game platform were characterized by higher age and higher income, and the users of large & medium sized casual games by lower age and lower income.

The users of online game in all types may either be defined with “used in 2006” or “ most often used in 2006”. And all the survey results indicated that the users of large & medium sized casual games had the lowest average age and the lowest personal monthly income; the users of chess & card desktop game platform had the highest average age and the highest personal monthly income.

Differences in personal features of the Chinese users of online games in different types Used Feature Used Used large Used

MMORPG in and medium platform-bas platform-bas 2006 sized casual ed chess & ed online game in 2006 card desktop fighting game game in 2006 in 2006 N= 4726 5167 8518 5369 Average age 26.5 (years old) 23.5 22.7 24.1 Average personal 1430 income (RMB Yuan) 1297 1169 1296 Average family 4514 income (RMB Yuan) 4627 4620 4498 ©2007.1 iResearch Inc. www.iresearch.com.cn

Most often used the Most often intelligent Most used Most often used large games on platform-base used and medium game d online MMORPG in sized casual platform in fighting game Feature 2006 game in 2006 2006 in 2006 N= 2493 1603 3531 1567 Average age 31.3 (years old) 23.7 21.2 24.6 Average personal 1705 income (RMB Yuan) 1281 992 1346 Average family 4552 income (RMB Yuan) 4472 4634 4241 ©2007.1 iResearch Inc. www.iresearch.com.cn Table 6- 4 Differences in personal features of the Chinese users of online games in different types

Content of the Report

Page5——1. Definition and classification Page5——1.1. Definition and classification of e-Game Page8——1.2. Definition and classification of Internet game Page8——1.2.1 Role playing game Page8——1.2.2. Casual / Casual game Page11——1.2.3 Contrast of Different online games Page12——2. Overview of global development of online game market in 2006 Page14——3. Overview of online game market development in China 2006 Page14——3.1. Market size of online game in China Page14——3.1.1. Revenue size of online game operators in China Page18——3.2. User size of online game Market in China Page23——3.3. Share of online game market in China Page23——3.3.1. Overall share of online game market in China Page29——3.3.2. Differentiated share of online game market in China Page37——4. Industry chain of online game market in China Page37——4.1. Industry chain structure of online game market in China Page38——4.2. Flow of business operation of online game in China Page38——4.2.1 Discussion phase of product development or agency collaboration Page41——4.2.2. Product test phase Page41——4.2.3. Formal operational phase Page42——4.2.4 All-the-way marketing activities Page43——5. Features of online game market development in China 2006 Page43——5.1. Multiplicity of the products preliminarily appeared with the casualization getting more evident Page43——5.2. Free operational mode of MMORPG getting increasingly mature Page46——5.3. Advertising in online game became the hotspot again Page47——5.4. Export heat continues to get higher Page49——5.5. Marketing getting reinforced Page50——5.6. Changes on policy will influence the market situation Page51——5.7. Preliminary size formed for online game trading in China Page52——6. Analysis on online trading between online gamers Page52——6.1. Analysis on online trading between global online gamers Page52——6.1. 1. Features on online trading between global online gamers Page53——6.1. 2. Platform for online trading between global online gamers Page55——6.1. 3. Size of online trading between global online gamers Page56——6.1. 4. Size of online trading of major global online games Page57——6.2. Analysis on online trading between the Chinese online gamers Page57——6.2.1. Features on online trading between the Chinese online gamers Page58——6.2.2. Platform for online trading between the Chinese online gamers

Page63——6.2.3. Size of online trading between major Chinese online gamers Page64——6.3 Analysis on future development trend of online trading between the Chinese online gamers Page65——7. Analysis on core operators of online game in China 2006 Page65——7.1. Analysis on comprehensive operators of online game in China 2006 Page65——7.1.1 Netease Page67——7.1.2. Shanda Page72——7.1.3. Ninetowns Page75——7.1.4. 9you.com Page78——7.1.5. Tencent Page82——7.6 Comprehensive analysis on development of core operators Page83——7.7. Analysis of operators in the Chinese differentiated market of online game Page83——7.7.1 Analysis of MMORPG operators Page88——7.7.2. Analysis on operators of casual game Page91——7.8. Comprehensive analysis on competency of operators Page93——8. Analysis on core game products Page94——9. Analysis on online games used by the Chinese netizens Page94——9.1 Situation of the Chinese netizens on using different types of online game platforms Page94——9.1.1 Situation on using game information service websites Page104——9.1.2 Situation on using game operational service websites Page115——9.1.3. Using situation of netizens on casual games and platform service websites Page117——9.2. Using situation of the Chinese netizens on different types of game software Page117——9.4.1. Analysis on total monthly booting times of online game software and its total running time Page121——9.4.2. Analysis on total monthly booting times of casual games and platforms and their total running time Page126——9.4.3. Analysis on total monthly booting times of PC game software and its total running time Page132——10. Analysis on online gamers in China Page132——10.1. Online game types once used and most often used by the Chinese online gamers of different genders Page133——10.2. Online game types once used and most often used by the Chinese online gamers in different ages Page134——10.3. Online game types once used and most often used by the Chinese online gamers in different marriage status Page135——10.4. Online game types once used and most often used by the Chinese online gamers in different employment status Page136——10.5. Online game types once used and most often used by the Chinese online gamers with different monthly incomes Page138——10.6. Online game types once used and most often used by the Chinese online gamers in different areas

Page139——10.7. Analysis on personal features of the Chinese users of online games in different types and differences in consuming behaviors Page139——10.7.1. Differences in personal features of the Chinese users of online games in different types Page141——10.7.2. Difference in purposes of using online games in different types in China Page142——11. Analysis on consuming behavior of MMORPG users in China Page142——11.1. Analysis on game props or items purchased by the Chinese gamer users Page144——11.2. Analysis on rate of expenses used by the Chinese MMORPG users on buying props or items in total expenses for games Page146——11.3. Analysis on payment ways of game most favored by pay online game users Page147——11.4. Cognition and attitude of the Chinese MMORPG users toward Online Game Fatigue System Page147——11.4.1. Cognition and attitude of the Chinese MMORPG users toward Online Game Fatigue System Page149——11.4.2. Cognition and attitude toward OGFS of the Chinese MMORPG users in different game consuming levels Page150——11.5. Analysis on channels for the Chinese online game users to acquire information Page150——11.5.1. Main channels and the most influential channel of the Chinese online game users to acquire game information Page152——11.5.2. Newspapers and magazines on games often browsed by the Chinese online game users Page154——11.5. 3. Main websites for the Chinese online game users to acquire information Page156——11.6. Most concerned factors in selection of games for the Chinese online game users Page158——11.7. Main reasons for the Chinese online game users to quit a certain game Page159——12. Analysis on preferences of the Chinese online gamers Page159——12.1. Themes of game story most favored by the Chinese online game users Page161——12.2. Screen style of game most favored by the Chinese online game users Page163——12.3. Performance form of game screen most favored by the Chinese online game users Page164——12.4. Music style of game most favored by the Chinese online game users

Figure Content of the Report Page4——Figure 1- 1 Classification of e-game Page10——Figure 2- 1 Industry size of global online game market 2003-2010 Page11——Figure 3- 1 Revenue size of online game overall market operators in China 2003-2011 Page12——Figure 3- 2 Revenue sizes and growth rates of the Chinese online game operators in differentiated markets Page13——Figure 3- 3 Rate of revenue sizes of the Chinese online game operators in differentiated markets in the revenue size of overall operators 2003-2011 Page16——Figure 3- 4 User size of online game in different types 2003-2006

Page17——Figure 3- 5 Penetration rate in online games of online game users in different types 2003-2006 Page18——Figure 3- 6 Shares of major operators in online game market in China 2006 Page19——Figure 3- 7 Market share in 2005-2006 of top5 online game operators in China 2006 Page20——Figure 3- 8 Concentration of online game market in China 2003-2006 Page21——Figure 3- 9 Income distribution of operators in online game market in China 2003-2006 Page22——Figure 3- 10 Shares of major operators in MMORPG matket in China 2006 Page23——Figure 3- 11 Shares of major operators in MMORPG market in China 2006 Page24——Figure 3- 12 Shares of major operators on casual games in China 2006 Page25——Figure 3- 13 Shares of major operators in casual game market in China 2005-2006 Page26——Figure 3- 14 Shares of major operators in large&medium sized casual game market in China 2006 Page27——Figure 3- 15 Shares of major operators in platform-based game market in China Page28——Figure 4- 1 Industry chain structure of online game market in China Page29——Figure 4- 2 Flow of business operation of online game in China Page29——Figure 4- 3 Agency cooperation mode Page34——Figure 5- 1 Rate of revenue contribution in free MMORPG operation of operators 2005-2006 Page45——Figure 6- 1 Size of online trading between global online gamers 2003-2010 Page46——Figure 6- 2 Top9 games in online trading size of global online gamers Page51——Figure 6- 3 Size of online between the Chinese online gamers 2003-2010 Page52——Figure 6- 4 Top5 in online trading sizes between the Chinese online gamers Page56——Figure 7- 1 Revenue of Netease on online games 2003-2006 Page59——Figure 7- 2 Revenue of Shanda on online games 2003-2006 Page60——Figure 7- 3 Revenue of Shanda on online games 2003-2006 Page63——Figure 7- 4 Revenue of Ninetowns on online games 2003-2006 Page71——Figure 7- 5 TGI of growth rate of the Chinese core online game operators and comprehensive situation of growth index Page79——Figure 7- 6 Favor of online game users on major operators Page84——Figure 9- 1 iUserTracker-2006.9-2007.1 per capita monthly valid browsing time of the Chinese netizens to the game information service websites Page85——Figure 9- 2 iUserTracker-2006.9-2007.1 Top10 of total monthly visits of the Chinese netizens to the game information service websites Page86——Figure 9- 3 iUserTracker-2007.1 Per capita monthly valid browsing time of Top10 of total monthly visits of the Chinese netizens to the game information service websites Page87——Figure 9- 4 iUserTracker-2007.1 Per capita monthly visits of Top10 of total monthly visits of the Chinese netizens to the game information service websites

Page88——Figure 9- 5 iUserTracker-2006.9-2007.1 total monthly visits of the Chinese netizens to the game information service websites Page89——Figure 9- 6 iUserTracker-2006.9-2007.1 Per capita monthly valid browsing time of the Chinese netizens to the game information service websites Page91——Figure 9- 7 iUserTracker-2006.9-2007.1 Top10 of total monthly visits of the Chinese netizens to the game information service websites Page92——Figure 9- 8 iUserTracker-2007.1 total monthly visits of Top10 of the Chinese netizens to the game information service websites Page93——Figure 9- 9 iUserTracker-2007.1 Per capita monthly valid browsing time of Top10 of the Chinese netizens to the game information service websites Page94——Figure 9- 10 iUserTracker-2006.9-2007.1 total monthly visits of the Chinese netizens to the casual games and platform service websites Page95——Figure 9- 11 iUserTracker-2006.9-2007.2 total monthly times of the Chinese netizens in booting the online game software Page96——Figure 9- 12 iUserTracker-2006.9-2007.2 Top10 of total monthly times of the Chinese netizens in booting the online game software Page97——Figure 9- 13 iUserTracker-2007.2 total monthly running time of Top10 of total monthly times of the Chinese netizens in visting the online game software Page98——Figure 9- 14 iUserTracker-2006.9-2007.2 total monthly times of the Chinese netizens in booting the casual games and platforms Page99——Figure 9- 15 iUserTracker-2007.2 Top10 of total monthly times of the Chinese netizens in booting the casual games and platforms Page100——Figure 9- 16 iUserTracker-2007.2 total monthly running time of Top10 of total monthly times of the Chinese netizens in booting the casual games and platforms Page101——Figure 9- 17 iUserTracker-2006.9-2007.2 total monthly times of the Chinese netizens in booting the PC game software Page102——Figure 9- 18 iUserTracker-2007.2 Top10 of total monthly times of the Chinese netizens in booting the PC game software Page103——Figure 9- 19 iUserTracker-2007.2 total monthly running time of Top10 of total monthly times of the Chinese netizens in booting the PC game software Page113——Figure 10- 1 Purposes of using online games in different types Page115——Figure 11- 1 Main reasons for online game uses to buy propsor intems in games Page116——Figure 11- 2 Rate of expenses used by MMORPG users on buying propsor items in total expenses for games Page117——Figure 11- 3 Payment ways of game most favored by pay online game user Page118——Figure 11- 4 Cognition and attitude of MMORPG users toward Online Game Fatigue System Page119——Figure 11- 5 Cognition and attitude toward OGFS of MMORPG users in different game consuming levels Page122——.Figure 11- 6 Newspapers and magazines on games often browsed by online game users

Page123——Figure 11- 7 Main websites for online game users to acquire information Page124——Figure 11- 8 Most concerned factors in selection of games for online game users Page125——Figure 11- 9 Main reasons for online game users to quit a certain game Page126——Figure 12- 1 Themes of game story most favored by online game users Page127——Figure 12- 2 Screen style of game most favored by online game users Page128——Figure 12- 3 Performance form of game screen most favored by online game users Page129——Figure 12- 4 Music style of game most favored by online game users

Table Content of the Report Page6——Table 1- 1 Classification of Casual Online Game Page8——Table 1- 2 Features and differences of online games in different types Page9——Table 2- 1 Industry size of global online game market and industry size in major areas 2003-2010 Page14——Table 3- 1 User size of online game in China 2003-2006 Page15——Table 3- 2 USER SIZE OF ONLINE GAME IN CHINA 2007-2010 Page44——Table 6- 1 Major platforms for online trading between global online gamers Page49——Table 6- 2 Major online trading platforms for online games in China Page50——Table 6- 3 Major online trading platforms for online games in China (continued) Page51——Table 6- 4 Trading size on online games of platforms for online trading between the Chinese online gamers 2003-2006 Page54——Table 7- 1 Major online game products of Netease Page55——Table 7- 2 Revenue on online game business of Netease 2005Q1-2006Q4 Page57——Table 7- 3 MAJOR ONLINE GAME PRODUCTS OF SHANDA Page58——Table 7- 4 Revenue on online game business of Shanda 2005Q1-2006Q4 Page61——Table 7- 5 Major online game products of Ninetowns Page62——Table 7- 6 Revenue on online game business of Ninetowns 2005Q1-2006Q4 Page65——Table 7- 7 Major game products of 9you Page66——Table 7- 8 Rate of game income in total 9you revenue Page68——Table 7- 9 QQ Game products list Page70——Table 7- 10 QQ revenue and online game income 2004-2006 Page73——Table 7- 11 Major online game products of Kingsoft Page73——Table 7- 12 Business revenue of Kingsoft online games 2002-2006 Page76——Table 7- 13 Rate of game income in total Ourgame revenue Page77——Table 7- 14 Major games of T2CN Page78——Table 7- 15 Major games of Tiancity

Page81——Table 8- 1 TOP 10 MOST POPULAR ONLINE GAMES IN CHINA MARKET2003-2006 Page104——Table 10- 1 Online game types once used and most often used by the online gamers of different genders Page105——Table 10- 2 Online game types once used and most often used by the online gamers in different ages Page106——Table 10- 3 Online game types once used and most often used by the Chinese online gamers in different marriage status Page107——Table 10- 4 Online game types once used and most often used by the Chinese online gamers in different employment status Page108——Table 10- 5 Online game types once used and most often used by the Chinese online gamers with different monthly incomes Page110——Table 10- 6 Online game types once used and most often used by the Chinese online gamers in different areas Page112——Table 10- 7 Differences in personal features of the Chinese users of online games in different types Page121——Table 11- 1 Main channels and the most influential channel of the Chinese online game users to acquire game information Legal Declaration: This report is made by iResearch Marketing Consulting Group. The proprietary of all the texts, pictures and forms and tables herein are protected by pertinent provisions of the Chinese laws on the intellectual property rights. Without the written permit of this Company, any other organizations and individuals may not use the information in this report for other commercial purposes. Part of the texts and data in this report were collected from the public information, and its ownership belongs to the original authors therewith. Without the written permit of this Company and pertinent original authors, any other organizations and individuals may not use the information in this report for other commercial purposes.

In this report, the revenue of the operators and pertinent market predictions were obtained by our researchers through the industry interview, the market survey, the second-hand data and other research methods and analysis, with part of the data not being directly confirmed with the operators. The survey data issued herein were partially through the sampling survey method, with the data results thereof subject to the influence of samples. Due to the limitation to the survey methods and the samples, plus the limitation to the collecting scope of the survey materials, part of the data are unable to reflect the actual market situation. This report is provided only for the clients who may purchase it as the market reference materials. This Company shall not take any legal responsibility for the data veracity herein.

China Instant Messaging Research Report 2006

Copyright statement: iResearch Consulting Co., Ltd. owns the copyrights of all pictures, charts and text in this report, with the copyrights of parts of the charts whose sources are indicated belonging to the data providers. iResearch Consulting Co., Ltd. has acquired the data through information open to the public, in case that a copyright dispute arises, please contact iResearch Consulting Co., Ltd. immediately. iResearch China Instant Messaging Research Report 2006

Contents I. Background of 4th iResearch Online Consumption Survey...... 2

II. Research Methods...... 4

III. Background of the Industry Research...... 5

IV. Definitions...... 5

V. Findings...... 7

VI. The report details...... 11

Part 1 Market Analysis...... 11

1. Industry Foundation and Industry Value Chain of IM Market...... 11 2. Analysis on Global Instant Messaging Market...... 13 2.1 Number of Global IM Users exceed 400 million in 2006...... 13 2.2 Market Sectors of Global Instant Messaging Industry...... 14 2.3 Market Share of There Global Instant Messaging Providers...... 17 3. Overview of China Instant Messaging Market...... 19 3.1 Number of Instant Messenger Users Reached 114 million in 2006...... 19 3.2 Development of Instant Messaging Products in China...... 20 3.3 Inevitability of the Development of Instant Messaging Products...... 21 3.4 Market Share of IM Operators in China...... 23

Part 2 Analysis of Operators...... 25

1. Tencent QQ...... 25 2. MSN Messenger (Live Messenger)...... 26 3. Instant Messengers of Three Major Portals...... 27 4. Overseas Instant Messengers - Yahoo Messenger, Google & Skype...... 29 5. New Marketers of the Instant Messaging Market...... 31

Part 3 User Analysis...... 32

1. IM Penetration Reached 86% among Internet Users...... 32 2. Most Frequently Used IM by IM Users...... 33 3. Use of Functions...... 34

Report Conclusion and Suggestions...... 35

Basic Attributes of IM Survey Samples...... 37

Attachment 1: iResearch Survey Method and Procedure...... 38

Attachment 2: Contents of Full Version Report...... 43

Attachment 3: Graphs and Table in Full Version Report...... 46

Disclaimers:...... 49

I. Background of 4th iResearch Online Consumption Survey

Following the three consecutive successful surveys on China’s netizens’ online consumption since 2003, during November to December of 2006, iResearch Consulting Co., Ltd（www.iresearch.com.cn）once again conducted a survey on China’s netizens’ online habits and consuming activities. Researches on the industry as well as on the users were carried out focusing on the following 18 aspects of relevant industries and reports were written accordingly.

Online Mobile Online Ads Search Games VAS Engines

Online Online Domain & Digital Education Recruitment Web Hosting Magazines

Travel Online Online Friends Blogs & Booking Shopping Making Communities

Online Online B2B Online Banking Payment E-Commerce Marketing

Instant E-Mail Messaging

Researches on the following aspects of all industries were made to gain an in-depth understanding: n The market scales and growth potentials of major industries; n The characteristics of the development of production chains of major industries; n The operation state of star companies in major industries; n Corporate strategies and promotions of relevant companies in major industries; n Internet usage habits and consumption state of netizens; n Netizens’ attitude or satisfaction degree toward the companies; n Netizens’ demanding degree toward relevant services; n Characteristics of various types like potential user groups and loyal user groups; n Problems to be encountered by major industries in the current development process.

Based on this survey, a series of research reports will be made, including: ² A Research Report on China’s Online Games 2007; ² A Research Report on China’s Online Ads 2007; ² A Research Report on China’s Instant Messaging 2007; ² A Research Report on China’s Search Engines 2007; ² A Research Report on China’s Email Accounts 2007; ² A Research Report on China’s Blogs & Communities 2007; ² A Research Report on China’s Online Education 2007; ² A Research Report on China’s Online Shopping 2007; ² A Research Report on China’s B2B E-Commerce 2007; ² A Research Report on China’s Online Shopping 2007; ² A Research Report on China’s Online Travel Booking 2007; ² A Research Report on China’s Online Banking 2007; ² A Research Report on China’s Online Payment 2007; ² A Research Report on China’s Online Recruitment 2007; ² A Research Report on China’s Digital Magazines 2007; ² A Research Report on China’s Online Friends-Making 2007; ² A Research Report on China’s Domain Names & Web Hosting 2007; ² A Research Report on China’s Mobile Value-Added Services 2007;

In addition, based on the previous three surveys, iResearch continued its research on netizens’ brand awareness and consuming activities, and according to the research data regarding netizens’ brand consumption, iResearch will be publishing relevant reports on netizens’ brand consumption for 2007.

II. Research Methods

For data collection and analysis, online questionnaires through the site of iUserSurvey were the major method, meanwhile, in-depth interviews with and researches on relevant business operators and channel agents were conducted for information acquisition. iUserSurvey is a market survey platform especially developed for user research via Internet media by iResearch Company.

1. An explanation on iResearch online survey (on Internet users)

1) survey methods According to statistics theories and international norms, this survey was mainly carried out via Internet connected computers by putting banner ads and text ads links on relevant channels of China’s 58 major websites (portal sites and vertical sites) (here’s the link: http://survey.iclick.cn/survey6/user.asp). On the iResearch website, during the period of Nov. 1 to Nov. 31 of 2006, information was acquired through the questionnaires voluntarily filled out by users. A total of 675,410,000 questionnaires were received. After removing invalid copies, proportioning and weighting according to netizens’ gender and age difference, the number of final samples for analysis was 60,000.

2）about netizens gender / region quotas Proportioning and weighting were carried out on netizens’ gender and age according to the data issued by CNNIC in July 2006.

2. An explanation on iResearch online survey (on industries) For industry researches, iResearch mainly adopted the methods of in-depth interviews with relevant industries and desktop researches: l Through in-depth interviews with industry experts, manufacturers and channel agents, understanding of the main situations of relevant industries and data relating to sales and markets, etc. were acquired; l Desktop researches: by drawing a comparison among parts of open information and referring to user survey data, final data on industry scales were acquired; l Some channels through which iResearch acquires open information: ü Data and information issued by the government ü Relevant economic data ü Industry open information ü Corporate annual/quarterly reports ü Publicly stated viewpoints by senior industry experts

III. Background of the Industry Research

Instant messaging software provides users a platform for real time conversations via a computer keyboard or wireless device using a convenient Internet communication technology. It is a new type of communication means through the Internet, which provides a new medium for public communication, business communication and cooperation.

Thanks to the popularization of instant messaging software and nearly a decade’s development of the instant messaging industry, instant messaging users and service recipients are gradually expanding, which has led to the establishment of a new type Internet sales platform on the basis of users, and more and more operators and investors are eyeing this Internet service market with the biggest user group. In 2005, international industry heavyweights MSN and Yahoo announced the plan to enable the intercommunication between the two types of instant messaging software; in 2006, IBM once again launched its latest instant messaging software for corporate users; in China’s market, instant messaging services crossing the platforms of the Internet and mobile phone communication are widely popular among netizens. The upcoming new turning point in China’s instant messaging market is a strong driving force behind users and market players alike to utilize and explore the instant messaging market.

While the instant messaging market is seeking new breakthroughs, a series of industry problems are highlighted. Bearing this in mind, iResearch Consulting Co., Ltd has composed “A Research Report on China’s Instant Messaging”, in which in-depth analysis are made on relevant issues in the industry, and predictions and judgments on future development trends are conducted. Hopefully, this report will be actively promoting the healthy development of China’s instant messaging industry.

IV. Definitions

Instant messaging: a comprehensive communication tool with low costs and high efficiency that enables same platform and cross platform communication through communication technologies involving multiple platforms and terminals, realized through software and relying on the platforms of the Internet and mobile communication for the purpose of communication in multiple information formats (text, pictures, sounds, videos, etc.).

Instant messaging users: users that have used instant messaging software for at least once in each month of the past year.

Monthly actively instant messaging users: active users that have used instant

messaging software for at least four times in each month.

Most frequent users of a certain piece of instant messaging software: users that have used a certain piece of instant messaging software most frequently in the past year.

Corporate instant messaging: instant messaging tools used within a company are instant, convenient, safe, effective and at lower maintenance cost.

V. Findings

Ø Market Analysis:

As one of the Internet software pieces offered for free that has been first realized, accepted and widely used, instant messaging software has gained huge public following after several years’ free service. The public following is not only reflected by the huge number of users, but also by the multiple Internet service types with huge market potentials and the lucrative Internet advertising industry. As a result, while the user-based instant messaging industry is creating users’ market, a multi-platform and multi-operation mode market has also been created as an extension to the instant messaging industry.

The number of China’s instant messaging uses has exceeded 100 million

Internet users don’t just use one instant messaging account. As instant messaging software becomes more popular and the number of service providers increases, global instant messaging accounts are increasingly growing and are expected to exceed 1.6 billion in 2010, with the total number of users worldwide reaching 0.65 billion.

China’s instant messaging market came into being in 1997, when China was at the early stages of the popularization of the Internet and all types of market participants and imitators began product designing and market promoting based on ICQ that was gaining popularity in western countries. In recent years, instant messaging software has become a field attracting the attention of investors and operators alike, with investors and operators playing different roles participating in China’s instant messaging market and the user groups increasingly expanding. By the end of 2006, the number of instant messaging users had reached 0.114 billion.

Inter connection/communication and user end weblization have contributed to a new turning point of the instant messaging market

According to the past 10 years’ history of China’s Internet development, a vast majority of China’s Internet services and operation modes are borrowed from the Internet applications of other countries, such as portal websites and email. And instant messaging is no exception. In the early stages of China’s instant messaging software development, i.e. between 1998 and 2000, only software services using computers as a carrier were provided. Early stage instant messaging software pieces like Sina Pager, QICQ and others were all modeled after western countries’ software. After 2000, as the number of instant messaging users and that of mobile communication users gradually grew, services crossing the Internet and mobile communication platforms became a new communication

tool for instant messaging users. From the general development state of the Internet in recent years, we can see that Web2.0 rules the market and as such, instant messaging inter connection/communication and user end weblization have become a new growth point of the instant messaging market.

Boosting factors of user demand and constraining factors of macro policies coexist

The demand for interactive communication by the general public and the demand for business coordination within a company are the driving forces behind the rolling out of new products to replace the old instant messaging software, meanwhile, profit driven service providers and their multiple profit gaining modes have led to the booming development of the overall market. The Internet demand for inter-software connection, communication, cross-platform communication and weblized Internet development in the past 2 years are all going to become the driving forces behind market development. However, safety restrictions of instant messaging and the restrictions of government policies imposed on the landline and PC instant messaging have called into question the development of instant messaging, becoming a hindering factor of the market.

Ø User analysis:

Through conducting long term monitoring of household and company Internet users, from the netizen coverage rate of instant messaging software, there’s little change in the situation of Tencent instant messaging software dominated market and MSN Messenger (Live Messenger), without a doubt, settles for the second largest market share in China. From the valid average daily usage time, Sina UC ranks the third thanks to its entertaining platform, closely trailing behind Tencent QQ and MSN Messenger (Live Messenger). The live programs of Sina UC’s entertaining platform are a key factor in controlling the valid usage time of the software, while other instant messaging software pieces are relatively less advantageous in this regard.

IM Penetration rate among netizens keeps growing.

Against the backdrop of China’s Internet users keeping growing, more and more instant messaging products have joined the market competition after nearly 10 years’ development of China’s instant messaging market, providing netizens with more choice. According to iResearch survey data of 2006, 86% netizens continuously used instant messaging products during the past year and the main purpose of using instant messaging is for communication. iResearch holds that the coverage rate of instant messaging software among netizens will continue to grow, so will the number of instant messaging users.

The main online activities of instant messaging users are for communication and entertainment.

The instant messaging user group is mainly characterized by people aged between 18 and 35 with an education of high school to university, who for the most part go online for activities of communication and entertainment, with half of the users spending an average of more than RMB50 on the Internet per month.

Functions catering to user needs drastically increase the usage rate of instant messaging tools.

The result of iResearch user survey shows that from the aspect of usage frequency, QQ, MSN Messenger, Taobao Wangwang, Sina UC and Skype are the 5 frequently used instant messaging products. 78.7% users choose Tencent software QQ/TM as their most frequently used software, while users who choose MSN Messenger for most frequent usage account for 11.5%.

From the comparison data on “pervious usage” from 2003 to 2006, Tencent QQ, MSN, NetEase POPO and Yahoo Messenger usage rates were on the rise; in 2006, the usage rates of Sina UC and Skype were growing, while other website instant messengers’ usage rates were decreasing. From the development characteristics of Sina UC and Skype, on the one hand, they reflected the increased efforts by service providers in product promotion and publicity, on the other hand and more importantly, they reflected users’ great demand for entertainment and voice functions of instant messengers.

Apart form the most popular text chatting, functions like file transfer, video, chatting with emotions, voice, and etc. have all become the most widely used instant messaging functions. Thanks to its features of high efficiency and timeliness, instant messaging software enjoys an increasingly high usage rate among users. 68.2% users indicate that they use instant messaging software on a daily basis; more than 90% users use the voice function, and users who use the video function account for 86.7%.

In 2006, China’s instant messaging users had an average of around 50 people on their contact list, with 30.6% users having more than 100. And users added 21 new friends to the list on average in the past year. iResearch holds that the online interpersonal function of instant messaging tools have become a key measure of users’ bond to the products as well as of low churn rate.

According to the usage trends of all instant messaging users during 2005-2006, of all Tencent QQ/TM users in 2006, 97.3% were old users; and Skype attracted 15.3% new users. From this indication, instant messaging products like Skype and Sina UC, which draw new users through feature functions, have more room for growth in terms of the increase of user scale. In 2006, Skype was the most recommended instant messaging software by users, with Sina UC coming in second.

The survey result shows that in 2006, the most popular 8 software pieces among China’s instant messaging users were Tencent QQ/TM, MSN Messenger, Taobao Wangwang, NetEase POPO, Skype, Sina UC, Yahoo Messenger and Google Talk. By observing the survey data for 2005, we can see that brand fondness degrees of Tencent QQ/TM, Skype and Sina UC were up in 2006 from those of 2005 and these products became new winners on the instant messaging market.

VI. The report details Part 1 Market Analysis 1. Industry Foundation and Industry Value Chain of IM Market

Instant messaging offers a convenient network terminal service. From two-person text conversations at the early stages of its inception to multi-person, multi-information format online conversations today, what’s been transmitted via instant messaging is no longer limited to text messages or common files, instead, the transmissions have expanded to voice, video exchanges and high-speed large sized file transfer. Such multifunctional communication tools characterized by the timely interaction have beat email in terms of timeliness, mobile phones in terms of content diversity, which has led to the leading positions in both the Internet platform and mobile communication platform.

The Composition of the Overall Industry Chains of the Instant Messaging Market

IM technology Media platform operators providers Online ads platform Provides IM operators technology Multiple operation Provides IM Mobile value-added

I platforms platforms M service platform IM operators are

u created operators s

e on the Interactive Internet r user marketing platform Mobile connection s network platforms base. operators connection platforms E-commerce Telecom Mobile platform operators /Internet network operators operators Multiple internet service modes

Interior of Foundation Extension of IM market of IM market IM market

As one of the Internet software pieces offered for free that has been first realized, accepted and widely used, instant messaging software has gained huge public following after several years’ free service and has laid a solid foundation for industry development. The public following is not only reflected by the huge number of users, but also by the multiple Internet service types with huge market potentials and the lucrative Internet advertising industry, including the service recipient group generated by the industry, all of which has become a big cake for instant messaging operators. As a result, while the user-based instant messaging industry is creating users’ market, a multi-platform and multi-operation mode market has also been created as an extension to the instant messaging industry

From the sheer communication purpose at the early phases of the instant messaging market to today’s multi-platform, multi-functional interactive platform structure, the instant messaging industry, in a broad sense, includes the interior market of its own as well as the market extension built on the instant messaging platforms.

From the perspective of the usage by instant messaging users, the market is mainly composed of technology providers, access providers and service operators, all of whom offer instant messaging services catering different types of users with different needs. This part of market is what we call the interior market of the instant messaging industry. User experience is the direct standard for technology providers, access providers and service operators to position their products, as users are the most direct individuals experiencing the products.

Instant messaging service operators may create multiple brand values based on the Internet and instant messaging by providing a good instant messaging platform, and having a good instant messaging platform can only be realized on the precondition of providing good technologies and access services in line with user experience. The realization of all these must rely on the concerted efforts by technology providers and access providers-the other two components with which a triangle market frame is formed. In the instant messaging market, technology providers and service operators are often act as one entity though, the interior market is quite mature and the industry chain frames are relatively stable.

The extended market generated on the basis of huge user group is a newly formed and changeable potential market. As the popularization of the Internet and instant messaging progresses, more and more investors and Internet service providers have realized the importance of the platform created by instant messaging. But, the extended market can’t be created or expanded overnight; it can only be evident when the success in forming a mature and complete interior market is secured. The Internet service modes are

diversified, so the extended market of the instant messaging industry can also be diversified and the huge user group is what the extended market is based on.

2. Analysis on Global Instant Messaging Market 2.1 Number of Global IM Users exceed 400 million in 2006

The number of global instant messaging users refers to the total number of all individuals of instant messaging users. In 2006, the number of global instant messaging users reached 432 million and is expected to reach 650 million in 2010.

Forecast on the Number of Global Instant Messaging Users 2006-2010 800 13.8% 12.2% 9.2% 7.8%

650 602 600 552 490 432

400

200

2.2 Market Sectors of Global Instant Messaging Industry

Generally speaking, the global instant messaging market can be divided into four subdivisions, i.e. the market for the general public, the market for corporate users, the market for management and security and the market for user end technologies.

1. The instant messaging market for the general public is the product market most familiar to general IM users. As the software is offered to the public free of charge via the Internet, the popularization rate and market share of the software are quickly increased. And the huge user base hence formed is what instant messaging providers build their product brands on, with a majority of service providers offering comprehensive Internet services to gain business opportunities.

Major global instant messaging service providers and their products: ICQ and AIM by AOL; Yahoo Messenger by Yahoo！and MSN Messenger by Microsoft, etc.

2. The instant messaging market for corporate users mainly targets the huge demand for instant messaging use within a company. The technology and software for corporate instant messaging is the solution to convenient and highly efficient interior communication for large multinational companies. The growth rate of corporate instant messaging use is close to 200% annually. As a chatting tool widely popular among young people, instant messaging has become an indispensable application tool for corporate communication, enabling timely interaction and work coordination among corporate staff members. In addition, as the functions of instant messaging software are increasingly being strengthened and improved, the use of instant messaging software within a company is no longer limited to text conversations. It also serves as a basic coordination software piece for employees’ day-to-day work.

Major industry players and their products in global market: corporate instant messaging platform-Live Communications Server by Microsoft; Lotus Sametime and Jabber by IBM, etc.

3. The market for instant messaging management and security is a subdivision of the industry that has gradually taken shape and developed in response to the more and more serious problems regarding communication security. Spam and virus problems cause lots of insecure factors to the information exchange via instant messaging. For individual Internet users, they may turn to anti-virus software for solution, but for corporate users, more consideration is needed, given the confidentiality of internal information and the security of corporate network. This is where instant messaging management software comes in. Such software assists a company’s web masters in managing the information

exchange within the company and ensures network security. A set of IM management software is usually capable of managing the communications through instant messaging, point to point, Web meetings, and VOIP, preventing the company from being attacked via IM communication.

Major industry players and their products in global market: IM Guardia by FaceTime Communications, the A Series and L Series of IM security software by Akonixetc, IMLogic IM Manager by IMLogic, Symantec IM Manager by information security provider Symantec IM Manager, etc.

4. The market for instant messaging user end technologies is an open market providing technologies for public and corporate instant messaging users alike. The service providers in this category increase their own influence by providing an integrated instant messaging user end to clients through technical means.

Major industry players and their products in global market: the instant messaging software combining multiple sets of chatting software like ICQ, MSN Messenger, Yahoo Messenger, and AOL Instant Messenger, etc. by Trillian; the IM user end on the webpage integrating different sets of IM software like GTalk, ICQ, MSN Messenger, Yahoo Messenger, AOL Instant Messenger and Jabber provided by Meebo; GAIM, etc.

Public instant messaging products are the easily accessible products meeting the communication needs of the general public and the user coverage rate of these products is always higher than that of company-related products. Nevertheless, the market revenues of public instant messaging products are far lower than those generated by corporate instant messaging products used for commercial purposes. As for integrated instant messaging user end products, the user group of these products covers those using instant messaging products by major service providers. So, integrated instant messaging user end products occupy a portion of market share with ease. Take Meebo, the web-based IM user end, for example, users can log on any of their IM accounts on the webpage and manage the contact lists of other IM software, communicating with friends using different IM software at the same time. For the general users, this type of service is completely free of charge. As a result, the market revenues are reflected by the brand values created by the user end products. It’s safe to say that the global IM income market is primarily created by corporate instant messaging.

Forecast on the Market Scale of Global Enterprise Instant Messaging 2006-2010 400 35.3% 22.0% 22.2% 13.7%

300 282.0 248.00

203.00 200 150.0 123.00

100

2.3 Market Share of There Global Instant Messaging Providers

Among the global public instant messaging products, MSN, AIM (AOL) and Yahoo are arguably the leading players. Although there’s a tremendous difference between the software products and versions actually used by the clients, the number of users covered by MSN, AOL and Yahoo accounts for a comparatively large market share both within the US and on the international instant messaging markets.

On the US market, the user number of AOL instant messaging products has long been well ahead of those of MSN and Yahoo products. AOL instant messaging products include AOL Instant Messenger and ICQ, the first of its kind in the instant messaging market. The two products are the most widely used IM tools in the US and ICQ in particular, has the biggest share in most markets of western countries. Since AOL’s acquisition of ICQ in 1999, the market share of AOL has been substantially increased from the original AOL Instant Messenger. According to the serial data of this year, by September 2006, the number of AOL instant messaging products had been the highest, being 51.5 million; MSN user number had been the second-nearly 6 million higher than that of Yahoo users. MSN user number began to exceed Yahoo user number around 2005, thanks to MSN’s increased efforts in promotion starting 2005 with the launch of MSN mobile service, MSN Space and other products meeting netizens’ communication needs.

Comparison between Global TOP3 Instant Messaging Providers’ US User Numbers Data Recording Time Jul. Aug. Aug. Sept. Service Provider 2004 2005 2006 2006 AOL 46.453 53 49.2 51.5 MSN 17.167 29 24.4 27.3 Yahoo 22.135 23 22 21.9 Unit：million people Source: Pew Internet , Nielsen/NetRatings, comScore ©2007.1 iResearch Inc. www.iresearch.com.cn

According to the global statistics, as far as the user data for August 2006 is concerned, MSN had 185 million users worldwide, ranking the top in the instant messaging market, followed by Yahoo users of 82.1 million in the second place and AOL only had 61.2 million users. From the statistics, we can see that the three major global instant messaging products providers have different focuses in terms of market strategies. AOL pays more attention to the market development within the US, with 80% users being domestic users, while Yahoo and MSN are more focused on international market exploration, with only 27% of all Yahoo users being those inside the US and only 13% of all MSN users being domestic US users.

Comparison between Global and US User Numbers of Global TOP3 IM Providers 200 185

150

100 82.1

61.2 49.2 50

24.4 22

3. Overview of China Instant Messaging Market 3.1 Number of Instant Messenger Users Reached 114 million in 2006.

As the Internet becomes increasingly accessible, the number of China’s netizens also keeps growing. After nearly a decade’s development, China’s Internet users are used to communicating online via instant messaging and this communication means is likely to exceed email use. The fast growth of the Internet has resulted in the fast growth of instant messaging users. As of the second quarter of 2006, the number of China’s registered instant messaging accounts was 830 million, of which MSN and QQ combined accounted for 80% market share. Of all the most frequently used IM functions, 80% users stuck to voice chatting; 50% video conference; and over 40% users used multi-person voice conference on a regular basis.

Overview and Forecast on Number of IM Users in China 2001-2010 300 42.9% 32.9% 21.7% 22.1% 14.8% 14.6% 12.8% 11.3%

200 187 168 149 130 114 93 100 70 49 40

0 2002 2003 2004 2005 2006 2007e 2008e 2009e 2010e

Instant messaging is widely used in the corporate world of China, but the instant messaging market especially for companies is relatively small. Most corporate users are currently using instant messaging software for the general public and there are no special solutions to instant messaging products designed for corporate users.

3.2 Development of Instant Messaging Products in China

3.3 Inevitability of the Development of Instant Messaging Products l The demand for interactive communication by the general public

People’s communication demand keeps changing and increasing as the technology evolves. It’s nothing new that online instant messaging has become a communication tool familiar to the general public, but all instant messaging service providers are seeking innovations and breakthroughs without a stop, trying to attract more instant messaging users. And as instant messaging technologies increasingly advance and the applications get more popularized, the user number and demand will continue to soar, boosting the development of the whole industry. l The demand for work coordination by corporate users

In the early stages of instant messaging products development, the use of instant messaging software within a company was widely considered as using a private chatting tool during work time, with most companies casting doubt on corporate security and confidentiality and banning the use of instant messaging tools within the company. However, along with the development of communication means, the use of instant messaging for work coordination within a company has become a must for communication. Stricter security control and all-round business management functions are needed for corporate instant messaging software, which is expected to conduct work coordination with most other business software. Many instant messaging service providers sensed great business opportunities in the corporate use of IM tools a long time ago. For example, Tencent released its RTM business version, allowing company staff members to conduct activities like real-time information exchange with multiple persons staying online at the same time by using the IM ports. Thus, meeting time is saved, as all communications are done on the interior server of the company, which is free from network security worries.

At present, these products may be in their infancy, but in the long run, given the increasing demand for corporate instant messaging use and relevant technologies, more instant messaging products better suited for business coordination will become available. And the technologies may well be applied to instant messaging for the general public and in turn boost the development of the whole market. l The profit demand for multiple profit making modes by service providers

The inception of instant messaging has brought thriving business opportunities to portal websites, companies, advertisers and other market players. The profit making modes of instant messaging operators include Internet value-added services, wireless network

value-added services, advertising services and corporate instant messaging services. Before 2003, the profit making modes of China’s instant messaging operators were limited to Internet instant messaging value-added services. Along with market and function developments, wireless network value-added services and integrated network marketing are playing a bigger role in operators’ profit making.

Through instant messaging, a high degree of friendliness and a powerful and cohesive social group can be created for market players. In the instant messaging market, the Internet advertising patterns of the past will be gradually eliminated and the IM embedded marketing will allow advertisers to combine the product with what we call subject matter to better impress consumers and increase their purchasing desire, such as many successful cases in which products are combined with movies or theatrical plays. This type of marketing mode is characterized by consumers’ spontaneous spreading, putting the spread effect into full play. For example, advertisers use interesting pictures and other information formats to catch consumers’ attention and at the same time spread the message via the Internet through forwarding from friend to friend in the same way virus is spread, exerting a subtle influence on product promotions. Take Yahoo’s marketing for a cosmetic product in Taiwan for instance, multiple ports that were simple, clear and bright were designed according to the product spokesperson, offering different backgrounds for users. And the marketing mainly relied on netizens’ spreading to each other, just like virus spreading. According to Yahoo’s statistics, in the 39 days of online advertising, a total of 910,000 users was recorded, with 150, 000 users and 45 messages on average per day at the spreading ratio of 1:1.75. In other words, each person downloading the background shared it with 1.75 others on average. And the total hits were made by 210,000 people.

The multiple profit-making modes generated by instant messaging products and their users will bring great profit to instant messaging service providers, who will redouble their efforts to promote product development and to explore the interior and extended IM markets. And there will be more and more shining spots on the market.

3.4 Market Share of IM Operators in China

According to the December data collected by the iUserTracker of iResearch, in terms of monthly total valid usage time, there was little change in Tencent QQ’s dominance in China’s instant messaging market, with a market share of over 80%. And the mark share for Tencent TM was 3%. To figure it out, Tencent instant messaging products accounted for a market share of 83.1%. MSN Messenger (Live Messenger) accounted for the second largest market share of 7.7%. Together with QQ, these two messengers are the most familiar instant messaging tools to netizens. Although Yahoo Messenger fared well in international markets, as Yahoo China slumped in China’s market, with much poorer performances in terms of both brand promotion and product publicity, the market share of Yahoo Messenger slid to the bottom in China. And as always, the instant messaging tools of leading portal websites were developing in a lukewarm manner.

iUserTracker—Market Share of IM Users in China by Monthly Total Valid Usage Time, Dec 2006 MSN Messenger 7.7%

Tencent TM 3.0%

Sina UC 1.9%

Taobao Wangwang 1.5%

NetEase Popo 1.1%

Tencent QQ 80.1% Skype 0.8% Others 3.9%

______Source:iUserTracker.Datawasacquiredbylong-termonlinebehavioralmonitoringovermorethan 40,000InternetusersinChina,representsanoverallbehavioralsituationofChina'sInternet users who access Internet at home and work. It excludes users who access Internet in the public locations __like_ I__nte_r___net _c___afe_s.______©2007.1 iResearch Inc. www.iresearch.com.cn

From the data on monthly user coverage rate, Tencent QQ accounted for a monthly 94%, the highest of all instant messaging tools. This indicates that Tencent QQ is the most widely used IM tool among netizens. MSN Messenger recorded the second highest number of times the software was run, at a rate of 35.6% with a wide gap between Tencent QQ at the top place.

iUserTracker—Market Share of IM Users in China by Monthly Total User Coverage, Dec 2006 Tencent QQ 94.0%

MSN Messenger 35.6%

Taobao Wangwang 29.0%

Skype 9.3%

Tencent TM 7.9%

Sina UC 7.5%

NetEase Popo 7.5%

AliMaoyitong 5.4%

Fetion 4.3%

Yahoo Messenger 2.1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

______m___ont_h___ly to_ta__l u_s___er c_o___ver_a___ge _ra___te ______Source:iUserTracker.Datawasacquiredbylong-termonlinebehavioralmonitoringovermorethan 40,000InternetusersinChina,representsanoverallbehavioralsituationofChina'sInternetusers who access Internet at home and work. It excludes users who access Internet in the public locations __like_ I__nte_r___net _c___afe_s.______©2007.1 iResearch Inc. www.iresearch.com.cn

Part 2 Analysis of Operators 1. Tencent QQ

In February 1999, as an Internet company solely focused on providing instant messaging software, Tencent released the first beta version of QICQ in China. Two months later, the number of registered accounts reached 200,000. By the end of 1999, the average QICQ online users had reached over 15,000. The product accounted for over 80% market share in the domestic Chinese language instant messaging tool market. In 2004, Tencent released an instant messaging software package Tencent Messenger (TM for short) targeting office workers, serving IM users in workplace, with a focus on communication and interaction between acquaintances and friends. Backed by its massive user base, Tencent developed a series of value-added services to satisfy users’ demand for entertainment, such as mobile QQ, QQ Show and QQ Games etc. The company was the first to adopt charge registration and to launch QQ pop-up ads, becoming a trailblazer on the road to profit making through value-added services. By making a comparison between the business revenue change before and after the launch of multiple QQ services, the huge profit generated by the value-added service for the instant messaging market was very much in evidence. For instance, after the full launch of value-added service, Tencent revenue between March and September of 2003 was US$26 million higher than that of the whole of 2002. In addition, in September 2003, Tencent released its free trial version messenger RTX as part of its corporate instant messaging business. To date, the software has drawn nearly 100,000 corporate users and the corporate instant messaging strategies begin to take shape.

Number of Tencent QQ Accounts 1999-2006 700 900% 400% 100% 100% 75% 35% 4% 8% 3% 600 549 493 532 500 474

400 350

300 200 200 100 100 50 1 10 0 Nov-99 Jun-00 Jan-01Mar-02 Sep-03Dec-04Sep-05Dec-05Mar-06 Jun-06

2. MSN Messenger (Live Messenger)

Live Messenger is an upgraded version of MSN Messenger, an instant messaging tool renamed and upgraded to be in line with Microsoft Windows Live products. It’s one of the top three global instant messaging products. By using Live Messenger, people can express their feelings through emotion icons and pictures. They can also communicate on a whole new level by using audio and video. In addition, Live Messenger has offered services like MSN Mobile and blog Spaces. In China’s market, the portal website of MSN China has provided more localized services and formed cooperative ties with all major content sites. The majority of users are white-collar office workers. Live Messenger serves as a good example of corporate use of instant messaging tools.

Currently, the number of active worldwide Live Messenger user stands at 24 million. It is one of the world’s most widely used free instant messaging tools with a massive user base. And the number of people on the contact list of the upgraded Live Messenger has been increased to 300 from 75 or 150 in the past, with the latest increased quota of 600. Meanwhile, Live Messenger plans to set foot in the VoIP market to realize PC-to-phone communication through Microsoft products. Such communication involves the contact list of Live Messenger. This function is currently available only in North America. Instant messaging users can purchase prepaid time periods and make phone calls to more than 220 countries at the rate of 2 cents per minute.

The upgraded blog service-Live Spaces has already attracted 75 million users globally, with the monthly webpage viewing times reaching 1 billion. And in China’s market, an Internet community platform based on Live Messenger and Spaces has been created, thanks to the massive white-collar users of MSN Messenger here in China. MSN Messenger log-in account related services also include Live Mail and web-based instant messaging, etc. This series of Live products will be providing lots of free services to users as well as paid-for services like customized subscriptions and trading transactions.

In 2006, Live Messenger realized it’s previously announced plan to interconnect with Yahoo Messenger worldwide, through which Live Messenger users can add Yahoo Messenger IDs to their contact lists and conduct text conversations. That was an unprecedented leap forward in the instant messaging development, bringing together a total of around 350 million MSN and Yahoo users.

3. Instant Messengers of Three Major Portals

As China’s first three mainstream comprehensive portal websites, Sina, NetEase and Sohu sensed the great business opportunities brought by instant messaging and all released their own instant messaging software.

Overview of Instant Messaging Products of NetEase, Sina and Sohu Portal Instant Releasing Product Features / Advantages Website Messaging Time Product UC July 2004 entertainment video platform Sina UTalk Aug. 2005 online game communication platform NetEase POPO Nov. 2003 clicking on ads for sending short messages for free Sohu SOQ Nov. 2003 sending mobile phone short messages for free ©2007.1 iResearch Inc. www.iresearch.com.cn

Sina instant messaging software includes Sina UC and UTalk. Backed by the huge user base of the portal site, these tools are designed with a focus on creating an entertainment IM platform and have massive Sina users. Sina UC has heralded in a “video era” of domestic instant messaging industry, offering an interactive entertainment platform for tens of millions of netizens in China. In 2006, the number of registered Sina UC users reached 12 billion, with more than 40 million active users. In this sense, Sina UC is the leader in terms of video sharing in the instant messaging market. The stereo chat room of Sina UC offers more participation and interaction chances to users, compared with traditional media like radio stations, TV stations and the Internet. Voice and webcam chatting is gradually becoming the first choice of most netizens when it comes to online communication. Meanwhile, due to the combination of rich content resources of Sina website and the advantages of Sina UC in audio and video, a portion of users with a demand for entertainment have been drawn to the messenger. The other Sina messenger - UTalk, is an instant messaging tool with voice developed for China’s online gamers and local area network gamers. UTalk can be logged in with UC number or Sina passport. Thanks to the promotion cooperation with more than 20 online game operators and media, UTalk has covered a large batch of online gamers on top of its numerous Sina users and Sina UC users. In 2006, the number of registered UTalk users topped 1 million and that of peak concurrent users topped 100,000.

NetEase POPO is the first instant messaging tool with customized image function in China.

Users can easily change their own images using POPO. Like other instant messaging tools, POPO supports multiple chatting means: text conversation, chat room, short message, voice chat and webcam video chat. The maximum content limit is 3,000 Chinese characters each time. NetEase POPO entered the instant messaging market with its free short message sending service as a selling point. It is the first of the three major portal websites in China to launch its instant messaging software. The company goes all out to attract users by allowing users to send short messages for free through POPO, regardless of the cost. Back in 2003, the number of POPO users was ranked the third, backed by the advantages of the huge user base of NetEase itself and the free short message policy. At the same time when numerous users are attracted by the free policy, a noticeable negative impact has also occurred. The long term free policy adopted by NetEase has exerted a subtle influence on POPO users, who are highly sensitive and reliant on sending free short messages. Once POPO withdraws its free short message service, users will probably desert NetEase POPO for other ‘POPOs’.

At the end of 2003, Sohu launched its online instant messaging software SOQ. Sohu is a relatively late comer, with its R & D starting at a later date than that of NetEase POPO and weaker effort in market entry than that of Sina UC. But Sohu refused to be left behind and allowed its SOQ users to send free mobile phone short messages via the software, tying to challenge Tencent QQ. The instant messaging functions of SOQ are pretty much the same as those of other IM tools: sending messages, files, distinctive emotions, multiple software skins, different window backgrounds, nudges, etc. Moreover, users can leave a message through SOQ on Sohu website.

The reason behind the top three portal sites’ eagerness to enter the instant messaging industry one after another is that they were drooling for the huge number of users. There’s great potentials to be tapped in China’s instant messaging market and the contents, communities, communication means, business activities of these sites are what brings the websites together and through which a large number of new members are attracted and bonded to the instant messaging tools. Thus, the Internet bonding effect has been created. Commercially speaking, it’s getting harder and harder for portal sites to make profit from wireless business, so they are paying more attention to the perfect combination of instant messaging and wireless services by shifting their competition focuses to instant messaging software from short messaging, free email accounts and search engines. These portal websites all redoubled their efforts in 2004 to develop the instant messaging market, not only to “make up for the lost time”, but also to explore a cash cow for the future.

4. Overseas Instant Messengers - Yahoo Messenger, Google & Skype

Yahoo Messenger was first launched in 1998. From the perspective of global instant messaging market, it is one of the world’s top three instant messaging tools and has hundreds of millions of registered users worldwide. When it comes to product functions, Yahoo Messenger has little difference with China’s homegrown instant messaging tools, with no distinctive or special features. Although it’s widely used in the US and some other areas, little has been achieved from its promotion in China.

In 2006, Yahoo joined hands with MSN in realizing the interconnection between the two messengers. Furthermore, Yahoo email and instant messaging were integrated, with the instant messaging program Yahoo Messenger being embedded into the email service. Users can shift between Yahoo email and messenger with ease and can run the two programs at the same time within the same web browser, without downloading Yahoo Messenger software. This move by Yahoo is considered as the first step forward toward weblized instant messaging. After the interconnection, Yahoo Messenger users have access to more powerful and more valuable services that enable them to easily communicate with clients, cooperative partners and friends whom they were unable to interact with in the past. And at the same time, Yahoo Messenger will also be more widely spread and used in the corporate world.

In 2004, global search engine giant Google began to offer its web-based email service – Gmail to individual users. Although it’s still a beta product today, with its official version yet to be released, there’s a huge Gmail user number worldwide. Afterwards, Google launched the instant messaging software GTalk, which supports online Gmail checking, text conversation, online voice chat and offline voice message recording. There’s another special feature of GTalk that separates it from China’s domestic IM software – GTalk supports instant messaging conversation on the webpage, i.e. at the same time when users are sending or receiving email through their Gmail accounts, they are able to conduct instant messaging conversations with their contacts, without running or logging in to GTalk.

GTalk can also be run on mobile phones, as wireless value-added service is one of the product advantages. But currently the mobile service is only available in America. Google has also announced that in the future, Gmail will be made inter-connectable with other instant messaging software, allowing users to connect with other tools, such as Apple computer iChat，GAIM，Trillian Pro and Psi.

Google had integrated its email service Gmail with the instant messaging tool Google Talk before Yahoo did so. But according to industry statistics, Yahoo email user number is far higher that that of Google, about 10 times as much as Google. In global instant messaging market, Google is faced with multiple competitors, such as AOL AIM, Yahoo Messenger and Microsoft MSN Messenger. But in China’s market, most Gmail users are those using Google search engine on a regular basis. So, the completion in China’s instant messaging market today isn’t so much about the instant messaging product itself as about the brand.

Skype is a well-famed VoIP service provider in European markets. Thanks to its cooperation with China’s portal website TOM Online, Skype entered China’s instant messaging market. And its official China market entry began in 2004. Today, TOM-Skype is very much familiar to instant messaging users. By June 2006, China’s registered Skype users had reached 15.5 million.

In the global market, Skype has always been a top VoIP service provider, with a pretty high market share. The number of registered users has topped 80 million and still growing at a rate of 6 million month on month. Its huge popularity among users is due to the fact that Skype not only provides pc-to-pc instant messaging, but also provides pc-to-fixed phone and mobile phone communication. But under the objective situations of China’s telecom market, it’s hard for Skype to realize pc-to-fixed phone and mobile phone communication any time soon in China. Although Skype also offers functions like text conversation and voice chat, it can’t immediately gain an advantageous foothold in China’s instant messaging market.

In August 2005, TOM Online signed an official agreement with Skype to form a joint adventure, in which 51% stake is held by TOM Online and 49% by Skype. The joint venture is responsible for R & D, developing simplified Chinese version of Skype software and services in China’s market. It is also responsible for distribution targeting China’s Internet users and service providers.

5. New Marketers of the Instant Messaging Market

In 2005 and 2006, a lot of changes took place in China’s instant messaging market. MSN entered China in earnest with increased investment; Google launched its webpage-based instant messaging service and upgraded it to include voice chat and file transfer in 2006; Yahoo made some new releases of a series of products, including the integrated email and instant messenger and it also realized interconnection with MSN. These changes related to instant messaging products fueled the possible changes in China’s instant messaging market, putting some homegrown products on the line. At that time, some domestic firms began to develop instant messaging products with a break-through. Among them were Pica of MMIM Technologies Ltd and Fetion (previously known as Femoo) of China Mobile.

With its eyes set on the instant messaging industry, China Mobile released its instant messaging tool-Fetion, a messenger featuring chatting, friends making, interaction, entertainment and other functions, offering a platform to users to communicate and showcase themselves. Fetion is characterized by its mobile phone number bonding service, which allows users to import all mobile phone contacts to the messenger, and the group short messaging service to all friends on the contact list. According to survey data, close to 60% of all Internet users are willing to receive the mobile phone number and Fetion number bonding service.

The instant messaging tool Pica launched by MMIM Technologies Ltd makes it possible to combine the traditional Internet, Internet -on-mobile and fixed network. In addition to inter short messaging, PICA also supports multimedia IM, chat room and online customer service, etc. Another key character of PICA is that it focused on mobile IM development from the very beginning, targeting mobile networks and users. PICA is an individualized communication and information platform. Apart from its basic IM functions like online status display, message box, message group sending and mobile chat room, etc., PICA also offers extended services like online customer service, voice, picture, emotion icon, video and various other formats. In terms of interconnection, PICA does a good job in interconnection with mobile QQ, mobile MSN and other mobile IM tools. Furthermore, PICA supports one-on-one, one-to-multiple and group chatting and Press-n-Talk voice conversation. The number of PICA users grows fast. According to relevant information, the registered users so far have reached nearly 2 million.

Part 3 User Analysis 1. IM Penetration Reached 86% among Internet Users

Against the backdrop of the continuous growing of China’s Internet users in recent years and after nearly a decade’s development, more and more instant messaging products are joining in the market competition, offering more choice to netizens. From the survey data of 2006, 86% netizens continuously used instant messaging products for online communication in the past year and about 14% did not use instant messaging products, including close to 5% netizens who had used these products at some point in the past, but abandoned them for various reasons.

IM Penetration among Interner Users in China 2006

have used but stopped using have used and still 4.9% using 86.0%

haven't used 9.0%

2. Most Frequently Used IM by IM Users

The survey on the most frequently used instant messaging tools shows that 78.7% users use Tencent QQ/TM most frequently and those using MSN Messenger on a regular basis account for 11.5%. This result is to some degree in line with the product share of China’s instant messaging market.

Most Frequently Used IM Products in China 2006 NetEase Popo 0.8%

other 4.2%

Yahoo Messenger 0.8%

MSN messenger 11.5%

Taobao Wangwang 1.6% Tencent QQ/TM 78.7% Sina UC 1.0% Skype 1.3%

3. Use of Functions

From the original text messaging to multi-format transfer, the function advancement of instant messaging tools has brought great convenience to users and user demand for various functions has also contributed to the IM function generation and advancement. Apart from the most widely used text chatting, functions like file transfer, webcam video, chatting with emotions, voice chatting are becoming more and more widely popular among IM users.

Frequently Used IM Functions in China 2006

text chatting 82.4% file transferring 67.0% video chatting 56.6%

chatting emotion icons/backgrounds 56.6% voice chatting 54.6%

contacts grouping 51.6%

group chatting 51.1% personalized images/photos 48.3%

games 28.2%

email 24.1% remote assistance 23.9% SMS/mobile messaging 12.8%

others 0.2%

______0%_____1___0%___20%_____3___0% ____40%___5_0%______60%____70%_____8__0%_____90% Sampledescription:N=10295.DatawasacquiredthroughonlinesurveyofiUserSurveywithlinks placed on 51 websites in Nov-Dec 2006. ______©2007.1 iResearch Inc. www.iresearch.com.cn

Report Conclusion and Suggestions

After nearly a decade’s development, instant messaging has become one of Internet applications most familiar to China’s Internet users and the operation market has matured to become a most established and completed application division of the Internet market. The division market enables instant messaging operators to make great profit from consumers and the commercial market. In the future, China’s instant messaging market will be going in the direction of diversification, specialization, audiolization and weblization.

In 2007, virtual cyberspace life based on the instant messaging platform will be better integrated and developed, as user demand for various Internet services continues to grow. An interactive online community with a huge user base will be a significant development trend for the instant messaging industry.

What instant messaging products bring to the commercial market is an interactive marketing environment under which products and users are bonded together. For website operators, they are no longer at the mercy of advertisers and accept whatever information on offer, instead, they publish or delete ads according the number of online users and they attract advertisers with their huge numbers of online members.

The communication group brought by instant messaging software has become an extendable communication space in which users express their thoughts and views. The integration of localized application is a development goal for instant messaging products suppliers. First and foremost, the integration will be reflected by IM service providers’ management and analysis on local user resources, understanding of local culture and continuous product optimization based on local user demand. Secondly, the information integration of the Internet and wireless Internet has become an inexorable trend. Currently, Sina UC and NetEase POPO have powerful resource advantages in their portal websites, and Microsoft is strengthening its influence through MSN. The instant messaging application will be going along the integration trend to incorporate with traditional portal sites, mobile or fixed user ends and online value-added services. Thirdly, wireless Internet connection is proving a hit with netizens. In the future, it’s inevitable for the Internet and wireless network to be incorporated; interconnection between instant messaging and wireless network will be realized; and 3G will be bringing great opportunities for IM mobile value-added services. The integration of instant messaging and local network, telecom network and other resources will be creating higher values to users.

Instant messaging will become a new online marketing medium with more popularity and better timeliness.

For the instant messaging product consuming market, or the consumers, IM functions are increasingly enriched and products are more and more diversified. Apart from chatting, entertainment and information functions are increased and improved to cater to user demand and these functions are what many instant messaging service providers are keen to focus their efforts on. For example, things like virtual pets, virtual images and magic emotions have become a bargaining chip for an instant messaging product to attract more users; and the online user community based on the IM entertainment platform has gained a huge following at the same time when information is published. Through the instant messaging platform, online users have more access to life-related information like house/car purchasing and petting. As a result, an interactive marketing mode via instant messaging software has become a bargaining chip for operators.

Basic Attributes of IM Survey Samples

Attachment 1: iResearch Survey Method and Procedure 1. Definitions Related with Survey Sample

- Regional Classification: China’s Internet users are divided into the following categories: Northern China, Eastern China, Southern China, Southwestern China, Northwestern China, Northeastern China and Central China as well as Central Cities, First-Level Cities and Others.

North China: Beijing, Tianjin, Hebei, Shanxi, Inner Mongolia and Shandong; East China: Shanghai, Zhejiang, Jiangsu and An’hui; South China: Guangdong, Fujian, Guangxi and Hainan; Southwest: Sichuan, Chongqing, Yunnan, Guizhou and Tibet; Northwest: Shanxi, Gansu, Ningxia, Qinghai and Xinjiang; Northeast: Jilin, Liaoning and Heilongjiang; Central China: Hunan, Hubei, Jiangxi and Henan.

Core cities: Beijing, Shanghai and Guangzhou;

First-Level Cities: Tianjin, Chongqing, Shenzhen, Hangzhou, Harbin, Changchun, Shenyang, Dalian, Shijiazhuang, Taiyuan, Jinan, Qingdao, Nanjing, Hefei, Fuzhou, Xiamen, Chengdu, Kunming, Guiyang, Xi’an, Lanzhou, Changsha, Wuhan, Nanchang, Zhengzhou, Nanjing, Baotou, Haikou, Lhasa, Yinchuan, Urumqi and Husain.

Others: apart from the First-Level Cities, including counties, towns and villages.

- Salary Classification: Low Income, Middle Income and High Income

Low Income：1000 RMB /month or less Middle Income：1001 to 4000 RMB /month High Income：4001 RMB /month or more

- Monthly household income levels: three categories - high, medium and low.

Low income: below RMB 2000 (including those have no income at all) per month; Medium income: RMB2001-6000 per month; High income: above RMB 6000 per month.

- Education Classification: Well Educated and Less Educated

Well Educated：College diploma and above Less Educated: High-school diploma and below

- Internet Experience Classification: Beginner, Average and Veteran

Beginner: less than 1 year Average: from 1 to 5 years Veteran: more than 5 years

- Daily Online Usage Classification: Less Frequent, Average and Hardcore

Less Frequent: less than 1 hour Average：From 1 to 8 hours Hardcore：More than 8 hours

- Internet Access Classification: Narrowband, Broadband and Others

Narrowband: Dial-up/ISDN Broadband: FTTB / Cable modem/ADSL Others: Wireless connection/ other fixed line access methods

- Age Classification:

Children: below 18; Youth: 18-35; Middle aged: 36-60; Senior citizens: above 60.

- According to users’ Internet connection types, iResearch has divided them into the following categories:

Dial-up connection: accessing the high-speed Internet using a modem or through ISDN dial-up; ADSL: ADSL MODEM encoded signals transmitting via the Internet, realizing true online video services; Leased Line Access: the digital data network is a digital data transmitting network composed of digital transmitting channels and DXC nodes; Wireless Access: wiring-free; users only need to insert the network card into the computer and install relevant software to access the Internet; Cable modem: accessing the Internet through closed-circuit TV system, a widely

used means by radio and TV sectors; this means is also known as Hybrid Fiber Coaxial, or HFC; Community broadband connection: otherwise known as FTTB (Fiber to The Building), by which optical fibers are connected to the buildings in a community before they are connected to each household through twisted pair wires; Other connections: currently, accessing the Internet via power lines is also in commercial use.

2. Survey Procedures

Industry Questionnaire Media Examination Data Report Demand Design Launch & Verification Analysis Compilin g

Step 1: Industry Demand Based on industry demand, determining the survey direction and research subject through interviews with industry insiders and other in-depth interviews;

Step 2: Questionnaire Design Making detailed plans on survey items and questionnaire content, conducting copywriting and technical implementation of sub-items of each process and rules on transitions;

Step 3: Media Launch Making a general analysis on the media functions of iResearch website, well-known online media and email, choosing quality vehicles to publish the questionnaire;

Step 4: Examination & Verification Conducting all-round and multi-layer examination and verification of the sample validity through iResearch quality control system;

Step 5: Data Analysis According to the characteristics of the groups surveyed, analyzing the sample data and the situations of the groups using iResearch professional survey data analysis model;

Step 6: Report Compiling Based on the survey result, after summarizing and making survey conclusion, iResearch compiles the research report according to iResearch standard for Internet economy research report compiling.

3. Definition of Invalid Questionnaires (1) The examination and verification of questionnaire validity

Automatic elimination Follow-up validity Blocking samples from due to answers with survey on spot repeated IP addresses logical contradictions samples

Validity

Member ID verification Gift incentives to Manual screening of non-anonymous invalid questionnaires individuals surveyed

Automatic elimination due to answers with logical contradictions: In case there are logic-related choice items in the questionnaire, samples containing answers with logical contradictions will be automatically eliminated by the functional program.

Follow-up validity survey on spot samples: Choosing a certain number of random samples and making a follow-up survey on users to confirm and dig out more useful information.

Blocking samples from repeated IP addresses Samples from the same IP address will be blocked to control malicious or redundant ones.

Member ID verification: A member registration system is in place to verify the personal information of those surveyed.

Gift incentives to non-anonymous individuals surveyed: Gifts are on offer to encourage those participating in the survey use their real names and submit true information.

Manual screening of invalid questionnaires: Specially assigned staff members will be trained and rules will be formulated for the manual screening of all kinds of invalid questionnaires.

(2) The examination and verification of questionnaire superiority

elimination for history database iResearch survey unreasonable answer- reference and research analysis completing time simulation model length Superiority

survey respondent survey respondent all-aspect cross quota based on characteristics examination and website current distinguishing verification capacity

Elimination for unreasonable answer-completing time length: 3% questionnaires completed with the longest time on average and another 3% questionnaires completed with the shortest time on average will be removed and incomplete questionnaires will be eliminated.

History Database reference and simulation: Cross reference will be made between samples and history data and corrections will be made to the original data through dynamic simulation.

iResearch survey research analysis model: In-depth data exploration will be conducted by using iResearch survey research analysis model.

Survey respondent quota based on website current capacity In line with the standard index for website current capacity of the industry, reasonable survey respondent distribution quota will be determined according to proportion.

Survey respondent characteristics distinguishing: Sub items of choice questions are available in the questionnaire to distinguish the characteristics of survey respondents through multiple factors.

All-aspect cross examination and verification: Data acquired through various channels will be integrated and cross-examined based on statistics theories.

Attachment 2: Contents of Full Version Report

Page4—I. Background of 4th iResearch Online Consumption Survey Page6—II. Research Methods Page7—III. Background of the Industry Research Page7—IV. Definitions Page9—V. Findings Page13—VI. The report details Page13—Part 1 Market Analysis Page13—1. Overview of Instant Messaging Market Page13—1.1 Analysis on Industry Value Chain of Instant Messaging Market Page15—1.2 Market Participants of China's Instant Messaging Industry Page17—2. Analysis on Global Instant Messaging Market Page17—2.1 Number of Global IM Accounts will reach 1.6 billion by 2010 Page18—2.2 Number of Global IM Users exceed 400 million in 2006 Page19—2.3 Market Sectors of Global Instant Messaging Industry Page22—2.4 Market Share of There Global Instant Messaging Providers Page24—3. Overview of China Instant Messaging Market Page24—3.1 Number of Instant Messenger Users Reached 114 million in 2006. Page25—3.2 Development of Instant Messaging Products in China Page29—3.3 Inevitability of the Development of Instant Messaging Products Page31—3.4 Advantages and Disadvantages in the Development of China's Instant Messaging Market Page31—3.4.1 Contributing Factors Page32—3.4.2 Hindering Factors Page33—4. Analysis on Competition in China's Instant Messaging Market Page33—4.1 Market Share of IM Operators Page35—4.2 Comparison of Monthly Use between Major IM in China Page37—4.3 Comparison of Daily Use between Major IM in China Page40—Part 2 Analysis of Operators Page40—1. Market Leaders Page40—1.1 Tencent QQ Page40—1.1.1 Number of Tencent QQ Accounts Page41—1.1.2 Number of Tencent QQ Peak Concurrent Users Page43—1.1.3 Annual Revenue of Tencent Page44—1.2 MSN Messenger (Live Messenger) Page44—1.2.1 Number of MSN Messenger Users Page45—1.2.2 User Comparison between Tencent QQ and MSN Messenger Page46—2. Instant Messaging Products of Portals and Overseas Operators Page46—2.1 Instant Messengers of Three Major Portals

Page48—2.2 3 Overseas Instant Messengers - Yahoo Messenger, Google & Skype Page50—2.3 User Comparison between Yahoo Messenger, Google & Skype Page52—3. New Marketers of the Instant Messaging Market Page52—3.1 Fetion Page54—3.2 PICA Instant Messaging Software Page56—4. Comparison of User Characteristics between IMs Page56—4.1 Gender Page57—4.2 Age Page58—4.3 Education Level Page59—4.4 Monthly Income Level Page60—4.5 Internet Access Location Page61—Part 3 User Analysis Page61—1. Use of IM by Internet Users in China Page61—1.1 IM Penetration Reached 86% among Internet Users Page62—1.2 Communication Demand Drives Internet User to IM Page63—1.3 Reasons Stop Internet Users Using Instant Messaging Page64—1.4 Non-IM Users are Likely to Join the Group of IM Users in the Future Page65—2. Basic Attributes and Online Habits of IM Users in China Page65—2.1 Basic Attributes of IM Users in China Page66—2.2 IM Users' Major Activities are for Communication and Entertainment Page67—2.3 The Group of China's IM Users is a Large Group of Online Consumers Page68—3. Use of IM by IM Users in China Page68—3.1 Most Frequently Used IM by IM Users Page69—3.2 Use of IMs Page71—3.3 Use of Functions Page73—3.4 Privacy and Communication Cycle are major Consideration for User to Choose an IM Page74—4. IM Behaviors of IM Users in China Page74—4.1 Frequency of IM Software Use in China Page75—4.2 Spent Length of Time of IM Use per Use Page76—4.3 Number of IMs Adopted by Users Simultaneously Page77—5. Use Analysis of Instant Messenger Functions Page77—5.1 Use Analysis of Contact List Function of Instant Messenger Page77—5.1.1 An Average Number of 50 Contacts in Users' IM Contact List Page78—5.1.2 An Average of 21 New Contacts are added to Users' IM Contact List Page79—5.1.3 Small Capacity Contact List will not Keep Users Away Page80—5.2 Use Analysis of Voice Function of Instant Messenger Page80—5.2.1 Voice Function Penetration Reaches 90% Page81—5.2.2 Major Voice Functional IMs Page82—5.2.3 Voice Communication Quality is a Key to Attract IM Users Page83—5.2.4 Satisfaction Level of IM Voice Function

Page84—5.3 Use Analysis of Video Function of Instant Messenger Page84—5.3.1 Video Function Penetration Exceeds 80% Page85—5.3.2 Major Video Functional IMs Page86—5.3.3 Video Connection Speed is a Key to Attract IM Users Page87—5.3.4 Satisfaction Level of IM Video Function Page88—5.4 Use Analysis of Interactive Window of Instant Messenger Page88—5.4.1 Interactive Window of IMs Reached Nearly 65% of IM Users Page89—5.4.2 News, Entertainment and Life Contents is to Satisfy Users' Demand Page90—5.4.3 Interactive Window Provides a Accuracy and Timeliness Platform Page91—5.5 Analysis of IM Charge Value Added Services Page91—5.5.1 IM Users Expect Spend approximate 10RMB/Mth on VAS Page92—5.5.2 Users are willing to Pay for Mobile Messaging, Mobile Phone Connected Page93—6. Analysis on User Loyalty and Brand Preference Page93—6.1 Tencent QQ Enjoys the Highest Loyalty Level and Skype Has the Biggest Attraction Level Page95—6.2 IM Users' Brand Preference Page96—6.3 Most Recommended IMs of the 2006 Page97—Report Conclusion and Suggestions Page99—Basic Attributes of IM Survey Samples Page100—Attachment: iResearch Survey Method and Procedure Page105—Disclaimers:

Attachment 3: Graphs and Table in Full Version Report

Page11——Graph: The Composition of the Overall Industry Chains of the Instant Messaging Market Page14——Graph: Number of Global IM Accounts Page15——Graph: Number of Global IM Users Page17——Graph: Size of Global IM Market Page18——Table: Comparison between Global TOP3 Instant Messaging Providers’ US User Numbers Page19——Graph: Comparison between Global an US User Numbers of Global TOP3 IM Providers Page20——Graph: Number of Instant Messenger Users in China Page21——Graph: Development of Instant Messaging Products in China Page28——Graph: Market Share of IM Operators by Monthly Total Valid Usage Time, Dec 2006 Page29——Graph: Market Share of IM Operators by Monthly Total User Coverage, Dec 2006 Page30——Graph: Monthly User Coverage Rate of Major IM Software in China, Sep-Dec 2006 Page31——Graph: Monthly Launch Times of Major IM Software in China, Sep-Dec 2006 Page32——Graph: Average Daily User Coverage Rate of Major IM Software in China, Sep-Dec 2006 Page33——Graph: Average Daily Valid Usage Time of Major IM Software in China, Sep-Dec 2006 Page34——Graph: Daily Valid Usage Time per Capita of Major IM Software in China, Sep-Dec 2006 Page35——Graph: Number of Tencent QQ Accounts Page36——Graph: Number of Tencent QQ Peak Concurrent Users Page37——Graph: Annual Revenue of Tencent by Business Modes Page39——Table: Comparison of User Characteristics between Tencent QQ and MSN Messenger Page40——Table: Overview of Instant Messaging Products of NetEase, Sina and Sohu Page43——Table: Comparison of User Characteristics between Yahoo Messenger, Google & Skype Page45——Graph: Pica and Fetion Software Drawing Page46——Table: Fetion User Characters Page47——Table: Comparison between PICA and Fetion Messengers Page50——Graph: Differences of Gender Distribution between Major IM Tools Page51——Graph: Differences of Age Distribution between Major IM Tools Page52——Graph: Differences of Level of Education between Major IM Tools

Page53——Graph: Differences of Level of Monthly Income between Major IM Tools Page54——Graph: Differences of Internet Access Location between Major IM Tools Page55——Graph: IM Penetration among Internet Users Page55——Graph: Why Do Internet Users Use Instant Messenger in China 2006 Page56——Graph: Reasons Stop Internet Users Using Instant Messaging Page57——Graph: Will Non-IM Users Use Instant Messenger in the Next Year Page59——Graph: Basic Attributes of IM Users in China Page60——Graph: Online Activities of IM Users in China 2006 Page61——Graph: Average Online Expenses of IM Users in China 2006 Page62——Graph: Most Frequently Used IM Products in China 2006 Page63——Graph: Use of IM Software in China 2006 Page64——Graph: Percentage of IM Users who Have Used an IM Software 2003-2006 Page65——Graph: Frequently Used IM Functions in China 2006 Page66——Graph: Use of Functions by Major IM's Users in China 2006 Page67——Graph: Top10 Factors Affecting Users’ Choice of a Certain IM Software in China 2006 Page68——Graph: Frequency of IM Software Use in China Page69——Graph: Spent Length of Time of IM Use per Use Page70——Graph: Number of IMs Adopted by Users Simultaneously Page71——Table: Comparison of Functions between Major IM Products Page71——Graph: Number of Contacts on IM Users' Contact List in China 2006 Page72——Graph: How Many Contacts Did Use Add to Contact List in the Past Year in China Page73——Graph: IM Users’ Reaction when IM Contact List Has No Vacancy Page74——Graph: Use Frequency of IM Voice Function by IM Users in China 2006 Page75——Graph: Use of Voice Functional IM by IM Voice Function Users in China 2006 Page76——Graph: Users' Consideration in Choosing a Type of Voice Functional IM Tool in China 2006 Page77——Graph: Satisfaction Level of IM Voice Function by Voice Functional IMs' Users in China 2006 Page78——Graph: Use Frequency of IM Video Function by IM Users in China 2006 Page79——Graph: Use of Video Functional IM by IM Video Function Users in China 2006 Page80——Graph: Users' Consideration in Choosing a Type of Video Functional IM Tool in China 2006 Page81——Graph: Satisfaction Level of IM Video Function by Video Functional IMs' Users in China 2006 Page82——Graph: Use of IM Interactive Window by IM Users in China 2006 Page83——Graph: Which Types of Contents Do User Expect to See in the IM Interactive Window in China 2006

Page84——Graph: Values of IM Software Interactive Window in Users’ Opinion in China 2006 Page85——Graph: Average Acceptable Monthly Cost of IM Value-added Services by IM Users in China 2006 Page86——Graph: Which Types of IM VAS Are Users Willing to Pay for in China 2006 Page87——Graph: Whether or not Users Were Using the Same IM Software Product in 2005 and 2006 Page88——Graph: Reasons for IM Users Shift to another IM Products in China 2006 Page89——Graph: Top 8 Favorite IM Products by IM Users in China 2005-2006 Page90——Graph: Number of Recommended Times of Major IM Products by IM Users in China 2006 Page92——Graph: Basic Attributes of Survey Samples

Disclaimers:

The report is produced by iResearch Consulting Group. All sentences, charts, tables and etc. in this report are under the protection of relative law and constitution on property rights in Peoples’ Republic of China.

The report may be used for informational purposes only. Any action of reproduction, copy and redistribution without iResearch’s written authorization is prohibited for any business purpose. Some data in this report are collected through secondary research from public publications and their copyrights are owned by the original publishers. Without written authorizations from the original publisher and iResearch, no part of this report may be used for any business purpose.

Statistics related to market size and operators’ revenue are mainly obtained through interview, marketing survey, secondary sources and etc., some of which have not been confirmed by the related operators. In addition, statistics resulting from original research in this report are influenced by sample structure. Due to the limitation of research and limited survey coverage, part of the result may not precisely reflect the situation. Customers should use this report as only a single factor in making business decisions. iResearch does not guarantee the accuracy of all data in this report.

Official website/free information： Research website in Chinese: http://www.iresearch.com.cn Media website in Chinese: http://www.iresearch.cn Research website in English: http://english.iresearch.com.cn iResearch premium services: Surveys on China’s netizens: http://www.iusersurvey.com Online ads monitoring: http://www.iadtracker.com Research on netizens’ behavior: http://www.iusertracker.com

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Report chief consultant: Henry Yang, President Email: [email protected]