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Cloudary's Hongxiu Reaches RMB 100 Mln in 2011 Revenue

Tencent Tech, 12/22/11

Sun Peng, CEO of online literature site Hongxiu.com, a property of Shanda Interactive (Nasdaq: SNDA) subsidiary Cloudary, revealed yesterday that the site reached nearly RMB 100 mln in revenue in 2011.

Sun said that female consumers now account for 88.4% of users with the site, adding that 64% of Hongxiu users have a university education. In 2012, the company will focus on promoting trendy youth-oriented serial content which lends itself to television or film adaptation.

Hongxiu's current business model focuses on licensing its copyrighted content for multiple derivative works. Revenue channels for the site include VIP paid subscriptions, mobile operations, online advertising, publishing partnerships and revenue from game products. VIP paid subscriptions account for more than half the site's revenue due to the company's partnership with China Mobile's (NYSE: CHL; 0941.HK) mobile literature base in Hangzhou, followed by revenue from Hongxiu's mobile literature business.

Sun said that in 2012 Hongxiu will continue its current partnership with China Mobile, but also look for areas to partner with China Telecom (NYSE: CHA; 0728.HK) and China Unicom (NYSE: CHU; 0762.HK; 600050.SH) in offering paid subscription services.

Hongxiu has subscription apps available for both the iOS and Android platforms, the latter of which was only released on November 16 this year and currently has 80,000 users and gains between 4,500-5,000 news users each day. On Apple's App Store, Hongxiu's iNovel client has been downloaded more than 600,000 times and currently gains an average of 80,000 new users each day. Sun said that within the coming 3 years, Hongxiu will have branded itself as a mobile internet company relying solely on sales of copyrighted works.

Editor's Note: For more information on this topic, please see "Hongxiu.com iPad Reading App Reaches 300K Downloads," MD 9/14/11 issue.

Keywords: segmentation copyright wireless online gaming Shanda China Telecom China Mobile China Unicom content Internet mobile literature female revenue users online advertising online literature SNDA business model CHL 0728.HK 0762.HK 0941.HK 600050.SH CHA CHU Cloudary Sun Peng

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