Marbridge Daily

<- May 02, 2012 ->

Sohu to Build Dedicated Sales Team for Video Ads

Tencent Tech, 5/01/12

In a phone conference for its Q1 financial report on April 30, Chinese Internet firm Sohu (Nasdaq: SOHU) said that it will establish a dedicated sales team for its video business. The company is in the process of putting together the team, and is still in a transitional stage.

Co-president and CFO Carol Yu said that contracts for content to be made available over Sohu Video will total USD 48 mln, including USD 17 mln paid by the company for content purchased in 2011 and a further USD 31 mln to be paid out this year, USD 5 mln of which was paid in Q1. The company predicts that views of new video content will drive USD 28 mln in ad revenues this year, with a further USD 19 mln to come from views of old content.

Yu said that Sohu hoped to recover 50% of the cost for a single licensed title within the first six months of its release on Sohu video, a further 30% within the subsequent six months, and the remaining 20% within the following year.

Video licensing costs will be split evenly between Sohu Video, Tencent (0700.HK) Video, and Baidu's (Nasdaq: BIDU) joint-venture online video site iQiyi under the three companies' licensing partnership, Yu said. The companies will cooperate primarily on jointly licensing major titles including major motion pictures and popular television dramas, but will continue to independently license smaller and lower-cost titles and content. The duration of the partnership is not set and it may be dissolved at any time.

Wang Xiaochuan, CEO of Sohu's search engine Sogou, said that the top five search advertiser categories were e-commerce, lifestyle services, IT and 3C goods, business and investment, and commercial services such as insurance.

Wang predicted 100% growth in advertising revenues for 2012, a faster rate of growth than for brand advertising, with revenue growth to be driven mainly by small and mid-sized clients.

The top five brand advertising categories, according to Sohu co-president and CMO Belinda Wang, are transportation, online gaming, real estate, e-commerce, and FMCGs.

Changyou CEO Wang Tao said that 17173 was in the process of developing a joint operations platform, to be called 37wanwan (a close homophone for "Go Online and Play"), but as Changyou is already engaged in joint operations of games, 17173's joint operations platform will not be a key area of development. The company will redraft its joint operations platform development strategy next month.

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