MCLC: battle lines drawn in online lit market

[Denton, Kirk]

MCLC LIST
From: kirk (denton.2 at osu.edu)
Subject: battle lines drawn in online lit market
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Source: Global Times (5/28/13):
http://www.globaltimes.cn/content/784974.shtml

Battle lines drawn
By Global Times

Recently, the central management team of qidian.com led by Wu Wenhui has
left for the Internet giant Tencent. This personnel change is expected to
create chain reaction in the online content business.

Tencent and SNDA, as two leading players in the business, have a history
of being opponents in many aspects. In 2010 Tencent surpassed Shanda Games
to become the bellwether in the field and has held on to the position ever
since. 

This time the battle is no longer about games.

The potential market for mobile reading in China is huge and is expected
to generate an explosion of online literature websites.

Having already established a large consumer base - especially its almost
400 million users of Wechat - Tencent is regarded as one of the earliest
companies to be prepared to take the market.

SNDA has Cloudary, which is now the second competitive content resource
(right after Shanda Games) within SNDA's group of companies.

Now, with the movement of Wu's team, providing content and services for
reading on smartphones, iPad or Kindle will be another battlefield for
both Tencent and SNDA.

Cloudary's advantage

On May 14, Hou Xiaoqiang, the CEO of Cloudary, released a few figures to
prove that Wu's leaving did not affect the stable growth that Cloudary has
experienced in the past few months.

The number of writers registered in April increased 70 percent compared to
the number in March. New literature works uploaded also increased 62
percent in the period.

However, according to industry insiders the influence from Wu's leaving
would not be short-lived.

Sun Peilin, an analyst at Analysys International sees Cloudary as
possessing the best literature resources.

Wu's creative team, while it does not include the entire group that
created qidian.com, still holds the majority of quality resources from
Cloudary. 

According to iResearch, in 2011, literature websites under Cloudary
occupied a 70 percent market share, including 43.8 percent from qidian.com.

Sun said that Hou's mission would be to coordinate and integrate resources
especially for its e-book store, but Cloudary's direct distribution has
not been completely established.

On the other hand, for Cui Wei, the COO of qidian.com, distribution
channels are only a part of their next phase and different content can
find different ways out.

Cloudary is still the most useful recourse for SNDA on its way to
developing an online entertainment world.

"It is still the big brother, but it needs to change its pace," said Sun.

Internet 'Disneyland'

Chen Tianqiao, the CEO of SNDA, first came up with the concept of an
Internet "Disneyland" some time ago. The plan was to develop games,
literature, and multiple entertainment platforms based on a large amount
of content copyrights at its heart.

Unfortunately, SNDA's fast pace of achieving such goal was seen as
problematic. 

Last year, Tencent also proposed a general entertainment strategy that
shared a similar idea.

Differently, Tencent has learned from SNDA's experience and started
building a consumer base long ago, without considering profiting in the
short run. 

Last month, Tencent released the news Tencent's game platform would
transform to an interactive entity of games, animation, literature and
television and films, each related to others.

Recent leaps in technology development have boosted the online
entertainment industry.

The sudden shift of human resources from one company to its chief
competitor has made the battle come earlier.

Wu's team will be responsible for Tencent's reading channel for men since
the content of this particular channel is also about games and fantasy
themes. 

The final mission for Wu is probably to contribute to the founding of
Tencent's "Internet Disneyland" where an open and movable online reading
platform plays a key role.