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Who Makes Money In China’s Mobile Market?

Though China’s domestic mobile Internet market has been booming since 2009, lingering questions remain about how to make a profit rather than simply reach more users and attract investment. It is estimated that the whole mobile Internet industry cannot make money until the number of smart phone users reaches 350 million. Under these circumstances, many companies in the mobile Internet industry are going to face a lot of difficulty.

Mobile Internet has actually seen a cool down as there has been a decline in investment since early 2012. After the first investment peak of 2011, most investors locked in their goals and became prudent about projects actively seeking financing; they prefer startups with clear business models and earnings outlooks.

How about companies in the mobile Internet industry now?

A few companies are realizing a profit.

The first wave of profitable companies in the industry earned money by virtue of user payments and advertisements, for instance game companies and professional utility apps that charge users. They operate with a steady and clear business model; however, such companies have no further vision for making money. An example of this is Camcard.

As for companies focusing on advertising channels, they have a variety of choices. Domestic advertising markets have no clear segmentation as they do abroad where its divided into ad exchanges, ad networks, SSP, DSP, and DMP. That’s why many companies in domestic markets take on several tasks at the same time. i-Media, Umeng, Domob and Madhouse are examples of this.

Some companies are still scrambling for users.

Typically, companies still haven’t made a profit yet; however, they have the potential to grow. Companies are pursuing users more than a big fortune for the moment. With an increasing number of users, they will eventually find clearer business models. Most likely, these companies will make monopolistic profit once they break the bottleneck. Good examples of this are WeChat, Momo and Changba, who are sparing no efforts to attract more users.

Translated from the Chinese original by Stella Wang (Sohu)

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