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Is the Sina Weibo Empire Crumbling? Weibo and Alibaba Deepen Relationship. No Investment Planned.

Commonly perceived as the Twitter of China, Sina Weibo has recently reached the 400 million user mark, receiving praise from abroad and contributing almost single-handedly to the rise of the information age in China. Yet this milestone notably lacks the “active user” label on the equation and their quarterly financial report is lacking in luster to say the least.

Are there rumblings on the horizon for this would-be worldwide social media contender?

Sure there were rumors earlier this week that Alibaba might seek investment in Sina, though it’s been confirmed now that these rumors were unfounded. Instead, Alibaba has apparently been negotiating on a rather deep level with Sina on their cooperation and the nature of the Weibo open platform and  hierarchy of its administration. Though not confirmed directly by Sina, reports say that they will soon be changing their management structure, shifting a chunk of the Weibo product management to the wireless side of the business.  The adjustments are still in progress, but it is clear that after a less-than-stellar earnings report, Sina wants to take a new direction before it gets left behind.

Charles Chao stated in its quarterly conference call that since the second quarter, the percentage of users solely logging on mobile or both mobile and PC has gone from 69% to 72%. Furthermore, microblog advertisements are already coming from mobile 15-20% of the time. Focusing on mobile will be a good move, but is it enough?

Some are beginning to express doubts about the viability of the Weibo platform entirely. With the rise of soon-to-be-direct rivals such as Weixin, Sina needs to begin to leverage its mobile platform or it will be swamped completely by Tencent. The smartphone age is just beginning, and though Sina seems to claim that Weibo runs on a different model than Weixin—more broadcast and less about personal networks—they are shooting themselves in the foot if they deny direct competition with Tencent for the attention of smartphone users.

And they need to start monetizing fast. Much like Twitter, they have had trouble monetizing over the years and have come under fire for recent changes to their services. The next year for Sina is going to be a painful process if it does not make some structural readjustments and redesign its mobile application.  Rarely is there a piece of information worth viewing on Weibo, and when there is, a group of advertisements crowds it out. Even as its user-base continues to grow, many are already complaining that there’s been a serious decline in the quality of information.

Let’s face it, Weibo is is getting messy.

Even more than Twitter, Sina has become an ad platform for the masses.  Descriptions of people refreshing pages and repeatedly finding no intelligent or useful content are becoming more and more common, whilst relatively famous figures are rarely releasing important information, save for the sometimes odd slips in the fashion of Qihoo’s Zhou Hongwei. Advertisements rule the day.

Deepening ties with Alibaba

Today’s leak about the deepening of cooperation with Alibaba is related to the advertising platform they wish to promote. According to Hitwise, Weibo represents 2.8% of outbound traffic to Taobao, making their business cooperation highly beneficial. Naturally, they will be deepening this relationship in the coming months, according to sources that spoke with Tencent Tech.

But is Sina making the right choice here? Rather than winning over the interest of millions of users and smaller and medium-sized businesses, they are courting large businesses and stores. Weibo is now an eyesore for anyone who is not an experienced user. They are making a mistake if they think they will keep their fan base for long.

My guess is there will be a breaking point for Sina if they do not act soon.  Though Weibo has not yet lost its value, especially as a source of news and information, it is not moving fast enough to account for the next stage of market growth. If they ramp up their mobile services and make an effort to rein in excessive advertising, it would do wonders for their user retention and acquisition, but I am afraid it will be too little too late.

Source: TechWeb

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