Piper Jaffray analyst Safa Rashtchy released a note to clients earlier today. The following is a short extract:
The Chinese music market is potentially a very large and lucrative area, especially as mobile music grows and monetization of music finally becomes possible. Ringtones, currently the vast majority of mobile music, are becoming increasingly popular with many users changing their ringtones several times a month and paying $1-$4 per month for music related content. Streaming and downloading of music is also becoming popular and China Unicom (ticker: CHU) and China Mobile (ticker: CHL) are heavily focused on promoting music content.
We believe the biggest beneficiaries will be the operators and content creators, but we believe there is also a large opportunity for distributors and intermediaries. Like any entertainment content, music requires appropriate merchandising and the mobile value added services (MVAS) companies and other innovative mobile music aggregators are likely to be most capable of effectively marketing a large group of smaller labels. We believe WVAS providers such as Tom Online (ticker: TOMO), KongZhong (ticker: KONG) and Hurray (ticker: HRAY) are in a good position to potentially benefit from the growth of mobile music services, both through expanded ringtone services as well as full streaming or downloads.
1-Yr Price Performance: TOMO, KONG, HRAY