Media, Entertainment and Gaming
• NHN Japan Corp. will strengthen distribution to smartphones, hoping to tap this market as such devices surge more popular. The unit of South Korean portal operator NHN Corp. operates the Hangame site for personal computers. It began distributing content for iPhone in Japan last July and hopes to develop the smartphone content business in South Korea as well starting this summer. The company has set up a roughly 100-member South Korean content creation studio to develop and distribute action games and puzzles. NHN Japan aims to have 10 titles out in the Japanese market this spring and 100 titles released in Japan and South Korea combined this year. The company is accelerating development of games for systems running Google's Android operating system. It will also introduce features to let users exchange game content and other data with friends as well as compete against others.
• An anticipated fight over Japan-based publisher Gentosha Inc.'s plan to go private never materialized, with the brokerage that holds a crucial stake refraining from taking part in a special shareholders meeting. Tachibana Securities Co. holds 35 percent of the voting rights in the midsize publisher on behalf of investment fund Isabel Ltd. The Cayman Island-based fund, which sought to launch a competing takeover bid, amassed the shares via margin trades through the brokerage. The charter amendments needed for the buyout required two-thirds of the votes cast by shareholders in attendance. Tachibana's absence cleared the way for the buyout proposal backed by Gentosha President Toru Kenjo, who owns 58 percent of Gentosha's voting rights. Tachibana said it could not comment on the matter. Gentosha will proceed with acquiring the remaining shares in the company, with an eye toward delisting from the Jasdaq Securities Exchange on March 16.
• NTT Prime Square Inc. will start an online content store that can be accessed using various types of devices, including cellular phones, smartphones and personal computers. Seeking to sign up 1 million users in the first year, the joint venture between Nippon Telegraph and Telephone Corp. and Kadokawa Group Holdings Inc. will begin offering the service March 14 through a members-only Web site. The online store's offerings will cover various genres, including entertainment, hobbies, history and sports, from publishers and film studios. In addition to PCs and cell phones, the online store will be accessible via smartphones and tablet computers that run on Google's Android operating system, and eventually from Internet televisions. The service provider is still negotiating to include Apple’s iPhone and iPad.
• Shares of South Korean telecom giant KT Corp. are seen as undervalued among foreign investors, as South Korea's telecom industry is seen to further expand, boosted by smartphones, a Hong Kong-based financial official told Yonhap News Agency, asking for an anonymity. A different financial source explained that the recent volatility on South Korea's stock markets has dulled investors' appetite for riskier assets and surged preference for shares with stable dividends. The investors are paying close attention to how the South Korean telecom sectors will be affected by robust growth of smartphones. KT Corp. had last month that its fourth-quarter earnings declined below expectations, but painted a brisk outlook as rising smartphone sales, led by Apple Inc.'s iPhone, are seen to improve its margin. Net profit reached 105.1 billion won (US$94.3 million) in the October-December period.
• The popularity of Android smartphones in South Korea has been driven by its partnerships with the country's mobile device makers and wireless operators, top executives at Google said. Since the first Android device was released about one year ago, South Korean consumers have seen a flux of Android devices made by Samsung Electronics, LG Electronics, Pantech, HTC and Motorola Mobility. The penetration rate of Android devices in the population is higher in South Korea than in any other country in the world, according to Google. Samsung and LG built their flagship smartphones and tablet computers on the Android system in efforts to play catch up with Apple and Research In Motion. Samsung, the world's second-largest mobile phone maker, recently manufactured the Nexus S phone with Google in the latest series of their collaboration.
Media, Gaming and Entertainment
• South Korea will create a film and entertainment complex modeled after Hollywood film studio by 2014 in its bid to promote local entertainment business and tourism. The city government will spend 170 billion won (US$151 million) on expanding the Digital Media City (DMC) in western Seoul to develop a cluster for the film, game and animation industries there with a central emphasis on South Korean pop culture, known as "Hallyu". The construction plan includes building the world's largest computer graphics center with three virtual studios, city-themed movie sets, pre/post production facilities as well as promotional exhibition halls of famous Korean dramas that are big hits across Asia by 2013. A theme park featuring famous game and animation characters will be set up there by 2012, officials said, noting the city government will gradually create a video game theme park in a nearby area to offer fans the opportunity to experience a fantasy world.
• South Korea's communications regulator approved a 40 percent surge in the subscription fee to 3,500 won (US$3.14) for public broadcaster Korea Broadcasting System (KBS). The surge in the KBS subscription fee by the Korea Communications Commission is subject to approval by the National Assembly. The subscription fee for the public broadcaster has been frozen at 2,500 won for the past three decades.
• South Korea's public broadcaster KBS had a greater-than-expected profit of 43.4 billion won (US$38.9 million) for fiscal 2010 on the strength of surged revenues from advertising and subscription fees. KBS reached revenue of 1.45 trillion won (US$1.2 billion) and spent about 1.41 trillion won (US$1.1 billion) last year. The profit figure marked a fall from 69.3 billion won (US$62 million) in 2009 but far exceeded its original target of 300 million won (US$269, 675) announced at the beginning of last year.
• South Korea's advertising market expanded at least 16 percent in 2010 as companies beefed up marketing expenses amid a robust economic recovery. It was the first time that the market size had exceeded the 8 trillion won mark. The on-year growth was led by a surge in online advertisements, which jumped 24.5 percent, Cheil Worldwide said. Commercials for cable television networks and outdoor advertisements also soared 23.8 percent and 19.9 percent on-year, respectively. By industry, the financial, technology and food sectors spent most heavily on advertising, according to Cheil Worldwide. Construction firms and state-run organizations, however, cut their advertising expenses.
• Daum Communications saw its earnings in 2010 almost quadruple as ad-based revenues went up. The company had a net profit of 112 billion won (US$101 million). Sales went up 44 percent to a record 346 billion won (US$311 million) and operating income at least doubled to 97.9 billion won (US$88 million). Sales of search ads surged 44 percent to 179 billion won (US$161 million) and sales of targeted display advertising surged 43 percent to 149 billion won (US$134 million).
• LG Electronics Inc. aims to at least quadruple its smartphone sales from last year to 30 million units in 2011 in a bid to revive its money-losing mobile business, a company executive said. LG will also lift its overall mobile phone sales by 30 percent to 150 million units, aiming to outnumber the industry's stagnant growth pace, said Park Jong-seok, president and chief executive of LG's mobile communications division. To achieve its goals, LG will release 20 new smartphone models and surge smartphone revenue to half of its total mobile device sales. Reinforcing smartphone business is seen as a key to turning around LG's mobile business, which did not have a premium smartphone lineup in 2010 to compete against the Galaxy S or the iPhone.
• The value of China's online retail sales in the final quarter of 2010 surged 29 percent quarter on quarter to 172.8 billion yuan (US$26.3 million) according to research firm Analysys International. The market size topped 520 billion yuan (US$79.2 million) last year in total in 2010. The B2C market size reached about 104 billion yuan (US$15.8 billion), accounting for 20 percent of the total, and the market share continues to surge, said the research firm. The market research attributes the growth to vigorous demand as well as vigorous promotions by retailers. Clothing and 3C products were still the most popular goods in the online shopping market in the fourth quarter of 2010. But publications surged faster than other sectors, with the market size rising 39.6 percent from the previous quarter to 1.83 billion yuan (US$278 million).
• Alibaba.com Ltd. acquired a 25 percent stake in export services software maker Sinosoft Technology PLC for 170 million yuan (US$26 million), Alibaba.com spokeswoman Linda Kozlowski said. Alibaba.com has at least 2,000 customers who use Sinosoft's software, Kozlowski said.
• Yahoo Inc. Chief Financial Officer Tim Morse said the company plans to name an additional member to Alibaba Group's board of directors, saying there is no need upset the state of affairs at the company. Yahoo would install a board member when it finds the right person for the position. Relations between the two companies have been strained over the past few years amid a series of differences over censorship and business issues. Alibaba has repeatedly tried to buy back its shares, but Yahoo has rebuffed those approaches. Yahoo acquired a 39 percent stake in Alibaba by handing over control of its mainland Chinese operation to Alibaba in 2005, along with US$1 billion, and since then it hasn't run its own operations in the world's most populous Internet market. Under terms of its partnership with the Chinese company, Yahoo has had the right to name another director to Alibaba's four-person board since last October. That would give it two seats, the same number controlled by Alibaba. Japan's Softbank holds the remaining seat.
• The visit by chief executive officer Mark Zuckerberg apparently helped boost Facebook Inc.'s recognition in China, with the number of users surging from 300,000 to 700,000 in one month. At least 720,000 Chinese checked into the social networking site, according to Socialbakers.com. The site had about 100,000 Chinese registrants. The ranks surged to roughly 300,000 at the start of January and reached the neighborhood of 500,000 by late that month. By gender, 80 percent of Chinese users are men, as 55 percent of U.S. subscribers are women. Those 34 and younger account for 83 percent of all registrants in China.
• Ctrip.com International generated net income of 302 million yuan (US$46 million) in the fourth quarter of 2010, up 59 percent year-on-year but down 6 percent from the previous quarter, bringing diluted earnings per ADS for the quarter to 1.98 yuan (US$.301). Net revenues in the quarter expanded 39 percent year-on-year but contracted 3 percent quarter-on-quarter to 787 million yuan (US$120 million), which the company attributed to seasonal effects. Hotel reservations contributed 360 million yuan (US$55 million), up 31 percent year-on-year, as air ticket booking revenues were 320 million yuan (US$49 million), up 35 percent annually. Packaged-tour revenues came to 101 million yuan (US$15.4 million), representing a 108 percent boost on an annual basis. For the full year, Ctrip made 2.9 billion yuan (US$441 million) in net revenues, up 45 percent from 2009, as net income hit 1.0 billion yuan (US$152 million), up 59 percent year-on-year.
• The number of China's mobile phone users topped 859 million by the end of 2010 with penetration rate of 64.4 percent. In Shanghai, the cell phone penetration rate reached 122.9 percent, ranking the country's first place. Beijing and Guangzhou respectively took up the second and third places, with the penetration rates reaching 121.4 percent and 99.9 percent. The number of 3G service subscribers in China surged 36.83 million to 47.05 million in 2010. Included were 14.06 million owned by China Unicom, 20.70 million from China Mobile, and 12.29 million of China Telecom. China's 3G users in 2011 are seen to exceed 100 million, said Chen Jinqiao, deputy chief engineer of the Chinese Academy of Telecommunication Research. The number of fixed-line phone users in China dwindled to 294 million by the end of 2010, and the penetration rate was 22.1 percent.
• ZTE Corp. said it has secured contract sales worth up to 100 billion yuan (US$15.2 billion) and a growth rate of 26 percent, making ZTE the fastest-growing vendor in the global telecom sector. The global market and domestic market in China both experienced deterioration in 2010, with an annual decline in telecom investment in each market by 3 percent and 14 percent respectively. ZTE has the highest compound annual growth rate (OTCPK:CAGR) among the top vendors in the global market. It had a CAGR of 28.01 percent between 2008-2010 and 37.48 percent between 2006-2010. ZTE has achieved 29 percent growth of its contract sales in overseas markets especially in Europe and North America.
• China Telecom officially launched the Broadband China Optical Network City project on Feb. 16 and in three years the company plans to establish a fiber optic link with all of China's cities. By the end of 12th Five-Year Plan period, the fiber optic network will cover all the family, government and enterprise users in the cities of southern China. By then, full 3G network coverage will be achieved and WiFi will cover the hotspot areas. This will mark the completion of the integration of wired and wireless high-speed broadband networks and provide ubiquitous and seamless coverage of broadband services.
• China Mobile Ltd. said it is seeking partners to bid for network licenses overseas to share the risks of global expansion. China Mobile is looking for opportunities to expand abroad as the company faces the slowest revenue growth in its 13 years as a public company. China Mobile's revenue rose an estimated 7 percent to 484 billion yuan (US$73 billion) last year, according to the average estimate of 29 analysts compiled by Bloomberg. That would be the slowest increase since the company's 1997 Hong Kong listing, and the analysts estimate growth will keep decelerating through 2013.The operator first expanded overseas in 2007 when parent company China Mobile Communications bought Pakistan's Paktel Ltd. China Mobile has also said it is seeking opportunities for investments or partnerships to speed the global adoption of a Chinese-developed fourth-generation mobile system TD-LTE. The company announced the formation of the Global TD-LTE Initiative to promote development of the technology. Softbank Corp, Vodafone Group Plc and Bharti Airtel Ltd are among international companies that will cooperate on the new technology standard
Media, Entertainment and Gaming
· The size of China's mobile phone game market slid 4.9 percent quarter on quarter in October-December 2010 to 877 million yuan (US$132.99 million), due mainly to a change in policy by Chinese telecom operators, according to Analysys International. The research firm said that the market believes that Chinese carriers' policy of sending text messages asking for confirmation from mobile phone game players directly impacted revenues from standalone games. Large numbers of mobile phone games developed by overseas companies have swarmed into Chinese mainland market, which also influenced the development of local mobile phone game service providers. The number of mobile phone game service subscribers in China topped 135 million in the final quarter of 2011, up 11.9 percent from the previous quarter. The user base returned to normal growth last year after explosive growth in 2009, and the quarter-on-quarter growth started to climb in the fourth quarter of 2010.
• Lenovo Group Ltd.’s fiscal third-quarter profit surged 25 percent to US$99.7 million as customers replaced aging machines and component costs declined. Revenue surged 22 percent to US$5.81 billion. The company benefited from businesses in China, U.S. and Europe replacing computers with machines running on Microsoft’s Windows 7. The maker of Thinkpad laptops is buying control of NEC Corp.’s PC division to expand in Japan and is gaining sales in emerging markets such as Russia and India. Companies are a third of their way through the current computer replacement cycle, which is seen to continue for another two years, Chief Operating Officer Rory Read said.