Top China Internet company Tencent Holdings Ltd said it expects an increase in microblog subscribers to 200-300 million by the end of the year from 160 million now, a senior executive said, as social networking services gain popularity in the country.
China, which has more than 400 million Internet users - more than the population of the United States - has seen a boom in online games, social networks and instant messaging, with Chinese imitations of Facebook and Twitter, which are officially blocked on the mainland, sprouting across the sector.
"Microblogging will be an essential business operation for Tencent, so we are determined to invest unlimited resources to it," Li Fang, senior executive in charge of microblogs, told Reuters in an interview on Thursday.
China's microblog sphere is now largely dominated by Sina Corp and Tencent, with other web portals, such as Sohu.com Inc and NetEase.com Inc rolling out similar services.
Ma Huateng, chairman & chief executive officer of Tencent, said in March when reporting 2010 results that the company will enter an investment phase, with microblog and e-commerce on top of its agenda.
"As we will incur significant costs and many of them will not generate revenue immediately, our profitability will be affected during the investment period," said Ma.
Even though microblogging is becoming a key service for web portals, it is far from being a revenue generator.
"Everybody is exploring this area and we haven't found a mature method to do it," Li said.
Jonnie Hu, an analyst with BOC International, believes that "it is too early to talk about monetization."
Hu said that user activity of Tencent microblog trails that of Sina microblog - the early bird in the area. Meanwhile, Tencent microblog and its social-networking site QZone share the same user pool, who hop between the two services substituting the other in many ways, creating concerns over the user stickiness prospects of the infant microblog service, according to Hu.
Tencent - which runs China's largest instant messaging platform, QQ, and social-networking site QZone - has been adding 800,000 to 1 million users daily as China's increasingly tech-savvy population goes online to make friends and chat.
Jake Li, an analyst with Guotai Junan International, commented that the user target of 200 to 300 million "is not difficult for Tencent", given its large user base of QQ.
Li thinks that that the quantity of users is just one factor in the development of microblogging.
"At the current stage, it is vital for all players in the microblog sphere to enhance user activity and stickiness rather than chasing profit. It is a long-term process and requires more seasoned cooperation among various units such as sales, marketing, and IT," said Li.