Renren.com. (Photo courtesy of Renren)
Despite his company's recent losses, Chen Yizhou, CEO of Renren, China's answer to Facebook, is still upbeat about the prospects of the social networking website thanks to rapid growth of its gaming business, reports the Beijing-based magazine Business Value.
The report points out that in the first quarter of last year the company's gaming division for the first time accounted for more than 50% of all earnings, and gaming sales topped US$24.2 million in the third quarter of 2012, up a little over 120% from a year earlier, according to the company's financial statement. In addition to web browser-based games, Renren also ranks among the top app sellers worldwide for its mobile gaming products.
In early May 2011, the company listed on the US stock market, two weeks before Facebook's much-hyped IPO. Also unlike Facebook, whose share price quickly dropped below the initial price, Renren's stock rallied with margin trading exceeding US$740 million in value, the highest for a Chinese company listed in the US market.
The magazine notes that like Facebook, the Beijing-based company is facing the challenges associated to the tidal wave of mobile internet use which entails a major rethink of the user experience and how to earn advertising money. With over half of its users already lognig in via mobile devices, ad revenue growth in the mobile sector is not making up the shortfall from ad revenue from the desktop version.
According to its financial statement, Renren's online ad sales reached US$17 million in the third quarter of 2012, down 13.7% from 2011. A major liability is subsidiary Nuomi, a group-purchase website which accounted for 51% of the company's losses amounting to US$12.1 million in the third quarter of 2012.
Renren now lists over 50 gaming products available for download on mobile devices putting it in the top echelon of software development companies. According to App Annie, an app ranking and market intelligence firm, the company ranks among the top 100 for sales in Apple's App Store in North America. The company had a 700-strong team developing its gaming products.
The magazine reports that at present Renren's website there are 15 in-house games and 50 from third parties available to users. The top five gaming products contribute to 73% of its total gaming sales.