Chinese online media company SINA Corp. (Nasdaq: SINA) has introduced premium features on its microblogging platform Weibo, charging users about 10 yuan or $1.57 for access. SINA has been struggling to make adequate money from its services and has incurred losses as a part of its latest quarterly results. Government restrictions and the threat of an economic downturn in China have also adversely affected SINA's revenues.
Will the premium moves really make a difference to the company's bottom line? Let's take a closer look.
More for a fee
About 300 million of SINA's Weibo platform users would be able to enjoy 15 new VIP features including personalizing their page, adding voice-based posts, and enjoying better security features, all in return for a fixed monthly fee.
Other Chinese Web-based companies such as Renren (NYSE: RENN) and Tencent Holdings have also introduced added features for which users have to pay a fee.
While a minority of users might pay for the premium features, that might not translate into a significant addition to the company's earnings. What SINA can do instead is focus on areas such as social-media gaming, and on its advertising business, which made up a hefty 74% of its recent first-quarter revenue. The Weibo connection becomes all the more important here as the company has been vocal about augmenting advertising revenues with its all new Weibo-based brand-advertising concept, and expects this effort to start generating better earnings by the latter half of this year.
The Foolish bottom line
SINA's latest move may not make a significant impact on the company in terms of earnings, but it is definitely a step in the right direction and also reflects the company's confidence in itself, even in this age of heavy competition. I'll be keeping a close watch on SINA's progress and so can you by adding it to your free watchlist.
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