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From its origins as a news portal, Sina launched its Weibo microblogging site (Twitter-like) in August 2009.  This has been a huge success as measured by the growth in the number of registered accounts which now total 368million and 36.5 million daily active users.

The huge development effort of the last 18 months, which has seen the employee count double to 6,000, has focused primarily on the user experience.  The current beta version 5 promises added features that move it further towards a social network platform where Tweets can be directed specifically to close friends/group postings; a potential dating platform where users can enter personal relationship information, status and mood.  There's also facility to prioritise how Tweets appear on a user’s page.

The big challenge ahead is how to monetise this platform.  The company is developing several models including ‘top feed’ where the advertiser’s message is shown at the top of the screen once every 24 hours.  Alternatively, enterprises can attach a succinct corporate message to specific Tweets, for example, Adidas congratulating team members during the Olympics or contextual adverts that are related to keywords in a Tweet.

As far as we can assess, the issues around user identity have been largely resolved by the requirement of recording one’s mobile phone number.  The real risk to the company lies in substitution.  Tencent, which started life as an instant messaging service looks the closest contender because of its profitability and larger user base.  It is attempting to use its messaging app, WeChat, to link with its own Weibo site.  The character of its offer and the demographics of its users are markedly different to those who are attracted to Sina Weibo.  Fortunately, Sina continues to make good returns on its own portal and is able to fund the development costs which pertain mainly to commercialisation.  The market is aware of this blue sky potential but if Sina is able to monetise Weibo at $50 million a quarter as is anticipated by management, the company will enter a new phase of its development.  

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