Web companies hope Games will prove gold online

Broadcast rights

In 2008, a number of online video companies purchased live broadcast and on-demand broadcast rights from State-owned online TV station, China Network Television, or CNTV.

The companies were able to attract the attention of users, but at the same time spent a lot of money on rights.

"In 2008, the revenues we generated from the event were about 20 percent of the cost," said Xu Weifeng, president of PPStream.

The company has been in talks with CNTV, which has broadcast rights of the Games on the Internet this year.

However, Xu said it is not known whether a deal could be reached between the two as the cost for the purchase is at least 20 million yuan, and it's difficult for companies to make ends meet in the Olympics Games projects if they purchase the rights.

Sohu and Netease have bought rights from CNTV, including those for the opening and closing ceremonies, and other matches. Neither company elaborated on how much they spent to purchase the rights.

CNTV will broadcast 5,600 hours of Olympic events live this year, it said.

History showed that operating expenses during the Olympics may be heavy enough to offset online media earnings.

Sina Corp, the nation's top Web portal, reported that its advertising revenues were $76.2 million in the third quarter of 2008, when the Games were held in Beijing. Although this represented a 17.4-percent quarterly increase, higher operating expenses reduced its net income to $22 million, a decrease of 13 percent from the previous quarter.

Sohu, an official sponsor of the Beijing Olympics, also reported a decrease of 2 percentage points in growth margin in the third quarter of 2008, and the operating margin of Tencent decreased to 40 percent from 47.8 percent the previous quarter.

"Generating profit is only a part of our Olympic strategy ... we need to test new marketing products through this big event," said Baidu, adding that the investment during the Olympics may be paid back if the advertisers are satisfied with the marketing results.

Contact the writers at chenlimin@chinadaily.com.cn and gaoyuan@chinadaily.com.cn

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