NetEase.com Inc, the most profitable Internet company in China, will launch a series of moves to accelerate its advertising business, although the Beijing-based dotcom reported firm growth in its core online game business in the first quarter.

 

Ding Lei, chief executive officer and the controlling holder of the NASDAQ-listed firm, said yesterday that his company the largest operator of free e-mail services in China would expand the capacity of its free e-mail in the coming weeks, but he did not reveal the exact capacity.

 

NetEase previously offered the largest number of free mailboxes in China, with a capacity of 2.28 gigabytes; but Yahoo! China, the No 2 firm in the e-mail business, launched a 3.5-gigabyte-capacity service on March 15. It cost Yahoo! China 70 million yuan (US$8.75 million) to upgrade the capacity from 2 gigabytes.

 

Although e-mail is a service that costs a lot of money but generates few profits, it is a major way to attract Internet users and encourage them to use other services on websites.

 

Ding said his company was investigating how to tap the commercial potential of bigger mailboxes and will launch a service to online advertising clients to help them monitor the effects of ads on viewers in the next quarter, allowing them to send ads to specific users and monitor their effectiveness.

 

It will also launch its blog service in the third quarter to attract more users.

 

NetEase is one of the traditional top three Internet portals with Sina Corp and Sohu.com, both also listed on the NASDAQ, but its revenue from online ads is very low compared with the other two firms.

 

The company said yesterday that it generated US$7.7 million in advertising revenue in the first quarter, while the figures of Sina and Sohu were US$22.2 million and US$20.10 million respectively.

 

Ding said that as the company's online game business is already stable, the firm has turned its focus to the non-game business, especially online advertising.

 

The company also said yesterday it would promote Zhan Zhonghui to the position of co-chief operating officer (COO). Michael Tong, another COO, will also turn to the non-game business with a focus on online advertising.

 

NetEase said yesterday that its revenue from online games rose by more than 70 percent over the same period last year to US$56.2 million, with the increasing popularity of its massive multiplayer online role-play game Fantasy Westward Journey, the most popular game in China.

 

Its total revenue was US$66.10 million, growing by 8.7 percent over the last quarter of 2005 and 60 percent over the first quarter of 2005.

 

(China Daily May 18, 2006)