October 2007 ONLINE COMMUNITIES Crossing the chasm WILLIAM BAO BEAN SOFTBANK CHINA & INDIA HOLDINGS

China advertising revenues US$25.8bn in 2007 Internet and Search only 4.3% of total “publisher” intake Note: Excludes agency fees Source: SBCI, GroupM, Company reports, National Bureau of Statistics of China, Zenith Optimedia

Internet and Search only 4.3% of total “publisher” intake

China Internet advertising and search revenues Units: US$ millions Note: Excludes agency fees Source: SBCI, Company reports

Opportunity: Communities 69% of Chinese youth use social networking sites Only children of only children Chinese youth have 37 “net” friends vs 18 in the US Source: Microsoft/MTV Circuits of Cool Project 2006/2007 (Millward Brown Sadek Wynberg OTX)

69% of Chinese youth use social networking sites

Only children of only children

Chinese youth have 37 “net” friends vs 18 in the US

Online communities are where its at…where are the advertisers? Online advertising spend in 2007 will hit US$1.17bn Online communities capture <5% Source: SBCI, Company reports

Online advertising spend in 2007 will hit US$1.17bn

Online communities capture <5%

Opportunity: Music 57% only download/listen to music online vs 32% in US 72% have played music on an MP3 in the past month 39% have downloaded and saved a song to their phone in the past month 63% have illegally downloaded music in the past month Only 6% listen to music on the radio vs 20% in Asia Only 8% watch music videos on TV vs 19% in Asia Ad supported music in its infancy but growing fast Source: MTV 15-35 year old urban youth April 2007 (Synovate)

57% only download/listen to music online vs 32% in US

72% have played music on an MP3 in the past month

39% have downloaded and saved a song to their phone in the past month

63% have illegally downloaded music in the past month

Only 6% listen to music on the radio vs 20% in Asia

Only 8% watch music videos on TV vs 19% in Asia

Ad supported music in its infancy but growing fast

Opportunity: Games Online gaming spend in 2007 will hit US$1.28bn China has 40m gamers, only 21m of whom pay 81% between 18-30 years old, female players on the rise 71% have high school education with 27% holding BAs Gamers’ favorite promotions include 57% for free trials, 50% in-game treasure hunts and 42% game master gifts 64% of gamers play free games Ad supported gaming gaining traction IDC, CGPA 2007

Online gaming spend in 2007 will hit US$1.28bn

China has 40m gamers, only 21m of whom pay

81% between 18-30 years old, female players on the rise

71% have high school education with 27% holding BAs

Gamers’ favorite promotions include 57% for free trials, 50% in-game treasure hunts and 42% game master gifts

64% of gamers play free games

Ad supported gaming gaining traction

Opportunity: Video Youth in China spends time differently than the US TV content in China not compelling… … and the most compelling “voting” shows taken off of during prime time Ad supported video in its infancy but growing fast Source: Microsoft/MTV Circuits of Cool Project 2006/2007 (Millward Brown Sadek Wynberg OTX)

Youth in China spends time differently than the US

TV content in China not compelling…

… and the most compelling “voting” shows taken off of during prime time

Ad supported video in its infancy but growing fast

Video case study: Tudou Tudou has 47% share of the China online video market Tudou sees 15bn minutes per month vs 3.5bn for YouTube Tudou’s average session is 40 minutes vs 15-20 for YouTube Tudou sees 4m unique visitors per day Tudou launching advertising platoform 20 major advertisers Frame and “barn doors” Source: Company reports, Hitwise

Tudou has 47% share of the China online video market

Tudou sees 15bn minutes per month vs 3.5bn for YouTube

Tudou’s average session is 40 minutes vs 15-20 for YouTube

Tudou sees 4m unique visitors per day

Tudou launching advertising platoform

20 major advertisers

Frame and “barn doors”

Crossing the chasm and doing it profitably Advertisers want: Reach customers where they are, not just through TV Avoid expensive Olympic TV ads Control ad timing, location, context, format, pricing model Coordinated campaigns across media and measurable results Agencies want: To become one stop shops for online services Offer search while still making a cut Publishers want: Monetize unsold inventory Raise pricing Avoid cannibalizing CPD sales Protect users from bad advertising

Advertisers want:

Reach customers where they are, not just through TV

Avoid expensive Olympic TV ads

Control ad timing, location, context, format, pricing model

Coordinated campaigns across media and measurable results

Agencies want:

To become one stop shops for online services

Offer search while still making a cut

Publishers want:

Monetize unsold inventory

Raise pricing

Avoid cannibalizing CPD sales

Protect users from bad advertising

Thank You! William Bao Bean [email_address] +86 139 1789 8171