Xinhua- PRNewswire reported on 28 July, that second quarter financial results (unaudited) for Chinese Internet giant, Sohu.com, reached USD $102 million; up 162% year-on-year and 20% quarter-on-quarter. Sohu.com is one of China’s leading Internet companies and is the internet content sponsor for the Beijing Olympics website. The company also operates online media, online games, mobile services, search engine and pinyin service, transliteration of standard Mandarin Chinese into Roman characters.

Sohu’s report revealed advertising revenues of USD $ 43.4 million, a rise of 57% year-on-year and 26% quarter-on-quarter. This increase has been partly due to increased advertising revenues from the Olympic website. Online games revenues were up to USD $ 47.9 million and the company’s online role-playing game, “TLBB”, Tian Long Ba Bu brought in USD $ 45.5 million.

Belinda Wang, Co-President and Chief Marketing Officer of Sohu.com, was reported saying that the company was delighted with its performance and from the strong growth in brand advertising revenues. She also said that the overall growth reflected the expansion of the China Internet market and the shifts from offline advertising budgets towards online advertising. Other senior members of staff mentioned the increased traffic due to the Beijing Olympic website and the continued high quality of Sohu’s internet content.

China’s soft gaming industry is booming – and it is predicted to grow even further... According to a report by CNNIC, China Internet Network Information Center, there are at present over 120 million online gamers in China and revenues from the soft gaming industry reached around $1.3 billion by the end of 2007. The figures, and the fact that China represents the largest, and fastest growing, online population, combine to make it an extremely attractive prospect for foreign investors. A number of foreign gaming companies have already staked a claim and bought into the market - despite changes to regulations, which stipulate that foreign companies must operate in partnership with local companies. However, there seems to be a loophole in the new regulations, as companies operating from outside China do not have such a limitation; they are merely required to hold an ICP, Internet Content Provider license and to register a company locally.

One European company that is doing extremely well in the soft gaming scene in China is the Dutch company, Spill Group. Spill Group was one of the very first foreign game companies to enter the Chinese market and opened an office in Shanghai in 2006. The group currently owns Game.com.cn and Xiaoyouxi.com, both of which it acquired over the last two years. Both portals’ user bases are growing at a rate of 15% to 20% per month and they already each have around 1 million users online at any given time. Marc van der Chijs, Spill Group’s CEO for Asia, has been reported saying that, for now, the company has no plans for further acquisitions in China, but that they intend to concentrate on developing new mobile games, working in cooperation with some local companies. Meanwhile, the company is focusing on a range of non-gambling, online games, which can be played alone, or against other players.

Entertainment and recreation are the most popular uses of the internet with China’s 221 million internet users and, as more and more women spend time on online games’ sites, the sites are becoming very interesting to advertisers. In fact, most of Spill Group’s revenue comes from advertising.