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Wired for Success: VODone Chairman Mr. Zhang Lijun

INTERNET VIDEO broadcaster VODone Ltd (HK: 82) enjoys a staggeringly high independent daily pageview visit rate of nine mln.

And thanks to its tieup with China Unicom, VODone can potentially tap into the telecom firm's over 100 mln subscribers.

The company’s management told NextInsight that the sky’s the limit for this growing power in the airwaves. 

VODone, listed in Hong Kong in 2006, is a Beijing-based state-affiliated leading new media firm principally engaged in tele-media services ranging from news production, internet-video production and broadcasting, advertising, mobile gaming and mobile lottery services.

The VODone Broadband platform broadcasts its in-house produced Internet video programs by leveraging on its ability to broadcast live shows.

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Good Company: VODone's Chairman Zhang Lijun with (from left) former US Presidents Bill Clinton, George W. Bush and current Russian PM Vladimir Putin. Photo: Company

Meanwhile, VODone BUS is monitored by AC Nielsen – the leading global name in monitoring media consumption patterns -- for its broadcast data, and receives support from Google advertising subsidiary DoublClick on the technical side.

Late last year, VODone beefed up its online gaming portfolio, angling for a 70% 168 mln yuan stake in Dragon Joyce Group, a software developer of mobile phone games.

“We only buy assets with good synergies. And we currently have no debt and can issue shares if necessary as we have 450 mln yuan cash on hand,” VODone CFO Mr. Hendrick Sin told NextInsight.

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"One particularly bright spot in our outlook is our self-designed software-installed mobile handset sales in the PRC," says VODone CFO Hendrick Sin (top). Photo: Andrew Vanburen

“One particularly bright spot in our outlook is our self-designed software-installed mobile handset sales in the PRC. We have on target to sell 40 mln units by the end of this year, and with our tieup with China Unicom on the 116114 phone application system, this will allow us to potentially reach the 100 mln subscribers of China Unicom,” Mr. Sin said.

VODone, the only Internet broadcasting company listed in Hong Kong, has a current revenue contribution from three general activities.

Advertising revenue contributes 60% to the top line, online lottery services and gaming operations both supply 20% each.

VODone, which enjoys a semi-state owned enterprise (SOE) status, enjoys the regulatory perks and connections that come along with it.

“As an example, our lottery business is growing very, very fast, with the Ministry of Civil Affairs overseeing this operation. And as we are quite experienced in this field and expanding rapidly, we don’t have the need to grow via mergers and acquisitions here, but rely on organic growth.

And VODone’s top moneymaker – advertising revenue – had fully recovered from the global recession-led slowdown in 2008.

“Our New Meda ad rates have recovered after companies across the board contracted their marketing budgets beginning two years ago. The rates are quite easy to monitor for us and closely follow the performance of the economy as a whole,” Mr. Sin added.

“Our V1.CN portal ranking is going up and up with nine mln independent pageviews per day, which certainly helps out on the ad rate side.”

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www.v1.cn, VODone's news portal (top) is a major ad platform for the company, whose Hong Kong-listed shares have seen a 52-wk range of 1.61-3.26 hkd and are currently priced at 2.25 hkd.

The online mobile gaming operations are a relatively new endeavor for VODone which is why the Hong Kong-listed firm was not shy about scooping up more experienced players in the sector, such as Dragon Joyce last year.

“To boost our gaming prowess we added two acquisitions as we don’t have a lot of expertise and prefer to grow this sector by M&As. Starting from April this year, Dragon Joyce became the first entity granted the right to develop a series of stand-alone and online mobile games featuring the Shanghai Expo mascot 'Haibao' and we successfully launched 10 games based on this at the end of June.

"The same month Dragon Joyce was exclusively licensed by MARVEL of the US to use the Iron Man character image in the PRC market to develop a series of mobile games based on the superhero. This has helped VODone launch over 100 mobile games in the PRC market so far. So we are on track to deliver satisfactory results."

In September, VODone announced the acquisition of businesses from Shenzhen Tastech Electronic Co Ltd (www.sz-tastech.com) and Bright Way Technology (Hong Kong) Ltd whose businesses include developing, designing and providing maintenance services of mobile communication products.

Tastech and Bright Way are the leading market providers of mobile communication technology products in the PRC, and provide a full range of hardware design, software design, quality assurance testing, industrial design and structural design of mobile communication solutions. The range of products include features such as touch-screen, analog television, TV-OUT, full-screen touch, full-keyboard flip, vertical slide, horizontal slide, professional audio sounds and other multimedia features.

“Tastech and Bright Way have efficient, professional research and development teams. They have over 80% of their human resources as R&D and technical staffs with the majority of them having more than seven years of professional and extensive experience in product development. We anticipate the newly acquired business can generate an annual design capacity in excess of 10 mln mobile handset by 2012.”

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Strange Bedfellows: Iron Man and Shanghai World Expo mascot Haibao are both helping promote VODone's mobile gaming ops. Photos: Company

Linfo (www.linxun.com), a new mobile internet community, which was jointly developed and operated by VODone Group and France Telecom, commenced operation in May 2010, and mainly targets 3G mobile phone users.

 

Currently, it supports four major operating systems i.e. Symbian, Windows Mobile, iPhone and Android, and is compatible with Nokia, HTC, Apple, Motorola and Sony Ericsson, etc. The official operation of "Linfo" marked the emergence of the first mobile internet community with full legitimacy in China.

Linfo is major potential growth driver for VODone, and mainly provides information services for mobile phones. By using the maps, registered members may conveniently find out their own location and restaurants, entertainment and leisure amenities nearby. Moreover, members may make contact with their relatives, friends and work partners by way of instantaneous communications via Linfo.

Mr. Sin said VODone had no shortage of analyst coverage which he believed was testimony to the company’s strong growth potential in an innovative sector.

“We now have nine houses covering us, mainly PRC banks like BOCI, CITIC and BOCOM as well as Taiwan’s Yuanda.”

See earlier:

VODONE: Government-Backed Media Player


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