The Mobile Internet Report Key Themes*

Tencent Business Model Overview –
High-Margin Virtual Goods / Services Drove $1B Revenue (+87% Y/Y) in 2008
Largest social network in the world – 485MM active IM user accounts in CQ3:09, +37% Y/Y,
per Tencent.
Largest Internet company in China by revenue and market value – $2B annualized CQ3
revenue in 2009, +66% Y/Y; $35B market value in 12/09; $988MM annualized CQ3 op. profits
in 2009, +107% Y/Y, 50% margin.
Primary monetization (88% of 2008 revenue) = virtual goods (game & non-game) + mobile.
Desktop / Mobile VAS (Value-Added Services)
$719MM, +96% Y/Y / $205MM, +73% Y/Y 2008 Revenue
Advertising
$121MM, +68% Y/Y
Fee-based IM
Premium QQ, QQ Xing
Fee-based IM
Mobile QQ
IM Client-end
Non-Game Virtual Goods
QQ Show, QQ Pet…
Content-based SMS
QQ.com
Online Games
Casual / MMORPG
Digital Goods
e-card, e-magazine…
2.5G
MMS / WAP…
Mobile Voice VAS
IVR + CRBT
Search
Social Networking
Sites
Note: Tencent has several social networking properties operating under the QQ brand. Each user can register multiple IM accounts
with Tencent; MMORPG is Massive Multiplayer Online Role Playing Game; IVR is Interactive Voice Response; CRBT is Color Ring-283
Back Tone. Chart courtesy of plus8star consulting. Source: Tencent, plus8star, Morgan Stanley Research.