SINA Needs to Go the Extra Mile

Chinese online media company SINA Corp. (NAS: SINA) has introduced premium features on its microblogging platform Weibo, charging users about 10 yuan or $1.57 for access. SINA has been struggling to make adequate money from its services and has incurred losses as a part of its latest quarterly results. Government restrictions and the threat of an economic downturn in China have also adversely affected SINA's revenues.

Will the premium moves really make a difference to the company's bottom line? Let's take a closer look.

More for a fee
About 300 million of SINA's Weibo platform users would be able to enjoy 15 new VIP features including personalizing their page, adding voice-based posts, and enjoying better security features, all in return for a fixed monthly fee.

Other Chinese Web-based companies such as Renren (NYS: RENN) and Tencent Holdings have also introduced added features for which users have to pay a fee.

While a minority of users might pay for the premium features, that might not translate into a significant addition to the company's earnings. What SINA can do instead is focus on areas such as social-media gaming, and on its advertising business, which made up a hefty 74% of its recent first-quarter revenue. The Weibo connection becomes all the more important here as the company has been vocal about augmenting advertising revenues with its all new Weibo-based brand-advertising concept, and expects this effort to start generating better earnings by the latter half of this year.

The Foolish bottom line
SINA's latest move may not make a significant impact on the company in terms of earnings, but it is definitely a step in the right direction and also reflects the company's confidence in itself, even in this age of heavy competition. I'll be keeping a close watch on SINA's progress and so can you by adding it to your free watchlist.

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The article SINA Needs to Go the Extra Mile originally appeared on

Keki Fatakia does not hold shares in any of the companies mentioned in this article. Motley Fool newsletter services have recommended buying shares of SINA. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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