Sohu Earnings Call Nuggets: Online Video Sites

On Monday, (NASDAQ:SOHU) reported its fourth quarter earnings and discussed the following topics in its earnings conference call. Take a look.

London Olympics 

Julian Cheung – Morgan Stanley asked: My question is related to the London Olympics. Based on your historical experience, how much upside in growth are you expecting from this event for your brand advertising business?

Belinda Wang – Co-President and COO responded: Actually, we had structured the 2012 Olympics game report plan and we have just launched the sales keys for the games. So far we haven’t received a great amount of interest from advertisers yet, but I think the Olympic games will be a very important event in terms of driving the advertising revenue in the third quarter.

It’s just too early to predict the exact amount. As one can imagine, the impact of 2012 London Olympics will be a lot smaller both in terms of its influence in China and its the impact of advertising dollars on us. It will be a lot smaller than the 2008 Beijing Olympics.

Cheung followed up: How will that compare to the 2004 Olympics?

Wang responded: I would think it’s very difficult to compare because eight years have passed. The complete landscape in the China Internet space and the advertising space has changed.

I don’t think there is any comparable; it’s completely non-comparable right now.

Charles Zhang – Chairman and CEO responded: You are talking about a totally different user base, different order of the magnitude of users.

Online video sites 

Wallace Cheung – Credit Suisse asked: One major question is on the online video space. We are seeing so many online video sites sales and Sohu is one of the leading players in this space. The competition on the content and users traffic is still very severe.

There are lot of talks about potential partnership and consolidation. How would you like to see the market evolve this year? Would Sohu be interested in participating in any kind of formal partnership and consultation? What would be the timing of it?

Charles Zhang – Chairman and CEO responded: I think in 2011 we achieved pretty good growth, including success in terms of the number of unique visitors for video viewers. We are already in the second place in this space. We are very confident going forward with our inclusive and high quality long clips, TV drama content, fast-growing news witness, short clips and user-generated content growth.

When people come to Sohu, the platform for news every day, they will see a Sohu video rather than people thinking about videos of other players. We are confident that by a standalone company, Sohu video will be able to compete and be in the first year group.

In terms of consolidation, we are not talking of doing any deals or speaking to anybody about consolidation. It’s almost characteristic of the Chinese Internet space that consolidation doesn’t happen that early or that easy.

If you look at the past 10 years, all these major portals or players, not much consolidation is happening unlike the U.S. counterparts for numerous reasons including the egos of entrepreneurs or protection of our employee talents and retention. These types of issues are preventing consolidation from happening.

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