Chinese social network Qzone: The worldwide market leader?

Neither Facebook nor MySpace nor other international social networks can claim to be the single largest one in the world, if a recent press release by leading Chinese social network Qzone is to be believed. The site, part of the larger Tencent internet portal, claims to have had more than 200 million monthly active users in January, according to China Web2.0 Review (a translated version of the release is also available at the Web2Asia blog). Facebook, otherwise considered the largest social network in the world, self-reported 175 million monthly active users earlier in February.

Unfortunately, there’s no referee available to review this press play by Qzone. Third-party analytics service comScore reports that Facebook has more than 225 million monthly active users, while MySpace has 130 million. Given the discrepancy with Facebook’s internal reporting, at least, it’s hard to take comScore’s numbers in this category of web service at face value. While comScore is recognized as one of the better analytics services out there, web companies large and small tell us that it gets their traffic numbers wrong. Still, it provides one data point suggesting that Qzone is not the world leader.

Meanwhile, web traffic analysis in China is even worse, so who’s to judge Qzone’s numbers? Chinese entrepreneurs and investors generally consider third party analytics (comScore and every other one) in the country to be suspect, as they have uniformly told me. “Get a company’s Google Analytics numbers if you want anything close to accurate,” is one refrain. The problems range from inaccurate third-party methods of tracking traffic to efforts by some web companies to willfully alter third-party tracking results. Also, Google Analytics isn’t perfect, either, as we and other bloggers regularly notice when comparing its measurement of our traffic with other third parties.

So let’s forget the game of social network one-upmanship for a moment. Perhaps the most interesting thing about Qzone’s release are its other self-reported user stats. The site, which lets users upload and share photos, blog, and add friends, had more than 150 million of its users perform at least one of those tasks at least once in January. Daily, around four million users upload a total of 60 million photos daily, and around 9.5 million new blog entries are created. Qzone is integrated with Tencent’s popular messaging service, QQ, which itself averages up to 50 million simultaneous users. The service is certainly massive, and Tencent has long been monetizing through virtual goods — something its U.S.-based rivals have only started looking into. Chinese users, at least, have shown themselves willing to generate revenue for social networks in the country; which so far is better than what many international rivals can show.

So who’s number one in the world?

Enough talk about revenue — back to the debate about who’s number one in traffic, in this still-emerging industry. QQ also launched a social networking service for college students last spring, as China Web2.0 Review’s Tangos Chan notes, called QQ Xiaoyou  — in part, it’s a defensive move in the event Facebook or other social networks try to go for that demographic. Xiaoyou has more than 20 million users. So add more chalk marks to Qzone’s user-count column, perhaps? Chan also notes the company has been working on an international version to reach beyond its mainly-mainland China user base, although its unclear how many users that effort is gaining.

TechCrunch’s Robin Wauters, who pulled the comScore January traffic graph (above) for Facebook, QQ and MySpace, concludes “if QQ doesn’t operate the world’s largest social networking sites already, it will soon.” There’s certainly quite a large market opportunity for the company — and for rivals like Xiaonei and others — within China. The country was estimated to have more than 250 million internet users as of last year, less than 20 percent of the total population. Expect more Chinese people to go online and start using sites like Qzone.

But, Wauter’s comScore graph is one reason I respectfully draw the opposite conclusion from him. Even with the reasons to be skeptical of comScore’s numbers for any social network, the massive lead Facebook seems to have over MySpace and QQ says it all. The company is growing fast in the U.S. and around the world — and there are more than 1.5 billion internet users out of nearly 7 billion humans, according to another estimate. Facebook offers a wide range of self-reported stats to back that up.

If Qzone wants to compete against the likes of Facebook, MySpace and other social networks for users around the world, it will need to prove it can get everyone everywhere using its service rather than established international competitors. So far, it has just done a good job of dominating in a — relatively speaking — niche market.

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About the Author, Eric Eldon

Eric currently covers digital media technology and business news, especially what's happening on social networks and their platforms. He also writes and edits stories about venture capital, and lots of other stuff, too. He started at VentureBeat in the spring of 2007, half a year or so after Matt Marshall left his reporting job at the San Jose Mercury News to found the site. Eric previously cofounded a startup called Writewith, that was building editorial software for newspapers and other groups of writers. The startup didn't work out, but he learned a lot.

  • calvin
    QQ is a public company listed in Hong Kong. Look at the financial report, and you'll find out it makes more money than FaceBook or Myspace. That is a better measurement than user count.
  • Right now, that's true. But also, MySpace has the most US users (also, for now, the most valuable ad market). The big question is how valuable the average user might be in the future. If Facebook can get the most users in the world and it can figure out how to monetize, one day it will make the most money.
  • Tencent will announce soon its 2008 figures and looking at the first 3 quarters of 2008, they will likely hit the 1 billion USD revenue mark. Profit should be in the 500 million USD range.
    If you remember MySpace was bought for less than 600 million USD, it means they could buy one MySpace a year simply based on cash flow. All this with almost no online advertising revenues. It is probably a good idea for MySpace and Facebook to start looking into digital goods ^_^
  • Both MySpace and Facebook are looking into digital goods -- but certainly Tencent is in the lead in that department. MySpace is also nearing the $1 billion revenue mark, albeit driven by more traditional forms of advertising.
  • Ielad
    if someone quesitons the truthfulness of the self-made report by QQ, he should question the self-made report by Facebook as well.
  • Sure. Facebook's self-reported monthly active user numbers typically come in far below what third-party analytics firms say it gets (as I mentioned in the article). To your point, why _does_ Facebook report smaller numbers about itself than third parties do about it? Other social networks don't do that.
  • Shane
    @Benjamin, that's sick. Talking about easy cash. Do you know how they're able to achieve a 50% profit margin?

    Dang! China is the Phoenix. I don't understand why anyone would question the fact that Chinese sites can be world leaders. We've become complacent by being so US centric. Being of Chinese decent, I can tell you that the Chinese love making money more then we do. Who would have ever thought that we, the US would ever be owing or borrowing so much money from China. China who is still considered a developing country!

    I know nothing about Qzone. So this is just a brain fart! It would be funny if an "unknown" Chinese company such as Tencent bought a US social networking site and applied their business model. The obvious kinks are localization factors! But this could end the endless debate on 'how do we make money'! Anyway, this could be something that Facebook or MySpace could look into ;)

    Facebook only recently added IM. Maybe Facebook was taking a page out of Qzone's success with IM. "Industry analysts believe that Tencent’s instant messaging tool QQ is a crucial factor leading to the high loyalty of the users to Qzone" IM = stickiness
  • Shane, I'd say the success of Chinese social networks in making money from virtual goods has already made them global leaders in that respect.

    "Localizing" on the other hand, is a challenge for any company looking to expand into a new market, Chinese or not (just look at outside social networks trying to move into China). Most Chinese web companies that I'm aware have stayed focused on the domestic market if for no other reason than that's the market they're best positioned to take advantage of.
  • Shane
    So true about "Localizing". Stick with what you know! The reasons why the iPhone isn't taking off in Japan popped into my head after I submitted - OOP's!

    The Qzone stats are just staggering. I'm going to start following and researching Qzone.
  • TedHoward
    I've been amazed for years that Silicon Valley doesn't seem to know or talk about Tencent. They've been running a massive and growing empire for years. The Chinese government, always concerned about control of exchange rates, even intervened with Tencent's QQ coins over a concern that QQ coins could rival the yuan as a valid Chinese currency.

    Another social network that Silicon Vallley rarely mentions is Microsoft's Live ID and Messenger networks. I've seen many numbers, and they're all around 300-500M actives depending on the exact service in question.
  • VentureBeat has covered Tencent, on and off (we've been pretty focused on Silicon Valley). I have not seen any stats like those about Live ID/Messenger -- got a link?
  • TedHoward
    My comment about the valley was based more on my impression of people here, not on VentureBeat's coverage. I have noticed an amazing bubble-like focus on the valley in most tech coverage. Kudos for venturing out of the valley and covering Tencent at all. There are amazing stories to told about that company, IMO.

    240M active in one month: http://lewisshepherd.wordpress.com/2008/06/25/t...
    460M, which likely includes non-active: http://dev.live.com/liveid/
    300M+, which sounds more like some version of active users: http://www.viawindowslive.com/WindowsLiveID.aspx
    380M with 1.2B authentications per day: http://winliveid.spaces.live.com/blog/cns!AEE1B...
    There are plenty more such numbers. Just search for '"live id" millions'. Yes, they are almost all first-party numbers but the basic story is quite clear. I haven't seen a count of under 200M for Live ID (Passport, etc) in years.
  • Aw
    QQ is a company for money, only money. All their service is based on getting more money from their users. They offered a lot of ranking system and virtual possessions to attract more and more young people to pay a lot a day.

    But finally, IMO, when internet in China turn from a Entertainment one to a utility industry, QQ.com would face a lot more problems.
  • I think www.TattooOrNot.com with their 267 user will be bigger than both Qzone & Facebook.

    Hmmmmm...........
  • OxMan
    Most Chinese internet companies are only interested in Chinese market since the market itself is huge, in terms of number of users and average spending per user. Thus focus, focus, focus is the key.

    The only exception is alibaba.com, it's the global B2B. well, it must be in and out of china