Shanghai Daily reports that Kingsoft is making money:

The firm earned 37.75 million yuan (US$5.03 million), a 19-percent growth year on year. Its revenue swelled 85 percent year on year to reach 139.5 million yuan in the period ending June 30.

…Kingsoft’s game business, which contributed two-thirds of its total revenue, hit 101.67 million yuan and every paid user spent 28 yuan on Kingsoft games on average in the second quarter, double from a year ago.

Kingsoft, which develops the WPS document processing suite to compete with Microsoft’s Office software in China, gained revenue of 36.51 million yuan from the software business, without providing a profit figure.

The growth in the software business mainly came from the anti-virus segment as 5.3 million people bought Kingsoft’s Duba products in the second quarter, a whopping 366-percent growth from a year ago.

You can make money selling software in China, as long as it’s either entertaining or useful and it’s subscription driven.

Packaged software off the shelf, particularly those aimed at the consumer, are pirated easily and often. Software that requires authentication (online games) or critical updates (anti-virus) forces users to buy the product.

China’s love affair with online gaming is well-known, so no real surprises there. But it’s the relative success of the the security/anti-virus product that underscores the importance of creating a dependency to ensure licensed sales. China is rife with internet security threats and compromised computers. Users, through education by the government and fear-mongering by companies, are beginning to understand just how at risk their computers really are.

Once the threat is understood, there’s little choice but to buy a security solution. There are open source solutions such as Clam, but it’s not in simplified Chinese and anyways is little known outside the IT community.

That leaves a lively market with international and domestic players battling it out for market position. I don’t have any information on how the market breaks down in China, but it’s sure to continue to grow. Companies with widely pirated security software and no subscription model will limit the profitability in the short-term. But Kingsoft has shown that Chinese consumers are more than happy to pay some money for peace of mind. And it comes cheap: RMB10/month or RMB50/year.

Share This