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Online ads, games boost portals

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May 08,2006
Share prices of Internet portal companies are skyrocketing as they profit from online advertising revenues and games. Major search portals such as Naver and Empas helped companies reap in profits in the first quarter, turning net deficits into net profits. Business was also good for companies that run game portals, such as Neowiz and KTH. Yesterday, NHN said that its first quarter net profits almost tripled to a record quarterly high of 35.1 billion won ($37.5 million), up from 10.2 billion won the previous year. Operating profits were up 90.8 percent from the previous year to 46.6 billion won and sales rose 71.8 percent to 121.8 billion won. NHN runs the Internet portal site Naver, which is one of the most popular portal sites among Korean Web users in terms of online traffic. The company also operates an extensive game portal called Hangame, which has about 1 million concurrent users. The company attributed the steep rise in first-quarter net income mainly to sales from “search-based” advertising and games. These search-based advertisements are slightly different from Web banner advertisements in that advertisers pay to have their Web site appear at the top of the list when users type in a certain word in the search engine. About 58.7 billion won in sales was from its search-based ads, marking an 8.2-percent year-on-year increase. Online game revenues amounted to 31.1 billion; online banner ad revenues were 20.4 billion won. These figures did not include NHN’s affiliates such as NHN Japan. “Search-based advertisements were a new source of revenue. Also, our Web-based board games such as ‘Las Vegas Poker’ became popular along with the general trend of web board games. Our growth rate in the game division was about 14.3 percent compared to the previous quarter,” an NHN representative said. NHN shares yesterday closed at 336,700 won; on May 9 last year, they were 96,400 won. Empas, another Internet portal with search functions, said yesterday that its operating profits turned from the previous deficits to 1.2 billion won and that sales in the first quarter of this year were up 28 percent compared to last year. The company said that revenues from keyword search functions and games were the main factor in such high sales. In the game division, the company’s sales shot up by 60 percent to 1.4 billion won. Yesterday, Empas shares closed at 17,100 won; a year ago on May 9, they were 3,075 won. “More Internet users and increasing data transmission on Web sites are attracting advertisers. In the second quarter, we expect more advertisements, with the World Cup games opening in Germany,” a Daum spokeswoman said. Daum, also an online portal Web site, posted earlier this month record quarterly sales of 126.7 billion won. Internet portals also included game portals, which provide an assortment of games ranging from board and arcade games to shooting, as well as role-playing games, although usually not as vast in scale as independent online games like Lineage 2 or Mu. Neowiz, which runs the game portal Pmang, recently reported first quarter sales of 35.2 billion won and operating profits of 10.3 billion won, both of which were higher than market forecasts. Compared to the previous quarter, their sales were up by 4.7 percent and operating profits were up by 26.3 percent. Share prices of Neowiz were up by about 120 percent compared to early this year. KTH, which operates the search and information portal Paran and game portal Paran Game, has also seen tremendous growth. Yesterday, KTH shares closed at 10,900 won; on May 9 last year, its shares were 3,610 won. Share prices of CJ Internet, which operates the portal game site NetMarble, have almost doubled since the start of this year. According to the Korea Internet Marketing Association, the scale of the online advertising market was 128 billion won in 2001, but sharply increased to 483.2 billion won as of 2004. Korea Investment and Securities Co. estimates that the market for last year was approximately 639 billion won and that this year, it will grow to 821.5 billion won. by Wohn Dong-hee


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