Two-Sided Network Effect Within Information Technology Two-Sided Network Effect Within Information Technology Essay

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Two-sided network effect within Information Technology A Brief Introduction of Tencent, Inc Tencent’s leading Internet platforms–QQ (QQ Instant Messenger), WeChat, QQ Games, Qzone, SoSo, PaiPai and Tenpay–have brought together China's largest Internet community, to meet various needs including communication, information, entertainment, e-commerce etc. As of 20 March 2013, there are 798.2 million active QQ accounts, with a peak of 176.4 million simultaneous online QQ users. [1] WeChat total Users, as of January 2013, had reached 300 million. [2]. Derived from the basic service QQ, Tencent’s community value-added service remains a steady source of revenue. Where the Tencent’s Success Come From? The success of Tencent can be seen as a successful example of two-sided markets or multi-sided platforms (MSP). [3] On the one hand, Tencent is attracting a huge number of users through its free online services of a handful of platforms in many areas. For example, QQ and WeChat in the instant message market, QQ Games in the online game market and PaiPai in the e-Commerce market, ect. On the other hand, based on the huge user base, customers from other sides would be willing to pay for premium services, such as advertising, membership and virtual products. Since Tencent’s revenue is mainly from its online game services, we may take the online game as a specific point to view Tencent’s strategy. Lianzhong’s Waterloo As a pathfinder of China’s online game market, Lianzhong used to be the only online game company that made a profit in the collapse of the dotcom boom in 2001. In 2004, Lianzhong dominate exclusively about 85 percent market share of China’s Chess & Card

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