Full Description

Sohu.com Inc. (Sohu), incorporated in August 1996, is an Internet company in China, providing Chinese with news, information, entertainment and communication. The Company’s business consists of advertising business and non-advertising business. Its advertising business comprises brand advertising and sponsored search services. Sohu’s non-advertising business principally includes online games and wireless value-added services. The Company’s advertising business offers content to its users free of charge and provides advertising services to advertisers on its matrix of Chinese language Web properties consisting of www.sohu.com, a mass portal and online media destination; www.17173.com, a games information portal; www.focus.cn, a real estate Website; www.chinaren.com, an online alumni club, and www.sogou.com, an interactive search engine. The Company operates two massively multi-player online role-playing games (MMORPG games), Tian Long Ba Bu (TLBB) and Blade Online (BO).

Advertising Business

On all of its Websites, the Company offers basic content to its users on a free of charge basis. Sohu's portal consists of Chinese language Web navigational capabilities, 40 main content channels, Web-based communications and community services. Each of its interest-specific main channels contains multi-level sub-channels that cover a range of topics, including news, business, entertainment, sports, business and finance, information technology, automobile, real estate, and women. Sohu also offers free Web-based e-mail services.

www.17173.com is an online game portal in China. 17173.com is an online destination for game players seeking information on games and feedback from other players on the site’s message boards. Focus.cn is a real estate Websites in China. Focus.cn attracts users who are homeowners, potential property buyers and real estate professionals. ChinaRen is an online youth community in China, with over 80 million registered users as of December 31, 2008. Sogou, which is a search engine, performs searches of billions of Web pages using algorithms.

The Company has launched online television-like channels, such as v.Sohu for entertainment, s.Sohu for sports and tv.Sohu for television programs, geared for video content. In addition to watching pre-set programs with broadcasting schedules, users can also enjoy certain programs on an on-demand basis. Sohu offer a variety of communication and community tools, such as Alumni Club, Blogs, E-Mail, Message Boards and Web Messenger. Sogou Pinyin is its Chinese Character Input Method software, whose vocabulary database is tied to the search queries database of Sogou search engine and thus can capture the latest trend of words used by Internet users.

Non-Advertising Business

Sohu engages in the development, operation and licensing of its online games. The Company operates two MMORPGs, TLBB, which it developed in house, and BO, which it licensed from a third party. The Company operates its games under the item-based revenue model, meaning game players can play games for free, but may choose to pay for virtual items to enhance the game-playing experience. Game players purchase prepaid game cards or game points, which are used to purchase virtual items. Sohu sells its prepaid game cards to approximately 100 regional distributors throughout China, who in turn sub-distribute them to numerous retail outlets, including Internet cafés and various Websites, news stands, software stores, book stores and retail stores.

TLBB is a 2.5D martial arts game, adapted from the Chinese novel, Tian Long Ba Bu. TLBB features a combination of martial arts-style fighting and community building among its game players. In TLBB, game players choose from nine categories of team-based identities with distinct skill sets and missions, and game players can engage in numerous virtual activities, such as making friends, getting married, learning skills or completing other tasks. Game players can communicate with each other in real time through an in-game instant messaging system.

BO is a 2.5D MMORPG that it licensed from a third party. BO is a martial arts game set to the backdrop of a Chinese myth. Game players can use different combat postures and can set their own rules for in-game fighting. Game players take on various roles, including a human, an evil spirit or an immortal in the game. Each role has different skill sets that can be learned and improved by completing different tasks. The Company has three new MMORPGs in the pipeline, Duke of Mount Deer ( DMD), which is being developed in house, and Immortal Faith (IF) and Legend of Ancient World ( LAW), both of which the Company has licensed from third parties.

The Company competes with Sina, PColine, SouFun, Baidu, Google, Yahoo!, SoSo, Microsoft/MSN, AOL, CCTV.com, XinHuaNet, Shanda, Giant Interactive Group Inc., The9 Limited, Netdragon, Kingsoft, Nineyou, NetEase.com, Inc., Blizzard Entertainment, Tencent Holdings Limited, NetDragon Websoft Inc., Perfect World, Co., Ltd., Tom Online, KongZhong, Linktone and Hurray!.