Take a look at the Internet companies

“Internet companies”—which investors once viewed as exotic and innovative—operate in a variety of business areas nowadays, and it can often be misleading to consider them comparable. While at first glance the likes of Google, Baidu and Sea Limited, for example, may operate in similar places with competing offerings, the outlook for each is very different.

Search engines and beyond

Initially, Google replaced the phone book, and represented much more than a simple search engine. An early innovator and market leader here, the company is estimated to process approximately 63,000 search queries every second, which translates to approximately 5.6 billion searches per day. 2 trillion Global searches annually. Google controls just over 92% of the worldwide search engine market share.

Search engine share: worldwide

Source: StatCounter

Share search engine: China

Source: StatCounter

closer worldwide The competitors are Bing and Yahoo! With a paltry 2.5% and 1.5% market share, respectively.

Conversely, while Baidu – widely touted as “Chinese Google” may rule roost in China, it is estimated to have an average global market share of just 1.2%.

While Google has been operating in China since 2006, the company has faced several disagreements with the Chinese government over searches that go against its censorship policies, resulting in the search engine being only available in Hong Kong as of 2010. In 2010, Google had a group Market share of 29% in China. Over the past 12 months, it has averaged about 2.8% of the total Chinese market.

But when looking across the whole of Asia, the results put Google back on top.

Share search engine: Asia

Source: StatCounter

This dominance can be attributed to two factors:

  1. Google currently has an average of 98.7% of the market share in India – with similar estimates in many other parts of Asia;
  2. Chinese users are said to be moving away from using search engines in favor of searching within one-stop applications that are more personalized to their queries. This hurts Baidu.

“Search” is an important source of income for both Google and Baidu because ads from different companies that pay a fee will get priority placement on top of search results. In 2020, more than 80% of Alphabet’s $183 billion revenue came from the Google Ads business. Similarly, 70% of Baidu’s $18.7 billion revenue for 2020 came from advertising.

Like Google’s YouTube, Baidu has a video/streaming service – iQIYI – organized like YouTube, with free and subscription forms along with revenue generated by the company via online advertising. Unlike YouTube, iQIYI offers TV shows and movies, making it comparable to the likes of Netflix and Amazon Prime.

Internet conglomerate or something simpler?

Singapore-based Sea Limited officially describes itself as an internet platform that operates across Southeast Asia and Taiwan. However, the term “internet platform” does not describe all of its business. Sea Limited – simply put – is an influential conglomerate that owns a number of online businesses, Lion City Sailors FC (a soccer club), Indonesian bank PT Bank Kesejahteraan Ekonomi (BKE), and Hong Kong-based hedge fund Composite Capital Management. Host from other companies.

However, the two main drivers of Sea’s revenue are two online properties – Shopee and Garena.

Sea Revenue Limited

2018 2019 2020 % change
Total revenue $1.05 billion $2.2 billion $4.4 billion 101%
Garena 63% 51% 45% 78%
Shopee 28% 37% 40% 116%

Shopee is a shopping app that works across Southeast Asia and Latin America on consumer-to-consumer (C2C) and business-to-consumer (B2C) models. Meanwhile, Garena is working in a powerful and growing online space: gaming.

Estimated number of players in the world 3 billion With the Asia Pacific region home to the largest squad and the Middle East and Africa showing the highest year-over-year growth

2021 global players

Source: Newzoo Global Games Report 2021

Shopee is a shopping app that works across Southeast Asia and Latin America on consumer-to-consumer (C2C) and business-to-consumer (B2C) models. Meanwhile, Garena is working in a powerful and growing online space: gaming.

Estimated number of players in the world 3 billion With the Asia Pacific region home to the largest squad, the Middle East and Africa showed the highest year-over-year growth.

2021 global players on a yearly basis

Source: Newzoo Global Games Report 2021

In 2021, it is expected that despite contractions in spending due to the pandemic, the global gaming market will be worth about 175 billion dollars. It should be noted that the forecast for 2020 was $ 159.3 billion, which was 9% less of actual revenue earned.

Global gaming market revenue

Source: Newzoo Global Games Report 2021

Once it was limited to expensive desktops and consoles, it is now expected that 52% of gaming revenue will be from mobile games, which typically run in the “freemium” style: they’re free to play, albeit with improved gaming experience options. Behind the paid subscription ban system.

Revenue growth by region

Source: Sensor Tower

These forecasts are particularly encouraging for Garena. one of her games – free fire – It had been downloaded 500 million times on the Google Play Store by February 2020. Its success was by no means limited to Southeast Asia: in the first quarter of 2021, free fire It generated $100 million in sales in the United States.

Finally

“Internet companies” offer a rich and diverse range of fields, which makes this classification fairly broad. However, the fact remains that the point of sale and service in the digital realm makes these companies paradigm shifts in the usual way of conducting business. Comparing the performance of stocks against the benchmark S&P500 (SPX) reveals some fascinating aspects about the companies being covered.

See also: Are we on the brink of a golden age of technology?