BEIJING—China Mobile Communications Corp. is planning to strengthen policies for third-party content providers in an effort to reduce customer complaints. Expected changes include increasing the number of text-message reminders to users of value-added subscriptions and automatically canceling subscriptions of users who fail to respond to confirmation requests.
Monstermob, which has invested heavily in the Chinese mobile content market in the last year, was one of several content players notified of the upcoming policy changes. SINA Corp., Tom Online Inc., Linktone Ltd. and Sohu.com Inc. also issued public statements after receiving advance word.Tom Online, which depends on wireless for 94 percent of its revenues, said the impact of the new regulations would likely be “negative and significant.” Linktone, which also derives nearly all its revenues from mobile, was more upbeat, saying stricter rules will help build a healthier wireless industry “despite the near term impact of these new policies.”
“It is too early to assess fully the adverse financial impact of these measures,” Monstermob said in a prepared statement, but the company predicted “the short-term impact could be substantial.” Monstermob has spent more than $100 million since last summer to acquire Chinese content providers and estimated 40 percent of its net revenues in the country are subscription-based.
The announcement shook investors, who sent Monstermob down nearly two-thirds, to $96.17. The company’s value crumbled from $151.47 million to just over $58 million during the plunge.
Monstermob ousted Chief Executive Officer Martin Higginson last month after the company lowered forecasts for its U.K. business by $2.8 million. Shares fell more than 21 percent following that announcement.
The company may be better positioned to withstand new, stricter policies than some of its China-based competitors, however, due to its global presence. The company is also active in the United States, where it operates Denver-based 9 Squared Inc., and in Russia, where it recently acquired Mobicon.
