Online literature site Cloudary CEO resigns

Hou Xiaoqiang, CEO of Cloudary Corporation, a Chinese online media company that publishes literature works online, resigned from the position, Hou announced Thursday on his Weibo account.

Hou attributed his resignation to health problems but said he will still be a senior consultant for Cloudary.

He also expressed his confidence in Cloudary, saying that the company will achieve a value of 5 billion yuan ($823 million) or even 10 billion yuan in the future, according to his Weibo post.

Some reports said Hou resigned because he did not get along well with Chen Tianqiao, president of Shanda Corporation, the parent company of Cloudary, but he denied the rumor in an interview with news portal sina.com late Wednesday and said Chen gave him much trust and respect.

Hou's resignation attracted attention to Cloudary, which experienced significant management team changes this year.

The core management team of qidian.com, an online novel website of Cloudary, including Wu Wenhui, president of qidian.com, left Cloudary in March and established a new online novel website chuangshi.qq.com, with investment from leading Internet company Tencent Holdings, Shanghai-based newspaper China Business News reported Thursday.

The continuous departures of management team members may reflect disagreements on the company's strategy, said Wang Jing, an analyst at Analysys International.

The original team of Cloudary put more focus on finding and developing writers, Wang said, but the current strategy of Cloudary is more focused on building a platform for online novels rather than connecting closely with writers.

Writers are the most precious assets in the Internet literature industry, and the frequent changes in the management team will reduce writers' confidence in Cloudary, Zhang Yi, CEO of Shenzhen-based Internet research firm iiMedia Research, told the Global Times Thursday, noting Hou's resignation, coming after Wu Wenhui's earlier this year, will have a negative impact on Cloudary.

As the leading Chinese company in online literature, Cloudary has the best resources - excellent writers and editors - and it has been a giant in the field for a long time, Wang said.

In 2012, websites owned by Cloudary had more than 70 percent market share in Internet literature industry, and Cloudary almost had no real competitors in the field, the report said.

In 2013, 15 of the top 20 richest Chinese Internet writers came from Cloudary's qidian.com, according to the Cloudary website.

But Cloudary may face a different future, Wang said, noting the leaving of qidian.com's core team took away a large number of writers and editors, causing a serious loss.

Although Tencent's chuangshi.qq.com is still in the early stages, it will be a strong competitor with a mature management team and support from its parent company, Wang said.

Tencent, which owns China's most widely used instant message software QQ, has a large number of users and can promote literature works instantly and very widely, Wang said, noting that will be a unique advantage of chuangshi.qq.com.

There is a new battlefield for Internet literature - the mobile Internet - which Cloudary has not performed well in, Wang said.

Cloudary's app usually ranked sixth or seventh in app stores and ranking below fourth indicates a lack of competitiveness, Wang said.

With readers gradually forming the habit of paying for Internet literature works, the whole industry may have a great year in 2014, Wang predicted, noting many companies in this industry will earn good profits next year and investors will focus more attention on the industry.