News portal faces structural challenge as consumers shift to mobile
Beijing-based news portal ifeng.com is undertaking a restructuring that includes large-scale layoffs, according to a letter addressed to the company's staff that circulated Tuesday.
The author of the letter was not identified.
Facing struggles in an evolving new media industry, Phoenix New Media (PNM), operator of ifeng.com, decided to adjust its strategy, the letter said. It will, for example, shift from PC-based delivery to mobile platforms and target more young readers.
As it highlights mobile apps, the company will reduce the number of editors whose work cannot be reused on mobile platforms, according to the letter. Off-line marketing activities that "cost too much" will be cut, it said.
The marketing department is being seriously affected by the changing strategy, a person close to the matter told the Global Times on Tuesday, speaking on condition of anonymity.
"The company suddenly canceled some of our branding activities, even some original off-line programs," he said.
Only two people out of a group of 13 employees in charge of certain original programs will remain, according to the person.
Liu Shumei, the company's PR representative, said that she would not comment on internal communications that were not intended for public consumption.
The letter did not say how many staff would be laid off, and the company has not revealed any information about severance pay for the dismissed employees.
"It's a shock, as there was no sign predicting that ifeng.com would eliminate so many jobs," the person close to the matter said.
Analysts who specialize in the Internet were not surprised, however, as ifeng.com hasn't been very profitable in recent years.
"The company has not successfully transformed its Internet-based business to a mobile business, which is a major hurdle in its operation," said Liu Dingding, analyst from Beijing-based Internet intelligence agency Sootoo.
Liu noted that online portal advertising has helped the country's major Internet portals such as sohu.com and sina.com generate profits during the past decade. Companies need to include mobile in their strategies as more users migrate from desktop computers to mobile devices.
In China, mobile Internet revenue rose 112 percent to about 76.2 billion yuan ($11.95 billion) in the first quarter of 2015 on a year-on-year basis, Beijing-based market research firm iResearch said in June.
Ifeng.com is not the only company of its kind that is losing a competitive edge in the era of the mobile Internet, Zhang Zengjie, analyst from iResearch, told the Global Times Tuesday.
"Emerging Internet startups in the country have come up with more eye-catching and creative content for their mobile apps, which help them create loyal customer groups," Zhang said, noting that Internet portals have to consider their mobile strategies from both technical and business perspectives.
PNM's total revenue was up about 2.9 percent in the second quarter of 2015 from a year earlier, according to its financial statements released in August.
Net income declined about 73 percent year-on-year to 22.5 million yuan, the results showed.
Listed on the New York bourse, the company's shares closed at $4.8 Monday US time, down 42.4 percent for the year to date.
Still, ifeng.com has a strong editorial team, said Zhang from iResearch. "The company can cut the cost of off-line marketing while enhancing its original online content to remain competitive on mobile platforms," he noted.
