In the first half of 2020, the Internet and related service industries showed a gradual development trend, business income and R&D investment resumed double-digit growth, and profits maintained positive growth; Internet companies in different fields are showing a trend of differentiation.
I. Overall operation
Internet business revenue grew rapidly. In the first half of the year, China’s Internet and related service enterprises above designated size (referred to as Internet enterprises) completed business income of 590.7 billion yuan, up 14.1% year-on-year, and the growth rate was 12.6 percentage points higher than that in the first quarter, still lower than that in the same period of last year by 3.8 percentage points.
Figure 1 Internet business revenue growth from January to June in 2019-2020
Industry profits maintained positive growth. In the first half of the year, the whole industry achieved a total operating profit of 52.16 billion yuan, up 2.8% year-on-year, reversing the sharp decline in the first quarter, but it was 19.9 percentage points lower than the same period last year and 11.3 percentage points lower than the revenue growth rate in the same period.
R&D investment continued to increase. In the first half of the year, the whole industry completed R&D expenditure of 31.34 billion yuan, up 10.7% year-on-year, and the growth rate was 10.7 percentage points higher than that in the first quarter, still lower than that in the same period last year.
II. Sub-business and regional operation
The income from information services grew rapidly, and the growth of audio and video services was outstanding. In the first half of the year, Internet companies completed information services (including online music and video, online games, news information, online reading, etc.) with a revenue of 357.7 billion yuan, up 16.3% year-on-year, and the growth rate was 5.2 percentage points higher than that in the first quarter, accounting for 60.6% of the Internet business revenue.
Internet platform service revenue accelerated, and online education and e-commerce platform enterprises led the development. In the first half of the year, Internet platform service enterprises (mainly providing production service platforms, life service platforms, scientific and technological innovation platforms, public service platforms, etc.) realized business income of 172.8 billion yuan, up 13.6% year-on-year, reversing the decline in the first quarter, and the growth rate rebounded by 8.7 percentage points from January to May, accounting for 29.3% of Internet business income.
Internet access service revenue declined, and Internet data services grew rapidly. In the first half of the year, the income of Internet companies from Internet access and related services was 21.27 billion yuan, down 5.8% year-on-year; The revenue from completing Internet data services (including cloud services and big data services) was 8.76 billion yuan, up 14.3% year-on-year, and the growth rate was 5.4 percentage points higher than that in the first quarter.
The growth of Internet business income in the central region is outstanding, and the northeast region continues to decline. In the first half of the year, the income from Internet business in the eastern region was 503.8 billion yuan, up by 15.7% year-on-year, accounting for 91.5% of the national income from Internet business (excluding cross-regional enterprises). The income from Internet business in the central region was 22.67 billion yuan, up 26% year-on-year, 11.9 percentage points higher than the national average. The income from Internet business in the western region was 22.02 billion yuan, up 12% year-on-year, 2.1 percentage points lower than the national average. The revenue from Internet business in Northeast China was 1.95 billion yuan, down 4.8% year-on-year.
Major provinces have achieved rapid growth, and some provinces have outstanding growth. In the first half of the year, Beijing (up by 27.7%), Guangdong (up by 0.7%), Shanghai (up by 21.7%), Zhejiang (up by 24.8%) and Jiangsu (up by 35.5%), the top five Internet businesses, achieved a total revenue of 482 billion yuan, accounting for 81.6% of the national total (excluding cross-regional enterprises), among which There are 21 provinces in China where the growth rate of Internet business income has achieved positive growth, among which Ningxia, Hubei, Chongqing and Tianjin provinces have increased by more than 50%, while Inner Mongolia, Xinjiang, Gansu, Heilongjiang and Liaoning provinces still have a large decline.
Third, the growth of the number of mobile applications (APPs) in China
The number of mobile applications (apps) has steadily increased. By the end of June 2020, the number of apps monitored in China’s domestic market was 3.59 million, a decrease of 10,000 from the end of May and a decrease of 0.3% from the previous month. Among them, there are 2.12 million APPs in local third-party app stores and 1.47 million apps in Apple Store (China). In May, there were 100,000 new apps on the shelves and 110,000 apps off the shelves.
The number of game applications remains ahead. By the end of June, the number of apps in the top four categories of mobile applications accounted for 58.6%, and other 10 categories of apps such as social communication and education accounted for 41.4%. Among them, the number of game apps continued to lead, reaching 925,000, accounting for 25.8% of all apps, an increase of 26,000 from the previous month. The number of apps for daily tools, e-commerce and life services reached 508,000, 365,000 and 305,000 respectively, ranking second to fourth in the scale of mobile applications, accounting for 14.1%, 10.2% and 8.5% of all apps respectively.
The total distribution of music and video applications ranked first. By the end of June, the total distribution of on-shelf applications in China’s third-party application stores reached 1,336.3 billion times. Among them, music and video downloads ranked first, with 181 billion downloads, an increase of 6.6% from the previous month; Game downloads ranked second, with 172.2 billion downloads, an increase of 7.3% from the previous month; Daily tools, social communication, system tools and life services ranked 3rd-6th with 155.5 billion times, 154.3 billion times, 121.9 billion times and 120.4 billion times respectively. Among other types of applications, applications that have been downloaded more than 50 billion times include news reading (108.8 billion times), e-commerce (86.9 billion times), finance (77.6 billion times), photography (51.5 billion times) and education (51.4 billion times).
Note:
1. In order to reflect the market dynamics of mobile applications more accurately, the monitoring data is changed from "cumulative strategy (that is, statistical data is cumulative calculation)" to "on-shelf strategy (that is, statistical data is only for on-shelf applications, excluding off-shelf applications)".
2. Referring to the classification of APP stores in the market, we divide mobile app into 14 categories: games, daily tools, e-commerce, life services, social communication, education, theme wallpaper, news reading, sports health, system tools, music videos, finance, photo photography and others.
