Malaysia’s Xtremedia Closes As Asian Internet Competition Grows

Posted on October 22, 1999 
Filed Under Julian, Newsbytes, Uncategorized

By Julian Matthews

Award-winning Malaysian news and information Website Xtremedia closed its virtual doors earlier this week after 20 months of operations.

The company cited “increasing challenges in the Internet market” as the reason for the closure.

Website owner BRG Interactive Digital Media Sdn Bhd (IDM) sunk over 2 million ringgit (US$526,000) into the Website before calling it quits, said executive director Gerard Lim.

“It was a matter of focus. There are two mines to mill, and we had to make the difficult decision to channel resources to only one mine,” he said.

Lim said the company would now devote more resources on its corporate Website designing venture of which 60 percent is from foreign sources including Singapore, Germany, Spain, Hong Kong and the US.

Xtremedia.com was a business, technology and lifestyle news site and was named Best Internet Website of the Year by the Association of the Computer Industry Malaysia in 1998. At its height, it had banner ads from Oracle and Unisys, and was the official Internet news media for Microsoft Professional Developer’s Conference 1999 in Malaysia.

Lim agreed banner advertising has yet to take off in Malaysia. “The Internet banner advertising market is small here. Only the large multinational organizations understand better the benefits of Internet advertising and have ready budgets for it,” he said.

Despite its closure, Lim insisted that the site did “reasonably well” in drawing repeat advertisers comprising of some of the largest names in the IT industry.

Xtremedia.com’s shut down sharply contrasted with the fortunes of Skali.com, another Malaysian-based news site which received official endorsement by Prime Minister Mahathir Mohamad this week.

Richard Jacobson, senior Internet analyst for International Data Corp’s Asia-Pacific unit said the two sites’ diverging fates suggest the rise-and-fall dynamics of the new medium as Asian Websites struggle to keep pace with foreign competition.

“Competition is heating up because of the entry of established players in the same market space. It is much harder for Asian players to establish a new name,” he said

Jacobson said Internet brand-names Yahoo!, ZDNet, Microsoft Network, Lycos and CNet have all raised the ante in Asia in recent months and are likelier to gain the eyeballs and traffic.

He suggested Asian Websites leverage on local language and culture instead to win over users citing China.com as a prime example of a successful site.

“The Internet is still largely English-based and there is nothing wrong with starting an all-English content site but opportunities could be lost by not considering other languages,” he said.

Meanwhile, Alam Teknokrat Sdn Bhd, which runs the two-year-old Skali.com, plans to speed up its strategy of tying-up with established content providers. “Over the next three to six months, more services will be offered and more partners will come on board,” said Tengku Farith Rithauddeen, its executive vice chairman at the official launch.

Skali.com currently has over 70 global partnerships with various content providers including Newsbytes, Asiapulse, CNet Asia and United Press International. The Website located at http://www.skali.com records more than six million page views every month and publishes more than 1,000 new content items daily. Alam Teknokrat also runs the Asian version of AltaVista search engine.

The company’s sales and marketing director Aimi Aizal says its “tough but not impossible” for Asian-based English news sites to thrive on the Internet. “It’s no longer about technology - that can be bought off the shelf. It’s how you use the technology, repackage it and build community and brand loyalties out of it,” he said.

Aimi said the company also does hosting and server co-location services and has just embarked on a joint-venture to provide e- commerce payment solutions to customers.

Aimi does not believe that more foreign players competing for the same advertising pie is a troubling factor. “The real money to be made is not just from banner ads. There are many more collaborative partnerships and affiliate programs today than two years ago. It’s more about mind share and community building. The common model now is ‘co-opetition’ where you cooperate and at the same time compete. And the money is for everyone,” he said.

He conceded, however, that having deep pockets for branding and marketing exercises helps.

IDC’s Jacobson maintains that pure-content sites reliant on advertising banners can still be profitable with the right positioning. He is also bullish about e-commerce in the region and said such tie-ups can raise new revenue streams for Asian Website.

Jacobson qualified, however, that in Malaysia the numbers of users online was still relatively small with IDC estimates of 580,000 users in 1998 and an estimated 770,000 in 1999. He expects the figure to jump 2.7 million users by 2003.

Published in Newsbytes, Oct 22, 1999.

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