Sohu.com Inc (SOHU): Forget Search and Video — Check Out This Stock’s Gaming Profits

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One company Sohu will have trouble with is Giant Interactive Group Inc (ADR) (NYSE:GA). Like Sohu, Giant Interactive creates games specifically for the Chinese market. But, unlike Sohu, Giant Interactive has done so for longer — it started in 2001 — and with more focus than Sohu. So, Sohu has its work cut out for it. Luckily, Giant Interactive Group Inc (ADR) (NYSE:GA) has taken a hit since insiders cashed out this month – giving Sohu an opening if it can react quickly enough.

Another company Sohu would also have to compete and catch-up with is NetEase, Inc (ADR) (NASDAQ:NTES). Not only does the company continue to push out new domestic titles — its last three helped Netease increase revenues 14% QoQ — but it is also building foreign partnerships. NetEase, Inc (ADR) (NASDAQ:NTES) already has a licensing agreement with Activision Blizzard, Inc. (NASDAQ:ATVI) to bring World of Warcraft to China. Luckily, World of Warcraft is censored, and it remains to be seen if the game mechanics will profit Netease.

Should you buy Sohu for its games?
While there are big competitors to fight, Sohu.com Inc (NASDAQ:SOHU) seems like it has a better chance battling gaming competitors than online portal, search, and video giants. Additionally, as China’s online gaming market has grown 56-fold over the past decade, there may still be room for even greater gaming profits going forward.

All you need to look for is where Sohu invests its $1 billion war chest. If it tackles gaming, then Sohu may be a great buy.

The article Forget Search and Video — Check Out This Stock’s Gaming Profits originally appeared on Fool.com and is written by Kevin Chen.

Fool contributor Kevin Chen owns shares of Baidu. You can follow him on Twitter at @TMFKang, or on Google+. The Motley Fool recommends Activision Blizzard, Baidu, Giant Interactive Group, NetEase.com, SINA , and Sohu.com. The Motley Fool owns shares of Activision Blizzard and Baidu.

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