Franchising and Licensing

Our other businesses currently consist of advertising for third parties in our content, licensing our franchises, such as our virtual worlds’ characters, for third-party use and using our franchises for print media and toys and third parties advertise through product placement or promotions in our virtual worlds or on our websites. We are careful to control the amount of advertising in our products and services to ensure that the quality of user experience is not negatively impacted. Additionally, we license the use of our content, such as characters and artwork from our virtual worlds, for third-party use in various media and websites, as well as license our virtual worlds’ games and activities directly for use in their websites. We also receive royalties from publishing of print media and proceeds from sales of toys based on our franchises.

Revenues from other businesses currently account for an insignificant portion of our total revenues. We are expanding our other businesses through (i) leveraging the increasing strength of our brand to obtain more advertising and licensing business and (ii) expanding our business to include areas such as television and movies. For example, in November 2013, we entered into a memorandum of understanding with a leading PRC movie production company to produce an animated movie based on the Aola Star virtual world and characters.