Sohu.com (SOHU)

NON-ADVERTISING BUSINESS

SIZE="2">Online Games

We engage in the development, operation and licensing of our online games. We currently operate two MMORPGs, TLBB, which we
developed in house, and BO, which we licensed from a third party. TLBB, which has been one of the most popular online games in China for 2007 according to International Data Corporation, is our first in-house developed MMORPG. For the three months
ended December 31, 2008, we had approximately 1.8 million active paying accounts for TLBB and approximately 159,000 active paying accounts for BO.

SIZE="2">We operate our current games under the item-based revenue model, meaning game players can play our games for free, but may choose to pay for virtual items to enhance the game-playing experience. Game players purchase prepaid game cards or
game points, which are used to purchase virtual items. We sell our prepaid game cards to approximately 100 regional distributors throughout China, who in turn sub-distribute them to numerous retail outlets, including Internet cafés and
various websites, news stands, software stores, book stores and retail stores.

We continually collect feedback from our game players through multiple
channels. Our product development team and our game operations team work closely together, allowing us to translate game player feedback into game updates and expansion packs in a timely manner. We typically produce expansion packs, which contain
significant upgrades, every few months, and update our games on a weekly basis with interim enhancements. We believe that such expansion packs and regular updates improve the game-playing experience and help to maintain the interest level of
players, thereby helping us to extend the lifespan of our games.

Non-advertising Business

For our online game business, we compete principally with the following three groups of competitors:

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Our MMORPGs currently compete with the following MMORPGs, among others, in China:

Our existing and potential competitors compete with us for talent, game player spending, time spent on game playing, marketing activities, quality of games, and distribution network. Some of our existing and potential competitors have significantly greater financial and marketing resources than we do.

Non-advertising Business

FACE="Times New Roman" SIZE="2">For our online game business, we compete principally with the following three groups of competitors:

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