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What changed in Sohu.com Ltd's 20-F — 2022 vs 2023

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Paragraph-level year-over-year comparison of Sohu.com Ltd's 2022 and 2023 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+719 added−695 removedSource: 20-F (2024-03-18) vs 20-F (2023-03-30)

Top changes in Sohu.com Ltd's 2023 20-F

719 paragraphs added · 695 removed · 593 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

265 edited+50 added−43 removed579 unchanged
Biggest changeAs of December 31, 2021 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals ASSETS Current assets: Cash and cash equivalents $ 13,564 606,306 346,566 32,513 0 998,949 Restricted cash 0 0 1,969 0 0 1,969 Short-term investments 0 147,598 251,747 0 0 399,345 Accounts receivable, net 0 25,552 20,971 36,027 0 82,550 Prepaid and other current assets 723 13,224 74,528 18,836 0 107,311 Intra-Group receivables due from subsidiaries (1) 539,677 670,362 837,566 647,330 (2,694,935 ) 0 Total current assets 553,964 1,463,042 1,533,347 734,706 (2,694,935 ) 1,590,124 Fixed assets, net 0 55,358 274,212 427 0 329,997 Investment in subsidiaries (2) 918,243 779,717 349,208 0 (2,047,168 ) 0 Controlling financial interests in VIEs (3) 0 0 213,763 0 (213,763 ) 0 Long-term time deposits 0 0 189,007 0 0 189,007 Other non-current assets 22,036 9,469 19,976 86,744 (1,568 ) 136,657 Total assets $ 1,494,243 2,307,586 2,579,513 821,877 (4,957,434 ) 2,245,785 LIABILITIES Current liabilities: Accounts payable $ 0 21,301 53,821 12,325 0 87,447 Accrued liabilities 1,678 11,257 81,566 43,695 0 138,196 Receipts in advance and deferred revenue 0 4,938 6,259 45,844 0 57,041 Accrued salary and benefits 83 25,637 57,372 8,393 0 91,485 Tax payables 9 7,925 7,241 1,539 0 16,714 Intra-Group payables due to subsidiaries (1) 36,912 1,011,224 1,184,312 462,487 (2,694,935 ) 0 Other short-term liabilities 1,358 58,866 38,250 14,094 0 112,568 Total current liabilities 40,040 1,141,148 1,428,821 588,377 (2,694,935 ) 503,451 Long-term other payables 0 0 3,922 0 0 3,922 Long-term tax liabilities 163,334 16,119 0 14,465 0 193,918 Deferred tax liabilities 0 237,116 8,726 3,323 0 249,165 Other non-current liabilities 0 0 2,960 1,750 (1,568 ) 3,142 Total long-term liabilities 163,334 253,235 15,608 19,538 (1,568 ) 450,147 Total liabilities $ 203,374 1,394,383 1,444,429 607,915 (2,696,503 ) 953,598 Commitments and contingencies SHAREHOLDERS’ EQUITY Total Sohu.com Limited shareholders’ equity 1,290,869 911,936 1,135,084 213,962 (2,260,982 ) 1,290,869 Noncontrolling interest 0 1,267 0 0 51 1,318 Total shareholders’ equity (2)(3) 1,290,869 913,203 1,135,084 213,962 (2,260,931 ) 1,292,187 Total liabilities and shareholders’ equity $ 1,494,243 2,307,586 2,579,513 821,877 (4,957,434 ) 2,245,785 4 Table of Contents As of December 31, 2022 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals ASSETS Current assets: Cash and cash equivalents $ 1,308 648,981 25,800 21,732 0 697,821 Restricted cash 0 0 1,803 1,838 0 3,641 Short-term investments 0 467,294 1,726 4,604 0 473,624 Accounts receivable, net 0 28,913 6 38,622 0 67,541 Prepaid and other current assets 700 22,201 46,258 13,934 0 83,093 Intra-Group receivables due from subsidiaries (1) 512,936 353,286 666,291 594,099 (2,126,612 ) 0 Total current assets 514,944 1,520,675 741,884 674,829 (2,126,612 ) 1,325,720 Fixed assets, net 0 51,087 236,787 352 0 288,226 Investment in subsidiaries (2) 834,714 1,735,970 455,149 0 (3,025,833 ) 0 Controlling financial interests in VIEs (3) 0 0 198,476 0 (198,476 ) 0 Long-term time deposits 0 0 265,802 0 0 265,802 Other non-current assets 22,036 8,284 15,694 53,450 (1,436 ) 98,028 Total assets $ 1,371,694 3,316,016 1,913,792 728,631 (5,352,357 ) 1,977,776 LIABILITIES Current liabilities: Accounts payable $ 0 26,751 18,789 10,909 0 56,449 Accrued liabilities 1,129 57,224 30,162 37,946 0 126,461 Receipts in advance and deferred revenue 0 7,055 77 40,948 0 48,080 Accrued salary and benefits 83 19,288 35,154 6,229 0 60,754 Tax payables 0 2,217 7,212 1,183 0 10,612 Intra-Group payables due to subsidiaries (1) 90,173 907,191 726,702 402,546 (2,126,612 ) 0 Other short-term liabilities 0 56,356 43,074 15,102 0 114,532 Total current liabilities 91,385 1,076,082 861,170 514,863 (2,126,612 ) 416,888 Long-term other payables 0 866 929 0 0 1,795 Long-term tax liabilities 170,867 16,120 0 13,242 0 200,229 Deferred tax liabilities 0 239,013 8,252 549 0 247,814 Other non-current liabilities 0 (80 ) 420 1,436 (1,436 ) 340 Total long-term liabilities 170,867 255,919 9,601 15,227 (1,436 ) 450,178 Total liabilities $ 262,252 1,332,001 870,771 530,090 (2,128,048 ) 867,066 Commitments and contingencies SHAREHOLDERS’ EQUITY Total Sohu.com Limited shareholders’ equity 1,109,442 1,982,747 1,043,021 198,541 (3,224,309 ) 1,109,442 Noncontrolling interest 0 1,268 0 0 0 1,268 Total shareholders’ equity (2)(3) 1,109,442 1,984,015 1,043,021 198,541 (3,224,309 ) 1,110,710 Total liabilities and shareholders’ equity $ 1,371,694 3,316,016 1,913,792 728,631 (5,352,357 ) 1,977,776 5 Table of Contents The following table presents our condensed consolidating schedules of results of operations for the VIEs that we consolidate and other entities for the periods presented (in thousands): Year Ended December 31, 2020 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Revenues: Third-party revenues $ 0 119,098 77,812 552,980 0 749,890 Intra-Group revenues (4) 0 19,598 390,062 30,207 (439,867 ) 0 Total revenues 0 138,696 467,874 583,187 (439,867 ) 749,890 Cost of revenues: Third-party cost of revenues 0 24,674 99,430 93,333 0 217,437 Intra-Group cost of revenues (4) 0 4,376 34,280 141,717 (180,373 ) 0 Total cost of revenues 0 29,050 133,710 235,050 (180,373 ) 217,437 Gross profit 0 109,646 334,164 348,137 (259,494 ) 532,453 Operating expenses: Third-party operating expenses 1,613 95,727 310,759 50,983 0 459,082 Intra-Group operating expenses (4) 0 3,957 741 254,796 (259,494 ) 0 Total operating expenses 1,613 99,684 311,500 305,779 (259,494 ) 459,082 Operating profit/(loss) (1,613 ) 9,962 22,664 42,358 0 73,371 Income/(loss) from subsidiaries (2) (46,084 ) 69,099 37,195 0 (60,210 ) 0 Income/(loss) from VIEs (3) 0 0 41,743 0 (41,743 ) 0 Non-operating income/(expense) (1,071 ) (3,948 ) 24,679 3,668 0 23,328 Income/(loss) before income tax expense (48,768 ) 75,113 126,281 46,026 (101,953 ) 96,699 Income tax expense 6,207 102,749 20,000 4,270 0 133,226 Net income/(loss) from continuing operations (54,975 ) (27,636 ) 106,281 41,756 (101,953 ) (36,527 ) Less: Net income from continuing operations attributable to the noncontrolling interest shareholders 0 18,448 0 0 0 18,448 Net income/(loss) from continuing operations attributable to Sohu.com Limited (54,975 ) (46,084 ) 106,281 41,756 (101,953 ) (54,975 ) Net loss from discontinued operations, net of tax (31,137 ) Net loss $ (86,112 ) 6 Table of Contents Year Ended December 31, 2021 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Revenues: Third-party revenues $ 0 90,830 79,923 664,823 0 835,576 Intra-Group revenues (4) 0 275,774 256,801 21,488 (554,063 ) 0 Total revenues 0 366,604 336,724 686,311 (554,063 ) 835,576 Cost of revenues: Third-party cost of revenues 0 26,055 96,891 81,725 0 204,671 Intra-Group cost of revenues (4) 0 4,957 37,732 136,221 (178,910 ) 0 Total cost of revenues 0 31,012 134,623 217,946 (178,910 ) 204,671 Gross profit 0 335,592 202,101 468,365 (375,153 ) 630,905 Operating expenses: Third-party operating expenses 1,768 123,963 335,576 72,126 0 533,433 Intra-Group operating expenses (4) 0 11,325 2,831 366,762 (380,918 ) 0 Total operating expenses 1,768 135,288 338,407 438,888 (380,918 ) 533,433 Operating profit/(loss) (1,768 ) 200,304 (136,306 ) 29,477 5,765 97,472 Income/(loss) from subsidiaries (2) 75,343 (71,989 ) 182,818 0 (186,172 ) 0 Income/(loss) from VIEs (3) 0 0 35,805 0 (35,805 ) 0 Non-operating income/(expense) 526 (3,017 ) 32,843 9,508 (5,765 ) 34,095 Income before income tax expense 74,101 125,298 115,160 38,985 (221,977 ) 131,567 Income tax expense 4,827 49,958 4,331 3,180 0 62,296 Net income from continuing operations 69,274 75,340 110,829 35,805 (221,977 ) 69,271 Less: Net loss from continuing operations attributable to the noncontrolling interest shareholders 0 (3 ) 0 0 0 (3 ) Net income from continuing operations attributable to Sohu.com Limited 69,274 75,343 110,829 35,805 (221,977 ) 69,274 Net income from discontinued operations, net of tax 858,451 Net income $ 927,725 7 Table of Contents Year Ended December 31, 2022 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Revenues: Third-party revenues $ 0 141,118 1,274 591,480 0 733,872 Intra-Group revenues (4) 0 202,250 257,442 27,914 (487,606 ) 0 Total revenues 0 343,368 258,716 619,394 (487,606 ) 733,872 Cost of revenues: Third-party cost of revenues 0 34,125 60,845 96,603 0 191,573 Intra-Group cost of revenues (4) 0 24,232 17,499 104,883 (146,614 ) 0 Total cost of revenues 0 58,357 78,344 201,486 (146,614 ) 191,573 Gross profit 0 285,011 180,372 417,908 (340,992 ) 542,299 Operating expenses: Third-party operating expenses 2,206 187,875 280,180 72,911 0 543,172 Intra-Group operating expenses (4) 0 9,104 2,662 329,226 (340,992 ) 0 Total operating expenses 2,206 196,979 282,842 402,137 (340,992 ) 543,172 Operating profit/(loss) (2,206 ) 88,032 (102,470 ) 15,771 0 (873 ) Income/(loss) from subsidiaries (2) (213 ) (71,405 ) 74,897 0 (3,279 ) 0 Income/(loss) from VIEs (3) 0 0 2,691 0 (2,691 ) 0 Non-operating income/(expense) (7,390 ) 24,159 37,107 (12,398 ) 0 41,478 Income before income tax expense (9,809 ) 40,786 12,225 3,373 (5,970 ) 40,605 Income tax expense 7,534 40,997 8,733 682 0 57,946 Net income/(loss) from continuing operations (17,343 ) (211 ) 3,492 2,691 (5,970 ) (17,341 ) Less: Net loss from continuing operations attributable to the noncontrolling interest shareholders 0 2 0 0 0 2 Net income/(loss) from continuing operations attributable to Sohu.com Limited (17,343 ) (213 ) 3,492 2,691 (5,970 ) (17,343 ) Net loss $ (17,343 ) 8 Table of Contents The following table presents our condensed consolidating schedules of cash flows for the VIEs that we consolidate and other entities for the periods presented (in thousands): Year Ended December 31, 2020 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Cash flows from operating activities: Net cash provided by/(used in) transactions with third parties $ (5,371 ) (25,798 ) (264,700 ) 459,263 0 163,394 Net cash provided by/(used in) transactions with intra-Group entities 0 18,721 360,928 (379,649 ) 0 0 Net cash provided by/(used in) continuing operating activities (5) (5,371 ) (7,077 ) 96,228 79,614 0 163,394 Net cash provided used in discontinued operating activities (68,187 ) Net cash provided by operating activities 95,207 Cash flows from investing activities: Net cash provided by/(used in) transactions with third parties 0 167,702 17,464 (773 ) 0 184,393 Net cash provided by/(used in) transactions with intra-Group entities 1,961 5,660 226,972 (106,321 ) (128,272 ) 0 Net cash provided by/(used in) continuing investing activities (5) 1,961 173,362 244,436 (107,094 ) (128,272 ) 184,393 Net cash provided by discontinued investing activities 235,374 Net cash provided by investing activities 419,767 Cash flows from financing activities: Net cash provided by/(used in) transactions with third parties 0 204,941 (103,146 ) 0 0 101,795 Net cash provided by/(used in) transactions with intra-Group entities 0 (254,216 ) 93,193 32,751 128,272 0 Net cash provided by/(used in) continuing financing activities (5) 0 (49,275 ) (9,953 ) 32,751 128,272 101,795 Net cash used in discontinued financing activities (8,209 ) Net cash provided by financing activities 93,586 9 Table of Contents Year Ended December 31, 2021 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Cash flows from operating activities: Net cash provided by/(used in) transactions with third parties $ (517 ) (127,098 ) (299,947 ) 541,172 0 113,610 Net cash provided by/(used in) transactions with intra-Group entities 0 288,308 217,245 (505,553 ) 0 0 Net cash provided by/(used in) continuing operating activities (517 ) 161,210 (82,702 ) 35,619 0 113,610 Net cash used in discontinued operating activities (175,888 ) Net cash used in operating activities (62,278 ) Cash flows from investing activities: Net cash used in transactions with third parties 0 (112,599 ) (400,933 ) (23,887 ) 0 (537,419 ) Net cash provided by/(used in) transactions with intra-Group entities (5,999 ) (172,370 ) 209,079 (140,671 ) 109,961 0 Net cash used in continuing investing activities (5,999 ) (284,969 ) (191,854 ) (164,558 ) 109,961 (537,419 ) Net cash provided by discontinued investing activities 1,054,148 Net cash provided by investing activities 516,729 Cash flows from financing activities: Net cash used in transactions with third parties (17,418 ) (407,550 ) 0 0 0 (424,968 ) Net cash provided by/(used in) transactions with intra-Group entities 36,912 (236,658 ) 197,819 111,888 (109,961 ) 0 Net cash provided by/(used in) continuing financing activities 19,494 (644,208 ) 197,819 111,888 (109,961 ) (424,968 ) Net cash used in discontinued financing activities (9,132 ) Net cash used in financing activities (434,100 ) 10 Table of Contents Year Ended December 31, 2022 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Cash flows from operating activities: Net cash provided by/(used in) transactions with third parties $ (10,122 ) (229,554 ) (177,018 ) 448,936 0 32,242 Net cash provided by/(used in) transactions with intra-Group entities 0 186,468 259,192 (445,660 ) 0 0 Net cash provided by/(used in) continuing operating activities (10,122 ) (43,086 ) 82,174 3,276 0 32,242 Net cash provided by operating activities 32,242 Cash flows from investing activities: Net cash provided by/(used in) transactions with third parties 0 (340,000 ) 112,632 (5,421 ) 0 (232,789 ) Net cash provided by/(used in) transactions with intra-Group entities 7,967 605,535 (208,182 ) 72,497 (477,817 ) 0 Net cash provided by/(used in) continuing investing activities 7,967 265,535 (95,550 ) 67,076 (477,817 ) (232,789 ) Net cash used in investing activities (232,789 ) Cash flows from financing activities: Net cash used in transactions with third parties (82,136 ) 0 0 0 0 (82,136 ) Net cash provided by/(used in) transactions with intra-Group entities 72,036 (171,590 ) (299,054 ) (79,209 ) 477,817 0 Net cash provided by/(used in) continuing financing activities (10,100 ) (171,590 ) (299,054 ) (79,209 ) 477,817 (82,136 ) Net cash used in financing activities (82,136 ) Note (1): Represents the elimination of intercompany balances generated from intra-Group service charges among Sohu.com Limited, the Primary Beneficiaries of VIEs, the Other Subsidiaries, and the VIEs and their subsidiaries that we consolidate.
Biggest changeAs of December 31, 2022 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals ASSETS Current assets: Cash and cash equivalents $ 1,308 648,981 25,800 21,732 0 697,821 Restricted cash 0 0 1,803 1,838 0 3,641 Short-term investments 0 467,294 1,726 4,604 0 473,624 Accounts receivable, net 0 28,913 6 38,622 0 67,541 Prepaid and other current assets 700 22,201 46,258 13,934 0 83,093 Intra-Group receivables due from subsidiaries (1) 512,936 353,286 666,291 594,099 (2,126,612 ) 0 Total current assets 514,944 1,520,675 741,884 674,829 (2,126,612 ) 1,325,720 Fixed assets, net 0 51,087 236,787 352 0 288,226 Investment in subsidiaries (2) 834,714 1,735,970 455,149 0 (3,025,833 ) 0 Controlling financial interests in VIEs (3) 0 0 198,476 0 (198,476 ) 0 Long-term time deposits 0 0 265,802 0 0 265,802 Other non-current assets 22,036 8,284 15,694 53,450 (1,436 ) 98,028 Total assets $ 1,371,694 3,316,016 1,913,792 728,631 (5,352,357 ) 1,977,776 LIABILITIES Current liabilities: Accounts payable $ 0 26,751 18,789 10,909 0 56,449 Accrued liabilities 1,129 57,224 30,162 37,946 0 126,461 Receipts in advance and deferred revenue 0 7,055 77 40,948 0 48,080 Accrued salary and benefits 83 19,288 35,154 6,229 0 60,754 Tax payables 0 2,217 7,212 1,183 0 10,612 Intra-Group payables due to subsidiaries (1) 90,173 907,191 726,702 402,546 (2,126,612 ) 0 Other short-term liabilities 0 56,356 43,074 15,102 0 114,532 Total current liabilities 91,385 1,076,082 861,170 514,863 (2,126,612 ) 416,888 Long-term other payables 0 866 929 0 0 1,795 Long-term tax liabilities 170,867 16,120 0 13,242 0 200,229 Deferred tax liabilities 0 239,013 8,252 549 0 247,814 Other non-current liabilities 0 (80 ) 420 1,436 (1,436 ) 340 Total long-term liabilities 170,867 255,919 9,601 15,227 (1,436 ) 450,178 Total liabilities $ 262,252 1,332,001 870,771 530,090 (2,128,048 ) 867,066 Commitments and contingencies SHAREHOLDERS’ EQUITY Total Sohu.com Limited shareholders’ equity 1,109,442 1,982,747 1,043,021 198,541 (3,224,309 ) 1,109,442 Noncontrolling interest 0 1,268 0 0 0 1,268 Total shareholders’ equity (2)(3) 1,109,442 1,984,015 1,043,021 198,541 (3,224,309 ) 1,110,710 Total liabilities and shareholders’ equity $ 1,371,694 3,316,016 1,913,792 728,631 (5,352,357 ) 1,977,776 4 Table of Contents As of December 31, 2023 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals ASSETS Current assets: Cash and cash equivalents $ 2,914 155,057 197,868 6,665 0 362,504 Restricted cash 0 0 1,772 1,412 0 3,184 Short-term investments 0 501,869 77,158 18,743 0 597,770 Accounts receivable, net 0 10,615 28,050 32,953 0 71,618 Prepaid and other current assets 631 15,394 60,432 5,514 0 81,971 Intra-Group receivables due from subsidiaries (1) 531,708 264,426 655,512 502,353 (1,953,999 ) 0 Total current assets 535,253 947,361 1,020,792 567,640 (1,953,999 ) 1,117,047 Fixed assets, net 0 47,780 221,075 203 0 269,058 Investment in subsidiaries (2) 805,454 3,389,434 1,186,862 0 (5,381,750 ) 0 Controlling financial interests in VIEs (3) 0 0 218,907 0 (218,907 ) 0 Long-term time deposits 0 171,621 216,992 0 0 388,613 Other non-current assets 22,036 24,424 13,794 48,538 (1,412 ) 107,380 Total assets $ 1,362,743 4,580,620 2,878,422 616,381 (7,556,068 ) 1,882,098 LIABILITIES Current liabilities: Accounts payable $ 0 8,680 28,013 7,916 0 44,609 Accrued liabilities 1,244 35,353 38,657 28,525 0 103,779 Receipts in advance and deferred revenue 0 4,634 2,237 43,958 0 50,829 Accrued salary and benefits 83 4,042 41,671 4,534 0 50,330 Tax payables 0 931 9,365 1,067 0 11,363 Intra-Group payables due to subsidiaries (1) 118,742 923,205 628,969 283,083 (1,953,999 ) 0 Other short-term liabilities 0 61,519 6,080 13,883 0 81,482 Total current liabilities 120,069 1,038,364 754,992 382,966 (1,953,999 ) 342,392 Long-term other payables 0 554 3,370 0 0 3,924 Long-term tax liabilities 183,718 16,120 0 13,021 0 212,859 Deferred tax liabilities 0 253,483 8,032 0 0 261,515 Other non-current liabilities 0 86 2,011 1,445 (1,412 ) 2,130 Total long-term liabilities 183,718 270,243 13,413 14,466 (1,412 ) 480,428 Total liabilities $ 303,787 1,308,607 768,405 397,432 (1,955,411 ) 822,820 Commitments and contingencies SHAREHOLDERS’ EQUITY Total Sohu.com Limited shareholders’ equity 1,058,956 3,271,691 2,110,017 218,949 (5,600,657 ) 1,058,956 Noncontrolling interest 0 322 0 0 0 322 Total shareholders’ equity (2)(3) 1,058,956 3,272,013 2,110,017 218,949 (5,600,657 ) 1,059,278 Total liabilities and shareholders’ equity $ 1,362,743 4,580,620 2,878,422 616,381 (7,556,068 ) 1,882,098 5 Table of Contents The following table presents our condensed consolidating schedules of results of operations for the VIEs that we consolidate and other entities for the periods presented (in thousands): Year Ended December 31, 2021 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Revenues: Third-party revenues $ 0 90,830 79,923 664,823 0 835,576 Intra-Group revenues (4) 0 275,774 256,801 21,488 (554,063 ) 0 Total revenues 0 366,604 336,724 686,311 (554,063 ) 835,576 Cost of revenues: Third-party cost of revenues 0 26,055 96,891 81,725 0 204,671 Intra-Group cost of revenues (4) 0 4,957 37,732 136,221 (178,910 ) 0 Total cost of revenues 0 31,012 134,623 217,946 (178,910 ) 204,671 Gross profit 0 335,592 202,101 468,365 (375,153 ) 630,905 Operating expenses: Third-party operating expenses 1,768 123,963 335,576 72,126 0 533,433 Intra-Group operating expenses (4) 0 11,325 2,831 366,762 (380,918 ) 0 Total operating expenses 1,768 135,288 338,407 438,888 (380,918 ) 533,433 Operating profit/(loss) (1,768 ) 200,304 (136,306 ) 29,477 5,765 97,472 Income/(loss) from subsidiaries (2) 75,343 (71,989 ) 182,818 0 (186,172 ) 0 Income/(loss) from VIEs (3) 0 0 35,805 0 (35,805 ) 0 Non-operating income/(expense) 526 (3,017 ) 32,843 9,508 (5,765 ) 34,095 Income before income tax expense 74,101 125,298 115,160 38,985 (221,977 ) 131,567 Income tax expense 4,827 49,958 4,331 3,180 0 62,296 Net income from continuing operations 69,274 75,340 110,829 35,805 (221,977 ) 69,271 Less: Net loss from continuing operations attributable to the noncontrolling interest shareholders 0 (3 ) 0 0 0 (3 ) Net income from continuing operations attributable to Sohu.com Limited 69,274 75,343 110,829 35,805 (221,977 ) 69,274 Net income from discontinued operations, net of tax 858,451 Net income $ 927,725 6 Table of Contents Year Ended December 31, 2022 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Revenues: Third-party revenues $ 0 141,118 1,274 591,480 0 733,872 Intra-Group revenues (4) 0 202,250 257,442 27,914 (487,606 ) 0 Total revenues 0 343,368 258,716 619,394 (487,606 ) 733,872 Cost of revenues: Third-party cost of revenues 0 34,125 60,845 96,603 0 191,573 Intra-Group cost of revenues (4) 0 24,232 17,499 104,883 (146,614 ) 0 Total cost of revenues 0 58,357 78,344 201,486 (146,614 ) 191,573 Gross profit 0 285,011 180,372 417,908 (340,992 ) 542,299 Operating expenses: Third-party operating expenses 2,206 187,875 280,180 72,911 0 543,172 Intra-Group operating expenses (4) 0 9,104 2,662 329,226 (340,992 ) 0 Total operating expenses 2,206 196,979 282,842 402,137 (340,992 ) 543,172 Operating profit/(loss) (2,206 ) 88,032 (102,470 ) 15,771 0 (873 ) Income/(loss) from subsidiaries (2) (213 ) (71,405 ) 74,897 0 (3,279 ) 0 Income/(loss) from VIEs (3) 0 0 2,691 0 (2,691 ) 0 Non-operating income/(expense) (7,390 ) 24,159 37,107 (12,398 ) 0 41,478 Income/(loss) before income tax expense (9,809 ) 40,786 12,225 3,373 (5,970 ) 40,605 Income tax expense 7,534 40,997 8,733 682 0 57,946 Net income/(loss) from continuing operations (17,343 ) (211 ) 3,492 2,691 (5,970 ) (17,341 ) Less: Net income from continuing operations attributable to the noncontrolling interest shareholders 0 2 0 0 0 2 Net income/(loss) from continuing operations attributable to Sohu.com Limited (17,343 ) (213 ) 3,492 2,691 (5,970 ) (17,343 ) Net loss $ (17,343 ) 7 Table of Contents Year Ended December 31, 2023 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Revenues: Third-party revenues $ 0 51,825 71,645 477,202 0 600,672 Intra-Group revenues (4) 0 2,431 382,418 13,283 (398,132 ) 0 Total revenues 0 54,256 454,063 490,485 (398,132 ) 600,672 Cost of revenues: Third-party cost of revenues 0 30,422 63,914 55,227 (3,806 ) 145,757 Intra-Group cost of revenues (4) 0 15,178 8,396 86,435 (110,009 ) 0 Total cost of revenues 0 45,600 72,310 141,662 (113,815 ) 145,757 Gross profit 0 8,656 381,753 348,823 (284,317 ) 454,915 Operating expenses: Third-party operating expenses 2,193 137,111 358,862 44,059 0 542,225 Intra-Group operating expenses (4) 0 1,387 287 282,812 (284,486 ) 0 Total operating expenses 2,193 138,498 359,149 326,871 (284,486 ) 542,225 Operating profit/(loss) (2,193 ) (129,842 ) 22,604 21,952 169 (87,310 ) Income/(loss) from subsidiaries (2) (51,138 ) 68,616 (122,232 ) 0 104,754 0 Income/(loss) from VIEs (3) 0 0 23,879 0 (23,879 ) 0 Non-operating income/(expense) 376 28,873 48,766 3,814 (169 ) 81,660 Income/(loss) before income tax expense (52,955 ) (32,353 ) (26,983 ) 25,766 80,875 (5,650 ) Income tax expense 12,850 19,050 26,633 1,887 0 60,420 Net income/(loss) from continuing operations (65,805 ) (51,403 ) (53,616 ) 23,879 80,875 (66,070 ) Less: Net loss from continuing operations attributable to the noncontrolling interest shareholders 0 (265 ) 0 0 0 (265 ) Net income/(loss) from continuing operations attributable to Sohu.com Limited (65,805 ) (51,138 ) (53,616 ) 23,879 80,875 (65,805 ) Net income from discontinued operations, net of tax 35,426 Net loss $ (30,379 ) 8 Table of Contents The following table presents our condensed consolidating schedules of cash flows for the VIEs that we consolidate and other entities for the periods presented (in thousands): Year Ended December 31, 2021 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Cash flows from operating activities: Net cash provided by/(used in) transactions with third parties $ (517 ) (127,098 ) (299,947 ) 541,172 0 113,610 Net cash provided by/(used in) transactions with intra-Group entities 0 288,308 217,245 (505,553 ) 0 0 Net cash provided by/(used in) continuing operating activities (517 ) 161,210 (82,702 ) 35,619 0 113,610 Net cash used in discontinued operating activities (175,888 ) Net cash used in operating activities (62,278 ) Cash flows from investing activities: Net cash used in transactions with third parties 0 (112,599 ) (400,933 ) (23,887 ) 0 (537,419 ) Net cash provided by/(used in) transactions with intra-Group entities (5,999 ) (172,370 ) 209,079 (140,671 ) 109,961 0 Net cash used in continuing investing activities (5,999 ) (284,969 ) (191,854 ) (164,558 ) 109,961 (537,419 ) Net cash provided by discontinued investing activities 1,054,148 Net cash provided by investing activities 516,729 Cash flows from financing activities: Net cash used in transactions with third parties (17,418 ) (407,550 ) 0 0 0 (424,968 ) Net cash provided by/(used in) transactions with intra-Group entities 36,912 (236,658 ) 197,819 111,888 (109,961 ) 0 Net cash provided by/(used in) continuing financing activities 19,494 (644,208 ) 197,819 111,888 (109,961 ) (424,968 ) Net cash used in discontinued financing activities (9,132 ) Net cash used in financing activities (434,100 ) 9 Table of Contents Year Ended December 31, 2022 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Cash flows from operating activities: Net cash provided by/(used in) transactions with third parties $ (10,122 ) (229,554 ) (177,018 ) 448,936 0 32,242 Net cash provided by/(used in) transactions with intra-Group entities 0 186,468 259,192 (445,660 ) 0 0 Net cash provided by/(used in) continuing operating activities (10,122 ) (43,086 ) 82,174 3,276 0 32,242 Net cash provided by operating activities 32,242 Cash flows from investing activities: Net cash provided by/(used in) transactions with third parties 0 (340,000 ) 112,632 (5,421 ) 0 (232,789 ) Net cash provided by/(used in) transactions with intra-Group entities 7,967 605,535 (208,182 ) 72,497 (477,817 ) 0 Net cash provided by/(used in) continuing investing activities 7,967 265,535 (95,550 ) 67,076 (477,817 ) (232,789 ) Net cash used in investing activities (232,789 ) Cash flows from financing activities: Net cash used in transactions with third parties (82,136 ) 0 0 0 0 (82,136 ) Net cash provided by/(used in) transactions with intra-Group entities 72,036 (171,590 ) (299,054 ) (79,209 ) 477,817 0 Net cash provided by/(used in) continuing financing activities (10,100 ) (171,590 ) (299,054 ) (79,209 ) 477,817 (82,136 ) Net cash used in financing activities (82,136 ) 10 Table of Contents Year Ended December 31, 2023 Sohu.com Limited Other Subsidiaries Primary Beneficiaries of VIEs VIEs and their subsidiaries Eliminating adjustments Consolidated totals Cash flows from operating activities: Net cash provided by/(used in) transactions with third parties $ (1,631 ) (356,837 ) (76,861 ) 409,762 0 (25,567 ) Net cash provided by/(used in) transactions with intra-Group entities 0 (13,528 ) 396,121 (382,593 ) 0 0 Net cash provided by/(used in) continuing operating activities (1,631 ) (370,365 ) 319,260 27,169 0 (25,567 ) Net cash used in operating activities (25,567 ) Cash flows from investing activities: Net cash provided by/(used in) transactions with third parties 0 (351,792 ) 75,049 (14,922 ) 0 (291,665 ) Net cash provided by/(used in) transactions with intra-Group entities 3 (1,124,552 ) (1,325,496 ) 73,894 2,376,151 0 Net cash provided by/(used in) continuing investing activities 3 (1,476,344 ) (1,250,447 ) 58,972 2,376,151 (291,665 ) Net cash used in investing activities (291,665 ) Cash flows from financing activities: Net cash used in transactions with third parties (6,560 ) 0 0 0 0 (6,560 ) Net cash provided by/(used in) transactions with intra-Group entities 9,794 1,355,281 1,112,687 (101,611 ) (2,376,151 ) 0 Net cash provided by/(used in) continuing financing activities 3,234 1,355,281 1,112,687 (101,611 ) (2,376,151 ) (6,560 ) Net cash used in financing activities (6,560 ) Note (1): Represents the elimination of intercompany balances generated from intra-Group service charges among Sohu.com Limited, the Primary Beneficiaries of VIEs, the Other Subsidiaries, and the VIEs and their subsidiaries that we consolidate under U.S.
Also, as we increasingly rely on content provided by third-party UGC and PGC providers on our Internet platforms, either developed by the outlets themselves or adapted from content of parties separate from such outlets, it will become increasingly difficult for us to fully monitor such content, which could make us more vulnerable to potential infringement claims.
Also, as we increasingly rely on content provided by third-party PGC and UGC providers on our Internet platforms, either developed by the outlets themselves or adapted from content of parties separate from such outlets, it will become increasingly difficult for us to fully monitor such content, which could make us more vulnerable to potential infringement claims.
Although we have adopted internal procedures to monitor the content displayed on our Internet platforms which is uploaded by PGC and UGC providers, due to the significant amount of content uploaded, we may not be able to identify all videos or other content that may violate relevant laws and regulations, and the risk may be greater as we increasingly rely on content provided by UGC and PGC providers through our Internet platforms, as our ability to fully review such content prior to its publication is limited.
Although we have adopted internal procedures to monitor the content displayed on our Internet platforms which is uploaded by PGC and UGC providers, due to the significant amount of content uploaded, we may not be able to identify all videos or other content that may violate relevant laws and regulations, and the risk may be greater as we increasingly rely on content provided by PGC and UGC providers through our Internet platforms, as our ability to fully review such content prior to its publication is limited.
On July 6, 2021, several authorities in the Chinese mainland jointly promulgated the Opinions on Strictly Combating Illegal Securities Activities in Accordance with the Law , which called for the enhanced administration and supervision of Chinese mainland-based companies listing outside Chinese mainland, proposed to revise the relevant regulations governing the issuance and listing of shares outside Chinese mainland by such companies, and clarified the related responsibilities of competent industry regulators and regulatory authorities in the Chinese mainland.
On July 6, 2021, several authorities in the Chinese mainland jointly promulgated the Opinions on Strictly Combating Illegal Securities Activities in Accordance with the Law , which called for enhanced administration and supervision of Chinese mainland-based companies listing outside of the Chinese mainland, proposed to revise the relevant regulations governing the issuance and listing of shares outside of the Chinese mainland by such companies, and clarified the related responsibilities of competent industry regulators and regulatory authorities in the Chinese mainland.
Changyou may need to incur significant expenses to enforce its proprietary rights, and if it is unable to protect such rights, its competitive position and financial performance could be harmed. Changyou regards its intellectual property and proprietary rights as critical to its success.
Changyou may need to incur significant expenses to enforce its intellectual proprietary rights, and if it is unable to protect such rights, its competitive position and financial performance could be harmed. Changyou regards its intellectual property and proprietary rights as critical to its success.
Substantial uncertainties exist regarding the timing of the promulgation of, and any changes to, current and future laws and regulations of the Chinese mainland and the effect of the interpretation and implementation thereof, which may, among other things: • have an adverse impact on the way Changyou designs its games and game features, which may make the games less attractive to game players; • have an adverse impact on Changyou’s ability to achieve an acceptable level of revenues and profit from its mobile games; • make it harder to access Changyou’s mobile games and cause a decrease in its player base; • increase the cost of the development and operation of Changyou’s mobile games; and • require substantial management attention and effort in monitoring the development of, and ensuring Changyou’s compliance with, existing and future laws and regulations of the Chinese mainland affecting the mobile games business.
Uncertainties exist regarding the timing of the promulgation of, and any changes to, current and future laws and regulations of the Chinese mainland and the effect of the interpretation and implementation thereof, which may, among other things: • have an adverse impact on the way Changyou designs its games and game features, which may make the games less attractive to game players; • have an adverse impact on Changyou’s ability to achieve an acceptable level of revenues and profit from its mobile games; • make it harder to access Changyou’s mobile games and cause a decrease in its player base; • increase the cost of the development and operation of Changyou’s mobile games; and • require substantial management attention and effort in monitoring the development of, and ensuring Changyou’s compliance with, existing and future laws and regulations of the Chinese mainland affecting the mobile games business.
Additional risks associated with the licensing or direct or joint operation of Changyou’s games overseas include: • difficulties and significant costs in protecting Changyou’s intellectual property in overseas markets; • difficulties in retaining and maintaining local management and key development and technical personnel who are experienced and knowledgeable about, and can effectively operate Changyou’s games in, particular markets; • uncertainties relating to Changyou’s ability to develop its games and/or expansion packs catering to particular overseas markets; • uncertainties relating to Changyou’s ability to renew its license and joint operation agreements with licensees and joint operators upon their expiration; • for Changyou’s direct operation of its games overseas, interruptions in the operation of the games due to cross-border Internet connection or other system failures; 54 Table of Contents • significant costs for translation of its games into the local languages of, or customization of its games for, the overseas markets in which Changyou plans to license or jointly operate its games; • limited choices of third-party Internet platforms to distribute Changyou’s mobile games in certain overseas markets; • difficulty for Changyou’s management to exercise timely and effective supervision and administration of local management and employees in general, and their interactions with local third-party Internet platforms or other service providers in particular, in order to identify and prevent any sloppy, dishonest or illegal activities, which could harm Changyou’s business and reputation or subject Changyou to penalties; • significant marketing costs to promote Changyou’s games in certain overseas markets where third-party Internet platforms do not include marketing services as part of the revenue-sharing arrangements; • different game player preferences in certain overseas markets; • difficulties and significant costs relating to compliance with the different legal requirements and commercial terms, such as game export regulatory procedures, taxes and other restrictions and expenses, in the overseas markets in which Changyou licenses or directly or jointly operates its games; • exposure to different regulatory systems governing the protection of intellectual property and the regulation of online games, the Internet and the export of technology; • costs for compliance with different legal requirements and commercial terms in overseas markets; • difficulties in verifying revenues generated from Changyou’s games by its licensees for purposes of determining royalties payable to Changyou; • difficulties and delays in contract enforcement and collection of receivables through the use of foreign legal systems; • changes in the political, regulatory or economic conditions, or public policy, affecting online games in particular foreign countries or regions; • the risk that regulatory authorities in foreign countries or administrative regions may impose withholding taxes, or place restrictions on repatriation of Changyou’s profits; and • fluctuations in currency exchange rates.
Additional risks associated with the licensing or direct or joint operation of Changyou’s games overseas include: • difficulties and significant costs in protecting Changyou’s intellectual property in overseas markets; • difficulties in retaining and maintaining local management and key development and technical personnel who are experienced and knowledgeable about, and can effectively operate Changyou’s games in, particular markets; • uncertainties relating to Changyou’s ability to develop its games and/or expansion packs catering to particular overseas markets; • uncertainties relating to Changyou’s ability to renew its license and joint operation agreements with licensees and joint operators upon their expiration; • for Changyou’s direct operation of its games overseas, interruptions in the operation of the games due to cross-border Internet connection or other system failures; • significant costs for translation of its games into the local languages of, or customization of its games for, the overseas markets in which Changyou plans to license or jointly operate its games; • limited choices of third-party Internet platforms to distribute Changyou’s mobile games in certain overseas markets; • difficulty for Changyou’s management to exercise timely and effective supervision and administration of local management and employees in general, and their interactions with local third-party Internet platforms or other service providers in particular, in order to identify and prevent any sloppy, dishonest or illegal activities, which could harm Changyou’s business and reputation or subject Changyou to penalties; • significant marketing costs to promote Changyou’s games in certain overseas markets where third-party Internet platforms do not include marketing services as part of the revenue-sharing arrangements; • different game player preferences in certain overseas markets; • difficulties and significant costs relating to compliance with the different legal requirements and commercial terms, such as game export regulatory procedures, taxes and other restrictions and expenses, in the overseas markets in which Changyou licenses or directly or jointly operates its games; • exposure to different regulatory systems governing the protection of intellectual property and the regulation of online games, the Internet and the export of technology; • costs for compliance with different legal requirements and commercial terms in overseas markets; • difficulties in verifying revenues generated from Changyou’s games by its licensees for purposes of determining royalties payable to Changyou; • difficulties and delays in contract enforcement and collection of receivables through the use of foreign legal systems; • changes in the political, regulatory or economic conditions, or public policy, affecting online games in particular foreign countries or regions; 58 Table of Contents • the risk that regulatory authorities in foreign countries or administrative regions may impose withholding taxes, or place restrictions on repatriation of Changyou’s profits; and • fluctuations in currency exchange rates.
Changyou competes with other game information portals, such as Game.sina.com.cn, operated by Sina Corporation, and other Internet portals which have, or may over time be able to build, competitive advantages over Changyou in terms of: • greater brand recognition among game players and advertising clients; • larger user and customer bases; • more extensive and well -developed marketing and sales networks; • more attractive mobile versions of their game information portals and more extensive mobile game-related products and services, such as mobile game discussion forums, in response to the rapid migration of users of Internet services from PCs to mobile devices such as tablets and mobile phones, and the unique preferences and demands of mobile users and mobile game players; and • substantially greater financial and technical resources.
Changyou competes with other game information portals, such as games.sina.com.cn, operated by Sina Corporation, and other Internet portals which have, or may over time be able to build, competitive advantages over Changyou in terms of: • greater brand recognition among game players and advertising clients; • larger user and customer bases; • more extensive and well-developed marketing and sales networks; • more attractive mobile versions of their game information portals and more extensive mobile game-related products and services, such as mobile game discussion forums, in response to the rapid migration of users of Internet services from PCs to mobile devices such as tablets and mobile phones, and the unique preferences and demands of mobile users and mobile game players; and • substantially greater financial and technical resources.
In addition, our ability to generate and maintain significant brand advertising revenues will also depend upon: • the development of a large base of users possessing demographic characteristics attractive to advertising clients; • the acceptance of brand advertisement as an effective way for business marketing by advertising clients; • the effectiveness of our advertising delivery, tracking and reporting systems; • the resistance pressure on brand advertising prices and limitations on inventory; and • the establishment of a successful business model to make our new products adaptable to portable devices, which has required us, and will continue to require us, to make significant expenditures for research, development, promotion and operations.
In addition, our ability to generate and maintain significant brand advertising revenues will also depend upon: • the development and maintenance of a large base of users possessing demographic characteristics attractive to advertising clients; • the acceptance of brand advertisement as an effective way for business marketing by advertising clients; • the effectiveness of our advertising delivery, tracking and reporting systems; • the resistance pressure on brand advertising prices and limitations on inventory; and • the establishment of a successful business model to make our new products adaptable to portable devices, which has required us, and will continue to require us, to make significant expenditures for research, development, promotion and operations.
If we are unable to expend the resources at a level necessary to self-develop or acquire the rights to, and provide on our video platforms, quality video content, we may not be able to compete effectively against these other popular sites, or grow or maintain the level of our user traffic, which could make our video platforms less attractive to advertisers, have a negative impact on our ability to generate advertising revenues, and make it difficult for us to stem our losses from operation of our online video services or to recoup our expenditures.
If we are unable to expend the resources at a level necessary to self-develop or acquire the rights to, and provide on our video platforms, quality video content, we may not be able to compete effectively against these other popular sites, or grow or maintain the level of our user traffic, which could make our video platforms less attractive to advertisers, have a negative impact on our ability to generate revenues, and make it difficult for us to stem our losses from operation of our online video services or to recoup our expenditures.
It is possible that the HNTE, Software Enterprise, and KNSE qualifications of our operating entities currently qualified as such, or their entitlement to an income tax exemption or refund of their VAT, will be challenged by higher level tax authorities and be repealed, or that there will be future implementing regulations that are inconsistent with current interpretation of the applicable tax laws and regulations.
It is possible that the HNTE and Software Enterprise qualifications of our operating entities currently qualified as such, or their entitlement to an income tax exemption or refund of their VAT, will be challenged by higher level tax authorities and be repealed, or that there will be future implementing regulations that are inconsistent with current interpretation of the applicable tax laws and regulations.
For example, Changyou developed and it operates its PC game TLBB and its mobile games Legacy TLBB Mobile and TLBB 3D with various features that are included in reliance on rights under its existing license agreements with respect to the late Chinese martial arts author Louis Cha’s popular novel Tian Long Ba Bu.
For example, Changyou developed and it operates its PC game TLBB and its mobile games TLBB 3D, Legacy TLBB Mobile, and New TLBB Mobile with various features that are included in reliance on rights under its existing license agreements with respect to the late Chinese martial arts author Louis Cha’s popular novel Tian Long Ba Bu.
In order to compete effectively in the Chinese mainland, as well as in the worldwide market, Changyou must continue to invest in research and development, to enhance its technology and its existing games, advertising and other services, and to introduce new game products and services in order for it to adapt to industry trends and shifting demands of game players and advertising clients and to remain competitive.
In order to compete effectively in the Chinese mainland, as well as in the worldwide market, Changyou must continue to invest in research and development, to enhance its technology and its existing games, advertising and other services, and to timely introduce new game products and services in order for it to adapt to industry trends and shifting demands of game players and advertising clients and to remain competitive.
GAAP) in and management of the VIEs, which exposes us to the risk of potential breach of contract by the VIEs or their shareholders, such as their failing to use the domain names and trademarks held by them, or failing to maintain our Internet platforms, in an acceptable manner or taking other actions that are detrimental to our interests.
GAAP) in, and to control management of, the VIEs, which exposes us to the risk of potential breach of contract by the VIEs or their shareholders, such as their failing to use the domain names and trademarks held by them, or failing to maintain our Internet platforms, in an acceptable manner or taking other actions that are detrimental to our interests.
Furthermore, because many Chinese mainland laws, regulations and legal requirements with regard to the Internet are relatively new and untested, their interpretation and enforcement may involve significant uncertainty. In addition, the legal system of the Chinese mainland is a civil law system in which decided legal cases have limited binding force as legal precedents.
Furthermore, because many Chinese mainland laws, regulations and legal requirements with regard to the Internet are relatively new and untested, their interpretation and enforcement may involve uncertainty. In addition, the legal system of the Chinese mainland is a civil law system in which decided legal cases have limited binding force as legal precedents.
Changyou stores on its servers, including physical servers that Changyou owns or rent and cloud-based servers that Changyou leases from third-party operators, and transmits over the Internet considerable and continually increasing amounts of data, much of which is essential to the operation of its business and some of which is highly confidential information concerning its business and its game players.
Changyou stores on its servers, including physical servers that Changyou owns or leases and cloud-based servers that Changyou leases from third-party operators, and transmits over the Internet considerable and continually increasing amounts of data, much of which is essential to the operation of its business and some of which is highly confidential information concerning its business and its game players.
Accordingly, the results of operations of Sogou and the gain of approximately $855 million, net of transaction and other costs, from its disposal are presented in separate line items in the table below as discontinued operations. Retrospective adjustments to the historical statements have been made in order to provide a consistent basis of comparison.
The results of operations of Sogou and the gain of approximately $855 million, net of transaction and other costs, from its disposal are presented in separate line items in the table below as discontinued operations. Retrospective adjustments to the historical statements have been made in order to provide a consistent basis of comparison.
Given the competitive nature of the industry, and in particular our competitors’ increasingly aggressive efforts to provide competitive compensation packages to attract talent in the key Chinese markets where we operate, the risk of key technology staff leaving Sohu is high and could have a disruptive impact on our operations.
Given the competitive nature of the industry, and in particular our competitors’ increasingly aggressive efforts to provide competitive compensation packages to attract talent in the core Chinese markets where we operate, the risk of key technology staff leaving Sohu is high and could have a disruptive impact on our operations.
Dividends we receive from our operating subsidiaries located in the Chinese mainland are subject to Chinese mainland profit appropriation and withholding tax. Chinese mainland regulations currently permit payment of dividends by our Chinese mainland-based WFOEs only out of their accumulated profits, if any, determined in accordance with Chinese mainland accounting standards and regulations.
Dividends we receive from our operating subsidiaries located in the Chinese mainland are subject to Chinese mainland profit appropriation and withholding tax. Chinese mainland regulations currently permit payment of dividends by our Chinese mainland-based subsidiaries only out of their accumulated profits, if any, determined in accordance with Chinese mainland accounting standards and regulations.
If Changyou’s revenues from TLBB and Legacy TLBB Mobile continue to decline as they have in recent years, or if Changyou’s online game revenues from games other than TLBB and Legacy TLBB Mobile do not grow or if they decrease, our revenues, net income, and operating cash flow will be adversely affected.
If Changyou’s revenues from TLBB PC and Legacy TLBB Mobile continue to decline as they have in recent years, or if Changyou’s online game revenues from games other than TLBB PC and Legacy TLBB Mobile do not grow or if they decrease, our revenues, net income, and operating cash flow will be adversely affected.
See “Governmental Regulation and Legal Uncertainties - Miscellaneous - Laws and Regulations Related to Security and Censorship.” The laws and regulations governing cybersecurity and data security in the Chinese mainland are relatively new and evolving rapidly, and the relevant regulatory authorities in the Chinese mainland have wide discretion in their interpretation and enforcement, which involve significant uncertainties.
See “Governmental Regulation and Legal Uncertainties - Miscellaneous - Laws and Regulations Related to Security and Censorship.” The laws and regulations governing cybersecurity and data security in the Chinese mainland are relatively new and evolving rapidly, and the relevant regulatory authorities in the Chinese mainland have wide discretion in their interpretation and enforcement, which involve uncertainties.
Accordingly, the financial position, results of operations, and cash flows related to the discontinued Sogou operations have not been disaggregated in the table below, because they do not constitute any part of our consolidated financial statements following the completion of the Tencent/Sohu Sogou Share Purchase.
The financial position, results of operations, and cash flows related to the discontinued Sogou operations have not been disaggregated in the table below, because they do not constitute any part of our consolidated financial statements following the completion of the Tencent/Sohu Sogou Share Purchase.
However, as there are limited telecommunication infrastructure service providers, we may not be able to lease additional bandwidth on acceptable terms, on a timely basis, or at all. If we are not able to lease additional bandwidth, the development of our business can be affected.
However, as there are limited telecommunication infrastructure service providers, we may not be able to lease additional bandwidth on acceptable terms on a timely basis, or at all. If we are not able to lease additional bandwidth, the development of our business can be adversely affected.
Changyou may experience declines in its revenues or suffer net losses in the future due to a number of factors, including, among other things, expected continued declines in revenues from TLBB, Legacy TLBB Mobile, and TLBB 3D; the uncertain level of popularity of Changyou’s future games; uncertainty as to Changyou’s ability to develop and launch high-quality mobile games that are commercially successful; the relatively higher game development and distribution costs generally associated with mobile games; the need to expend greater amounts in order to develop or acquire new games, technologies, assets, and businesses; and uncertainty as to Changyou’s ability to integrate such newly acquired games, technologies, assets and businesses.
Changyou may continue to experience declines in its revenues or suffer net losses in the future due to a number of factors, including, among other things, expected continued declines in revenues from TLBB PC, TLBB 3D and Legacy TLBB Mobile; the uncertain level of popularity of Changyou’s future games; uncertainty as to Changyou’s ability to develop and launch high-quality mobile games that are commercially successful; the relatively higher game development and distribution costs generally associated with mobile games; the need to expend greater amounts in order to develop or acquire new games, technologies, assets, and businesses; and uncertainty as to Changyou’s ability to integrate such newly acquired games, technologies, assets and businesses.
For example, there are regulations which require that annual leave ranging from five to 15 days be made available to employees and that employees be compensated for any unused annual leave days at a rate of three times their daily salary, subject to certain exceptions. 29 Table of Contents Under the Social Insurance Law of the People’s Republic of China and Administrative Measures on Housing Fund , employees are required to participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance, maternity insurance and housing funds and employers are required, together with their employees or separately, to pay the social insurance premiums and housing funds for their employees.
For example, there are regulations which require that annual leave ranging from five to 15 days be made available to employees and that employees be compensated for any unused annual leave days at a rate of three times their daily salary, subject to certain exceptions. 30 Table of Contents Under the Social Insurance Law of the People’s Republic of China and the Administrative Measures on Housing Fund , employees are required to participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance, maternity insurance and housing funds and employers are required, together with their employees or separately, to pay the social insurance premiums and housing funds for their employees.
Changyou may fail to launch new games according to its timetable, and its new games may not be commercially successful. All online games have limited lifespans. Changyou must launch new games that can generate additional revenue and diversify its revenue sources in order to remain competitive.
Changyou may fail to launch new games according to its timetable, and its new games may not be commercially successful. All online games have limited lifespans. Changyou must continually launch new games that can generate additional revenue and diversify its revenue sources in order to remain competitive.
Under the Archives Rules, if a Chinese mainland domestic company wishes to provide or publicly disclose to investment bankers, or other securities and investment services providers or to regulators outside of the Chinese mainland (i) any information or materials that contain state secrets or work secrets of any regulatory authorities in the Chinese mainland or (ii) any other information or materials leakage of which could have an adverse impact on national security or public interests, the company must obtain approval from, and/or comply with filing or other regulatory requirements of, relevant authorities in the Chinese mainland before any such provision or disclosure.
Under the Archives Rules, if a Chinese mainland domestic company wishes to provide or publicly disclose to investment bankers, other securities and investment services providers, or regulators outside of the Chinese mainland (i) any information or materials that contain state secrets or work secrets of any regulatory authorities in the Chinese mainland or (ii) any other information or materials leakage of which could have an adverse impact on national security or the public interest, the company must obtain approval from, and/or comply with filing or other regulatory requirements of, relevant authorities in the Chinese mainland before any such provision or disclosure.
We have a history of using employee share options and restricted stock units to align employees’ interests with the interests of our shareholders and encourage quality employees to join us and retain our quality employees by providing competitive compensation packages.
We have a history of using employee share options and restricted share units to align employees’ interests with the interests of our shareholders and encourage quality employees to join us and retain our quality employees by providing competitive compensation packages.
In addition, for subsidiaries engaging in Sohu’s business in the Chinese mainland to be able to use the proceeds of cash dividends from Changyou, the dividends would have to be paid through the Sohu Cayman Islands entities Sohu Game that hold Sohu’s shares in Changyou.
In addition, for subsidiaries engaging in Sohu’s business in the Chinese mainland to be able to use the proceeds of cash dividends from Changyou, the dividends would have to be paid through the Sohu Cayman Islands entities that hold Sohu’s shares in Changyou.
Our Memorandum and Articles of Association authorizes our Board of Directors to designate and issue one or more series of preferred shares, having rights and preferences as the board may determine, and any such designations and issuances could have an adverse effect on the rights of holders of our ordinary shares and our ADSs. 43 Table of Contents Risks Related to Changyou.com Limited Risks Related to Changyou’s Business Overall Risks The markets for Changyou’s products and services are evolving rapidly and significantly, which makes evaluating its business and prospects difficult.
Our Memorandum and Articles of Association authorizes our Board of Directors to designate and issue one or more series of preferred shares, having rights and preferences as the board may determine, and any such designations and issuances could have an adverse effect on the rights of holders of our ordinary shares and our ADSs. 46 Table of Contents Risks Related to Changyou.com Limited Risks Related to Changyou’s Business Overall Risks The markets for Changyou’s products and services are evolving rapidly and significantly, which makes evaluating its business and prospects difficult.
If these standards do not develop, advertisers may choose not to advertise on the Internet in general or through our portals or search engines; • We may not have systems that are sufficiently well-developed to support our brand advertising business, and as a result, we may suffer system bugs that cause bad user experiences, errors, or omissions in publishing our client’s advertisements, which could have a negative impact on our brand advertising business.
If these standards do not develop, advertisers may choose not to advertise on the Internet in general or through our portals; • We may not have systems that are sufficiently well-developed to support our brand advertising business, and as a result, we may suffer system bugs that cause bad user experiences, errors, or omissions in publishing our client’s advertisements, which could have a negative impact on our brand advertising business.
In addition, Changyou’s ability to generate and maintain significant online advertising revenues will also depend upon: • the development of a large base of users possessing demographic characteristics attractive to advertising clients; • the development of successful mobile versions of the 17173.com Website and the provision of extensive mobile game-related products and services in response to the migration of users of Internet services from PCs to mobile devices, such as tablets and mobile phone; • the acceptance of online advertisements, either through PCs or mobile devices, as an effective method of business marketing; • the effectiveness of Changyou’s advertising delivery, tracking and reporting systems; • the extent of resistance from existing or potential customers to online advertising prices; and • the development of new formats for online advertising, such as streaming video.
In addition, Changyou’s ability to generate and maintain significant online advertising revenues will also depend upon: • the development of a large base of users possessing demographic characteristics attractive to advertising clients; 61 Table of Contents • the development of successful mobile versions of the 17173.com Website and the provision of extensive mobile game-related products and services in response to the migration of users of Internet services from PCs to mobile devices, such as tablets and mobile phone; • the acceptance of online advertisements, either through PCs or mobile devices, as an effective method of business marketing; • the effectiveness of Changyou’s advertising delivery, tracking and reporting systems; • the extent of resistance from existing or potential customers to online advertising prices; and • the development of new formats for online advertising, such as streaming video.
Although each of these members of Changyou’s management and key personnel has entered into an employment agreement with non-competition provisions, these non-competition provisions may not be enforceable in the Chinese mainland. 46 Table of Contents Changyou’s prospects for growth may be adversely affected if Changyou cannot successfully manage and make timely adjustments to its hiring needs to support its business strategies.
Although each of these members of Changyou’s management and key personnel has entered into an employment agreement with non-competition provisions, these non-competition provisions may not be enforceable in the Chinese mainland. 49 Table of Contents Changyou’s prospects for growth may be adversely affected if Changyou cannot successfully manage and make timely adjustments to its hiring needs to support its business strategies.
As a result, Changyou may be limited in its ability to assert intellectual property rights against online game developers who independently develop ideas and designs that compete with Changyou. 47 Table of Contents Changyou may be exposed to infringement or misappropriation claims by third parties, which, if determined adversely to it, could subject it to significant liabilities and other costs.
As a result, Changyou may be limited in its ability to assert intellectual property rights against online game developers who independently develop ideas and designs that compete with Changyou. 50 Table of Contents Changyou may be exposed to infringement or misappropriation claims by third parties, which, if determined adversely to it, could subject it to significant liabilities and other costs.
Furthermore, any interruptions in TLBB’s and Legacy TLBB Mobile’s operations could cause significant decreases in our revenues, net income, and operating cash flow. 12 Table of Contents We face intense competition, which could reduce our market share and adversely affect our financial performance. There are many companies that distribute online content and services targeting Chinese Internet users.
Furthermore, any interruptions in TLBB PC and Legacy TLBB Mobile’s operations could cause significant decreases in our revenues, net income, and operating cash flow. 12 Table of Contents We face intense competition, which could reduce our market share and adversely affect our financial performance. There are many companies that distribute online content and services targeting Chinese Internet users.
Changyou has the right to use trademarks including TLBB, TLBB logos, and TLBB 3D for its PC game TLBB and its mobile games TLBB 3D and Legacy TLBB Mobile under Changyou’s existing license agreements with the holder of the intellectual property rights with respect to the popular Chinese martial arts novel Tian Long Ba Bu written by Louis Cha, who died in 2018.
Changyou has the right to use trademarks including TLBB, TLBB logos, TLBB 3D and New TLBB for its PC game TLBB, and TLBB 3D, Legacy TLBB Mobile, TLBB Honor, and New TLBB Mobile for its mobile games under Changyou’s existing license agreements with the holder of the intellectual property rights with respect to the popular Chinese martial arts novel Tian Long Ba Bu written by Louis Cha, who died in 2018.
For example, a group of plaintiffs brought a lawsuit against Changyou in the Cayman Islands claiming that they were entitled to assert dissenters’ rights in the Changyou Merger.
For example, in 2020, a group of plaintiffs brought a lawsuit against Changyou in the Cayman Islands claiming that they were entitled to assert dissenters’ rights in the Changyou Merger.
For example: • Changyou may fail to provide game updates, expansion packs and other enhancements in a timely manner due to technological or resource limitations, or other factors; • Changyou’s game updates, expansion packs and new versions may contain programming errors, and their installation may create other unforeseen issues that adversely affect the game-playing experience; • Changyou may fail to timely respond and/or resolve complaints from its game players; • Changyou may fail to eliminate computer “bots” which can disrupt its games’ smooth operation and reduce the attractiveness of its games; and 55 Table of Contents • Changyou’s game updates, expansion packs and other enhancements may change rules or other aspects of its games that its game players do not welcome, resulting in a reduction in the active accounts or active paying accounts of its online games.
For example: • Changyou may fail to provide game updates, expansion packs and other enhancements in a timely manner due to technological or resource limitations, or other factors; • Changyou’s game updates, expansion packs and new versions may contain programming errors, and their installation may create other unforeseen issues that adversely affect the game-playing experience; • Changyou may fail to timely respond and/or resolve complaints from its game players; • Changyou may fail to eliminate computer “bots” which can disrupt its games’ smooth operation and reduce the attractiveness of its games; and • Changyou’s game updates, expansion packs and other enhancements may change rules or other aspects of its games that its game players do not welcome, resulting in a reduction in the active accounts or active paying accounts of its online games.
Changyou has the license rights to use the trademarks TLBB, TLBB logos and TLBB 3D for its mobile games TLBB 3D, Legacy TLBB Mobile, and TLBB Honor and for its PC game TLBB under its existing license agreements with the holder of the intellectual property rights with respect to the popular Chinese martial arts novel Tian Long Ba Bu written by Louis Cha, who died in 2018.
Changyou has the license rights to use the trademarks TLBB, TLBB logos, TLBB 3D and New TLBB for its PC game TLBB, and TLBB 3D, Legacy TLBB Mobile, TLBB Honor and New TLBB Mobile for its mobile games under Changyou’s existing license agreements with the holder of the intellectual property rights with respect to the popular Chinese martial arts novel Tian Long Ba Bu written by Louis Cha, who died in 2018.
A number of factors, including technical difficulties, lack of sufficient game development capabilities, personnel and other resources, failure to obtain or delays in obtaining relevant regulatory authorities’ approvals, adverse developments in Changyou’s relationships with the licensors or third-party operators of its new games, and outbreaks of health epidemics, such as the ongoing COVID-19 pandemic, which may cause our offices to close and our management and key employees to be absent from work due to illness, could result in delayed launching of its new games or the cancellation of the development of its pipeline games.
A number of factors, including technical difficulties, lack of sufficient game development capabilities, personnel and other resources, failure to obtain or delays in obtaining relevant regulatory authorities’ approvals, adverse developments in Changyou’s relationships with the licensors or third-party operators of its new games, and outbreaks of health epidemics and pandemics, such as the recent COVID-19 pandemic, which may cause our offices to close and our management and key employees to be absent from work due to illness, could result in delayed launching of its new games or the cancellation of the development of its pipeline games.
The Overseas Listing Measures will establish a new filing-based regime to regulate direct and indirect overseas offerings and listings by Chinese mainland domestic companies.
The Overseas Listing Measures establish a new filing-based regime to regulate direct and indirect overseas offerings and listings by Chinese mainland domestic companies.
We believe that these features have had a critical role in attracting and retaining many of the players of TLBB, Legacy TLBB Mobile, and TLBB 3D.
We believe that these features have had a critical role in attracting and retaining many of the players of TLBB, TLBB 3D, Legacy TLBB Mobile, and New TLBB Mobile.
In addition, substantial uncertainties exist regarding the interpretation and implementation of current and any future laws and regulations of the Chinese mainland applicable to the online game industry.
In addition, uncertainties exist regarding the interpretation and implementation of current and any future laws and regulations of the Chinese mainland applicable to the online game industry.
We compete with distributors of content and services over the Internet, including content sites, online games, Internet service providers and sites maintained by regulatory authorities, educational institutions and other institutions. These sites compete with us for user traffic, advertising dollars, online game players, potential partners and mobile services. The Internet market in the Chinese mainland continues to evolve.
We compete with distributors of content and services over the Internet, including content sites, online games, Internet service providers and sites maintained by regulatory authorities, educational institutions and other institutions. These sites compete with us for high-quality content, user traffic, advertising dollars, online game players, potential partners and mobile services. The Internet market in the Chinese mainland continues to evolve.
Furthermore, if the shareholders of any of the VIEs were involved in proceedings that had an adverse impact on their interests in the VIEs or on our ability to enforce relevant contracts related to the VIE structure, our business would be adversely affected. 26 Table of Contents The shareholders of the VIEs may breach, or cause the VIEs to breach, the VIE contracts for a number of reasons.
Furthermore, if the shareholders of any of the VIEs were involved in proceedings that had an adverse impact on their interests in the VIEs or on our ability to enforce relevant contracts related to the VIE structure, our business would be adversely affected. 27 Table of Contents The shareholders of the VIEs may breach, or cause the VIEs to breach, the VIE contracts for a number of reasons.
As a result, we could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations. If we are found to be in violation of current or future Chinese mainland laws, rules, and regulations regarding Internet-related services, telecom-related activities, and overseas listing, we could be subject to severe penalties.
As a result, we could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations. If we are found to be in violation of current or future Chinese mainland laws, rules, and regulations regarding Internet-related services, telecom-related activities, and overseas listings, we could be subject to severe penalties.
We believe that we may have been classified as a PFIC for United States federal income tax purposes for our taxable year ended November 30, 2022. There can be no assurance that we will not continue to be classified as a PFIC in the current taxable year or in any future taxable year.
We believe that we may have been classified as a PFIC for United States federal income tax purposes for our taxable year ended November 30, 2023. There can be no assurance that we will not continue to be classified as a PFIC in the current taxable year or in any future taxable year.
We also offer Web-based e-mail and subscription services, which expose us to potential liabilities or claims resulting from: • unsolicited e-mail; • lost or misdirected messages; • illegal or fraudulent use of e-mail; • interruptions or delays in e-mail service, or • illegal or inappropriate content included in advertisements on our platforms.
We also offer e-mail and subscription services, which expose us to potential liabilities or claims resulting from: • unsolicited e-mail; • lost or misdirected messages; • illegal or fraudulent use of e-mail; • interruptions or delays in e-mail service, or • illegal or inappropriate content included in advertisements on our platforms.
In addition, if for any reason we needed to cause the transfer of any of the shareholders’ equity interests in any of the VIEs to a different nominee shareholder (such as if, for example, one of such shareholders was no longer employed by us), we might be required to pay individual income tax, on behalf of the transferring shareholder, on any gain deemed to have been realized by such shareholder on such transfer. 27 Table of Contents We may lose the ability to use and enjoy assets held by one or more of the VIEs that are important to the operation of our business if such VIEs declare bankruptcy or become subject to dissolution or liquidation proceedings.
In addition, if for any reason we needed to cause the transfer of any of the shareholders’ equity interests in any of the VIEs to a different nominee shareholder (such as if, for example, one of such shareholders was no longer employed by us), we might be required to pay personal income tax, on behalf of the transferring shareholder, on any gain deemed to have been realized by such shareholder on such transfer. 28 Table of Contents We may lose the ability to use and enjoy assets held by one or more of the VIEs that are important to the operation of our business if such VIEs declare bankruptcy or become subject to dissolution or liquidation proceedings.
For example, under current tax laws and regulations of the Chinese mainland, in order to be entitled to the preferential tax treatment afforded to “Software Enterprises” or KNSEs we are responsible for conducting a self-assessment and filing required supporting documentation with tax authorities.
For example, under current tax laws and regulations of the Chinese mainland, in order to be entitled to the preferential tax treatment afforded to “Software Enterprises” we are responsible for conducting a self-assessment and filing required supporting documentation with tax authorities.
From time to time we have held, and as of December 31, 2022 and the date of this annual report hold, assets consisting of significant amounts of cash and cash equivalents and short-term investments, and a relatively smaller amount of assets consisting of long-term time deposits and long-term investments.
From time to time we have held, and as of December 31, 2023 and as of the date of this annual report we hold, assets consisting of significant amounts of cash and cash equivalents and short-term investments, and a relatively smaller amount of assets consisting of long-term time deposits and long-term investments.
Changyou faces significant risks associated with the licensing or joint operation of Changyou’s games, including: • difficulties in identifying appropriate markets; • difficulties in identifying, negotiating and maintaining good relationships with licensees or joint operators who are knowledgeable about, and can effectively operate Changyou’s games in, particular markets; • difficulties in maintaining Changyou’s reputation and the reputation of its games when its games are operated by licensees or joint operators pursuant to their own standards; and • difficulties in protecting Changyou’s intellectual property.
Changyou faces significant risks associated with the licensing or joint operation of Changyou’s games, including: • difficulties in identifying appropriate markets; • difficulties in identifying, negotiating and maintaining good relationships with licensees or joint operators who are knowledgeable about, and can effectively operate Changyou’s games in, particular markets; 57 Table of Contents • difficulties in maintaining Changyou’s reputation and the reputation of its games when its games are operated by licensees or joint operators pursuant to their own standards; and • difficulties in protecting Changyou’s intellectual property.
Various macroeconomic measures and monetary policies adopted by regulatory authorities in the Chinese mainland to guide economic growth and manage inflation and the allocation of resources may not be effective in sustaining the growth rate of the Chinese mainland’s economy.
Various macroeconomic measures and monetary policies adopted by regulatory authorities in the Chinese mainland to guide economic growth and manage inflation and/or deflation and the allocation of resources may not be effective in sustaining the growth rate of the Chinese mainland’s economy.
Despite the early success of Changyou’s mobile game TLBB 3D after Changyou introduced it in late 2014 and of Changyou’s mobile game Legacy TLBB Mobile after Changyou launched it in May 2017, the popularity of, and the revenues generated from, TLBB 3D and Legacy TLBB Mobile continued to decline from 2019 through 2022.
Despite the early success of Changyou’s mobile game TLBB 3D after Changyou introduced it in late 2014 and of Changyou’s mobile game Legacy TLBB Mobile after Changyou launched it in May 2017, the popularity of, and the revenues generated from, TLBB 3D and Legacy TLBB Mobile continued to decline from 2019 through 2023.
If its data systems fail to record data accurately, its ability to improve existing virtual items or design new virtual items that are appealing to its game players may be adversely affected, which could in turn adversely affect its revenues.
If its data systems fail to record data accurately, its ability to update existing virtual items or design new virtual items that are appealing to its game players may be adversely affected, which could in turn adversely affect its revenues.
If the SEC or the staff of the SEC (the “SEC Staff”) were to determine or argue that the current, or any future, mix of our assets consisting of cash and cash equivalents, short-term investments, long-term time deposits, and long-term investments could cause us to be an “investment company” under the Investment Company Act of 1940, in order to avoid such designation we could be required to place a relatively larger portion of such assets than we do at present in low-return investments.
If the SEC or a court were to determine, or if the staff of the SEC (the “SEC Staff”) were to take a position, that the current, or any future, mix of our assets consisting of cash and cash equivalents, short-term investments, long-term time deposits, and long-term investments could cause us to be an “investment company” under the Investment Company Act of 1940, in order to avoid such designation we could be required to place a relatively larger portion of such assets than we do at present in low-return investments.
In addition, we may not publish certain news items, such as news relating to national security, without permission from regulatory authorities in the Chinese mainland. Furthermore, the Ministry of Public Security (the “MPS”) has the authority to make any local Internet service provider block any Website maintained outside the Chinese mainland at its sole discretion.
In addition, we may not publish certain news items, such as news that compromises national security, without permission from regulatory authorities in the Chinese mainland. Furthermore, the Ministry of Public Security (the “MPS”) has the authority to make any local Internet service provider block any Website maintained outside the Chinese mainland at its sole discretion.
Accordingly, holders of our ADSs may be unable to participate in our rights offerings and may experience dilution in their holdings. 40 Table of Contents In addition, the depositary of our ADSs has agreed to pay to ADS holders the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses.
Accordingly, holders of our ADSs may be unable to participate in our rights offerings and may experience dilution in their holdings. In addition, the depositary of our ADSs has agreed to pay to ADS holders the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses.
If Changyou falls behind in adopting new technologies or standards, its existing games may lose popularity, its newly developed games may not be well received in the marketplace. The proliferation of “cheating” programs and scam offers that seek to exploit Changyou’s games and players harms the game-playing experience and may lead players to stop playing its games.
If Changyou falls behind in adopting new technologies or standards, its existing games may lose popularity, its newly developed games may not be well received in the marketplace. 60 Table of Contents The proliferation of “cheating” programs and scam offers that seek to exploit Changyou’s games and players harms the game-playing experience and may lead players to stop playing its games.
If we fail to promote our brands successfully or if our users or advertisers do not perceive our content and services to be of high quality, we may not be able to continue growing our business and attracting users, advertisers, online game players and mobile users. 14 Table of Contents Our failure to keep up with rapid technology changes may severely affect our future success.
If we fail to promote our brands successfully or if our users or advertisers do not perceive our content and services to be of high-quality, we may not be able to continue growing our business and attracting users, advertisers, online game players and mobile users. Our failure to keep up with rapid technology changes may severely affect our future success.
For a discussion of the risks associated with laws and regulations of the Chinese mainland affecting online games in general and mobile games in particular, see “Risks Related to Doing Business in the Chinese Mainland” in this Item 3 of this annual report. Changyou’s new games may attract game players away from its existing games.
For a discussion of the risks associated with laws and regulations of the Chinese mainland affecting online games in general and mobile games in particular, see “Risks Related to Doing Business in the Chinese Mainland” in this Item 3 of this annual report. 55 Table of Contents Changyou’s new games may attract game players away from its existing games.
These arrangements pose substantial risks to us and our shareholders that are not present in conventional arrangements where operations are conducted through direct and indirect subsidiaries of holding companies. The MIIT issued a circular in 2006 that emphasizes restrictions on foreign investment in value-added telecommunications businesses.
These arrangements pose substantial risks to us and our shareholders that are not present in conventional arrangements where operations are conducted through direct and indirect subsidiaries of holding companies. 25 Table of Contents The MIIT issued a circular in 2006 that emphasizes restrictions on foreign investment in value-added telecommunications businesses.
Charles Zhang or one of the other shareholder borrowers, as the case may be, is not an employee of us. We do not intend to request repayment of the loans as long as Chinese mainland regulations prohibit our WFOEs from engaging, or owning entities engaged, in the businesses operated by the VIEs.
Charles Zhang or one of the other shareholder borrowers, as the case may be, is not an employee of us. We do not intend to request repayment of the loans as long as Chinese mainland regulations prohibit our Chinese mainland-based subsidiaries from engaging, or owning entities engaged, in the businesses operated by the VIEs.
Our competitors may establish the same relationships as we have, which may adversely affect us. We may not be able to maintain these relationships or replace them on commercially attractive terms. 16 Table of Contents We depend on key personnel and our business may be severely disrupted if we lose the services of our key executives and employees.
Our competitors may establish the same relationships as we have, which may adversely affect us. We may not be able to maintain these relationships or replace them on commercially attractive terms. We depend on key personnel and our business may be severely disrupted if we lose the services of our key executives and employees.
Furthermore, regulatory authorities in the Chinese mainland have recently been drawing attention to issues regarding the infringement of online intellectual property rights. For example, a regulatory program, called the “Jian Wang Campaign,” aimed at cracking down on network copyright infringement, has been in effect for several years.
Furthermore, regulatory authorities in the Chinese mainland have recently been drawing attention to issues regarding the infringement of online intellectual property rights. For example, a regulatory program called the “Jian Wang Campaign” aimed at cracking down on network copyright infringement, has been in effect for several years.
In order to reduce our video content costs, in recent years, we have gradually shifted our strategy from purchasing expensive head content to self-producing content, which generally generates less user traffic and revenues than purchased content does and has adversely affected, and may continue to adversely affect, our brand advertising revenues.
In order to reduce our video content costs, in recent years we have gradually shifted our strategy from purchasing expensive head content to providing self-developed content, which generally generates less user traffic and revenues than purchased content does and has adversely affected, and may continue to adversely affect, our brand advertising revenues.
We believe that we may have been classified as a passive foreign investment company (a “PFIC”), for the 2022 taxable year, which would likely result in adverse United States federal income tax consequences to U.S. holders of our ADSs or ordinary shares.
We believe that we may have been classified as a passive foreign investment company (a “PFIC”), for our 2023 taxable year, which would likely result in adverse United States federal income tax consequences to U.S. holders of our ADSs or ordinary shares.
Accordingly, in order to comply with Chinese mainland regulatory requirements while providing our shareholders with the opportunity to hold economic interests in results of Chinese mainland operations in those industries, the VIEs conduct operations in those industries where foreign investment is prohibited or restricted in the Chinese mainland, and the results of operations of the VIEs only accrue to us through a series of contractual arrangements between the VIEs and/or their shareholders, on the one hand, and certain of our WFOEs and/or their wholly-owned subsidiaries, on the other hand.
Accordingly, in order to comply with Chinese mainland regulatory requirements while providing our shareholders with the opportunity to hold economic interests in the results of the Chinese mainland operations of those businesses, the VIEs conduct operations of those businesses where foreign investment is prohibited or restricted in the Chinese mainland, and the results of operations of the VIEs only accrue to us through a series of contractual arrangements between certain of the VIEs and/or their shareholders, on the one hand, and certain of our Chinese mainland-based wholly-owned subsidiaries, on the other hand.
On February 24, 2023, the CSRC published the revised Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering s and Listing s by Domestic Companies (the “Archives Rules”), which will take effect on March 31, 2023. The Archives Rules will apply to indirect Offshore offerings and listings by Chinese mainland domestic companies.
On February 24, 2023, the CSRC published the revised Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering s and Listing s by Chinese Mainland Domestic Companies (the “Archives Rules”), which took effect on March 31, 2023. The Archives Rules apply to indirect Offshore offerings and listings by Chinese mainland domestic companies.
See “Changyou may not be successful in operating and improving its games to satisfy the changing demands of game players.” To prolong TLBB PC and Legacy TLBB Mobile’s lifespans and slow the pace of their decline, Changyou needs to continually improve and update them on a timely basis with new features, including enhanced social interaction features, that appeal to existing game players, attract new game players (including those who played earlier versions of TLBB PC and Legacy TLBB Mobile), and improve player stickiness to the game.
See “Changyou may not be successful in operating and improving its games to satisfy the changing demands of game players.” 51 Table of Contents To prolong TLBB PC and Legacy TLBB Mobile’s lifespans and slow the pace of their decline, Changyou needs to continually improve and update them on a timely basis with new features, including but not limited to enhanced social interaction features, that appeal to existing game players, attract new game players (including those who played earlier versions of TLBB PC and Legacy TLBB Mobile), and improve player stickiness to the games.
For example, the revenues generated from Changyou’s mobile game Legacy TLBB Mobile, which was launched in May 2017, declined sequentially from 2018 through 2022, which is typical for a mobile game.
For example, the revenues generated from Changyou’s mobile game Legacy TLBB Mobile, which was launched in May 2017, declined sequentially from 2018 through 2023, which is typical for a mobile game.
Any breaches by hackers of Changyou’s network or of cloud-based servers Changyou leases from third-party operators could cause severe disruptions in its game development and operations and other business activities, allow piracy of the source code used in the operation of its games and allow pirated versions of its games to enter the marketplace, or result in the release of confidential personal or financial information of its game players or confidential information concerning Changyou’s business, any of which could have an adverse impact on Changyou’s business, its revenues, and its reputation among game players.
Any breaches by hackers of Changyou’s network or of cloud-based servers Changyou leases from third-party operators could cause severe disruptions in its game development and operations and other business activities, allow piracy of the source code used in the operation of its games and allow pirated versions of its games to enter the marketplace, or result in the release of confidential personal or financial information of its game players or confidential information concerning Changyou’s business, breaches in the security of Changyou’s server network, including cloud-based servers that Changyou leases from third-party operators, could cause disruptions in its service or operations, any of which could have an adverse impact on Changyou’s business, its revenues, and its reputation among game players.
In addition, if we are accused by any regulatory authority of hosting vulgar content, our reputation could be adversely affected. 34 Table of Contents Regulations relating to the online transmission of foreign films and TV dramas may adversely affect our online video business.
In addition, if we are accused by any regulatory authority of hosting vulgar content, our reputation could be adversely affected. Regulations relating to the online transmission of foreign films and TV dramas may adversely affect our online video business.
The lack of such inspections in the future could cause investors and potential investors in our ADSs to lose confidence in our registered public accounting firm’s audit and quality control procedures, our reported financial information, and the quality of our financial statements, and cause the market value of our ADSs to decline significantly. 38 Table of Contents The U.S.
The lack of such inspections in the future could cause investors and potential investors in our ADSs to lose confidence in our registered public accounting firm’s audit and quality control procedures, our reported financial information, and the quality of our financial statements, and cause the market value of our ADSs to decline significantly. The U.S.
Our business has been and could in the future be adversely affected by natural disasters, such as earthquakes, floods, landslides, and tsunamis; terrorist attacks and other acts of violence or war; social instability; and recurrences of outbreaks of previous health epidemics such avian influenza, severe acute respiratory syndrome (or “SARS”), the Zika virus, and the Ebola virus; or new outbreaks of health epidemics.
Our business has been and could in the future be adversely affected by natural disasters, such as earthquakes, floods, landslides, and tsunamis; terrorist attacks and other acts of violence or war; social instability; and recurrences of outbreaks of previous health epidemics and pandemics such as avian influenza, severe acute respiratory syndrome (or “SARS”), the Zika virus, the Ebola virus, and COVID-19.
Changyou may not be able to efficiently or effectively implement its growth strategies and manage the growth of its operations, and any failure to do so may limit its future growth and hamper its business strategy. Changyou may not be able to avoid slowing growth or declines in its revenues, or future losses.
Changyou may not be able to efficiently or effectively implement its growth strategies and manage the growth of its operations, and any failure to do so may limit its future growth and hamper its business strategy. 48 Table of Contents Changyou may not be able to avoid slowing growth or declines in its revenues, or future losses.
Changyou’s ability to avoid further declines in, or grow, its online advertising revenues may be adversely affected by any of the following risk factors: • Changes in regulatory policy could restrict or curtail Changyou’s online advertising services; • The decline in the demand for online advertising services from developers and operators of PC games, as the relative popularity of such games continues to decline; • Advertising clients may adopt new methods and strategies other than online advertising to promote their brands, which would have an adverse impact on Changyou’s advertising revenues; and • The acceptance of the Internet as a medium for advertising depends on the development of a measurement standard.
Changyou’s ability to avoid further declines in, or grow, its online advertising revenues may be adversely affected by any of the following risk factors: • The decline in the demand for online advertising services from developers and operators of PC games, as the relative popularity of such games continues to decline; • Advertising clients may adopt new methods and strategies other than online advertising to promote their brands, which would have an adverse impact on Changyou’s advertising revenues; • The acceptance of the Internet as a medium for advertising depends on the development of a measurement standard.
Also see “We may be subject to intellectual property infringement claims, which may force us to incur substantial legal expenses and, if determined adversely to us, materially disrupt our business.” Our business also depends significantly on relationships with leading technology and infrastructure providers and the licenses that the technology providers have granted to us.
Also see “We may be subject to intellectual property infringement claims, which may force us to incur substantial legal expenses and, if determined adversely to us, materially disrupt our business.” 16 Table of Contents Our business also depends significantly on relationships with leading technology and infrastructure providers and the licenses that the technology providers have granted to us.
The Ministry of Culture and Tourism of the People’s Republic of China (the “MCT”) issued an Online Performance Notice , which became effective on July 1, 2016, and issued the Online Performance Measures, which became effective on January 1, 2017; the CAOC issued Live Social Video Provisions on November 4, 2016; and the MIIT and several other regulatory authorities in the Chinese mainland issued a Notice on Strengthening the Administration of Live Online Social Video Services on August 1, 2018, providing for the administration and censorship of live broadcasting.
The Ministry of Culture and Tourism of the People’s Republic of China (the “MCT”) issued an Online Performance Notice , which became effective on July 1, 2016, and issued the Online Performance Measures, which became effective on January 1, 2017; the CAOC issued the Provisions on the Administration of Online Live Social Video Services (the “Live Social Video Provisions”), which became effective on December 1, 2016; and the MIIT and several other regulatory authorities in the Chinese mainland issued a Notice on Strengthening the Administration of Live Online Social Video Services on August 1, 2018, providing for the administration and censorship of live broadcasting.
In the meantime, the Ministry of Industry and Information Technology (the “MIIT”) and other regulatory authorities in the Chinese mainland can be expected to regularly promulgate standards and other regulations regarding Internet software and other Internet-based technologies. Adapting to any such standards and regulations could require us to make significant expenditures in the future.
In the meantime, the Ministry of Industry and Information Technology (the “MIIT”) and other regulatory authorities in the Chinese mainland can be expected to regularly promulgate standards and other regulations regarding Internet software and other Internet-based technologies. Adapting to such standards and regulations, including any regarding emerging artificial intelligence technology, could require us to make significant expenditures in the future.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeLaws and Regulations Related to Security and Censorship The principal pieces of laws and regulations of the Chinese mainland concerning information security and censorship are: • The Internet Security Law (2017); • The Measures for Cybersecurity Review (2022); • The Regulations on Security Protection of Critical Information Infrastructure (2021); • The Data Security Law (2021); • The Draft Data Security Regulations (2021); • The Law of the People’s Republic of China on the Preservation of State Secrets (1988, as amended in 2010) and related Implementing Rules (2014); • The Anti-spy Law of the People’s Republic of China (2014); • The Working Regulations for Anti-spy Security Precautions (2021); • Rules of the People’s Republic of China for Protecting the Security of Computer Information Systems (1994, as amended in 2011); • Administrative Regulations for the Protection of Secrecy on Railway Computer Information Systems Connected to International Networks (1999); • Regulations for the Protection of State Secrets for Computer Information Systems on the Internet (2000); • Notice issued by the Ministry of Public Security of the People’s Republic of China Regarding Issues Relating to the Implementation of the Administrative Measure for the Security Protection of International Connections to Computer Information Networks (2000); and • The Decision of the Standing Committee of the National People’s Congress Regarding the Safeguarding of Internet Security (2000) which has been amended in 2009. 94 Table of Contents These laws and regulations specifically prohibit the use of Internet infrastructure where it results in a breach of public security, the provision of socially destabilizing content or the divulgence of State secrets, as follows: • “A breach of public security” includes a breach of national security or disclosure of state secrets; infringement on state, social or collective interests or the legal rights and interests of citizens or illegal or criminal activities. • “Socially destabilizing content” includes any action that incites defiance or violation of Chinese mainland law; incites subversion of state power and the overturning of the socialist system; fabricates or distorts the truth, spreads rumors or disrupts social order; advocates cult activities; spreads feudal superstition; involves obscenities, pornography, gambling, violence, murder, or horrific acts; or instigates criminal acts. • “State secrets” are defined as “matters that affect the security and interest of the state.” The term covers such broad areas as national defense, diplomatic affairs, policy decisions on state affairs, national economic and social development, political parties and “other State secrets that the State Secrecy Bureau has determined should be safeguarded.” Under the laws and regulations discussed above, it is mandatory for Chinese mainland-based Internet companies to complete security filing procedures with the local public security bureau and for them provide regular updates to the local public security bureau regarding information security and censorship systems for their Websites.
Biggest changeThese laws and regulations specifically prohibit the use of Internet infrastructure where it results in a breach of public security, the provision of socially destabilizing content or the divulgence of State secrets, as follows: • “A breach of public security” includes a breach of national security or disclosure of state secrets; infringement on state, social or collective interests or the legal rights and interests of citizens or illegal or criminal activities. • “Socially destabilizing content” includes any action that incites defiance or violation of Chinese mainland law; incites subversion of state power and the overturning of the socialist system; fabricates or distorts the truth, spreads rumors or disrupts social order; advocates cult activities; spreads feudal superstition; involves obscenities, pornography, gambling, violence, murder, or horrific acts; or instigates criminal acts. • “State secrets” are defined as “matters that affect the security and interest of the state.” The term covers such broad areas as national defense, diplomatic affairs, policy decisions on state affairs, national economic and social development, political parties and “other State secrets that the State Secrecy Bureau has determined should be safeguarded.” Under the laws and regulations discussed above, it is mandatory for Chinese mainland-based Internet companies to complete security filing procedures with the local public security bureau and for them provide regular updates to the local public security bureau regarding information security and censorship systems for their Websites.
We provide users free access to the majority of our extensive and comprehensive video content library, which includes popular domestic and overseas television programs purchased from third parties; self-developed video content; variety shows; UGC; PGC; and other content generated through live broadcasting. We also offer selected content from which we generate subscription revenues.
We provide users free access to the majority of our extensive and comprehensive video content library, which includes popular domestic and overseas television programs purchased from third parties; self-developed video content; variety shows; PGC; UGC; and other content generated through live broadcasting. We also offer selected content from which we generate subscription revenues.
The 17173.com Website provides news, electronic forums, online videos, and other online game information services to game players, as well as mobile game distribution services. Changyou generates online advertising revenues from providing advertising services to third-party advertisers on the 17173.com Website and online game revenues from mobile game distribution services.
The 17173.com Website provides news, electronic forums, online videos, and other online game information services to game players, as well as mobile game distribution services. Changyou generates online advertising revenues from providing advertising services to third-party advertisers on the 17173.com Website and online game revenues from mobile game distribution services.
Such service providers must provide notice of the purpose, methods and scope of their collection and use of user information, and obtain the consent of each person whose personal information will be collected.
Such service providers must provide notice of the purpose, methods and scope of their collection and use of user information, and obtain the consent of each person whose personal information will be collected.
We also filed registration of trademarks relating to our subsidiary companies’ names and Changyou’s online games and other businesses in various countries and regions, such as the United States, European Union, Japan, South Korea, Malaysia, Brazil, Taiwan and Hong Kong. Our rights to these marks could be affected adversely if any of our applications are rejected.
We also filed registration of trademarks relating to our subsidiary companies’ names and Changyou’s online games and other businesses in various countries and regions, such as the United States, European Union, Japan, Korea, Malaysia, Brazil, Taiwan, and Hong Kong. Our rights to these marks could be affected adversely if any of our applications are rejected.
The Internet Audio-Video Program Catalogue classifies Internet audio-video program services (excluding IPTV, Internet TV and mobile TV services) provided to computer and mobile phone users the Internet into four categories, consisting of (i) Internet audio-video programs sponsored and broadcast through Internet radio and television stations, including political news, political talk shows, self-produced news programs and live programs of vital political, military, economic, social and sports activities; (ii) reprints of political news, Internet hosting, interviews, report and commentary services in entertainment, technology, financial, sports and educational audio-video programs, production and broadcasting of Internet dramas, compilation and broadcasting of entertainment, technology, financial, sports and education audio-video programs, and live broadcasting of cultural and sports activities; (iii) the aggregation of Internet audio-video programs, which means editing and arranging Internet audio-visual programs on the same website, providing search and viewing services to public users, and broadcasting user-uploaded audio-video programs; and (iv) retransmission of Internet audio-video programs.
The Internet Audio-Video Program Catalogue classifies Internet audio-video program services (excluding IPTV, Internet TV and mobile TV services) provided to computer and mobile phone users the Internet into four categories, consisting of (i) Internet audio-video programs sponsored and broadcast through Internet radio and television stations, including political news, political talk shows, self-produced news programs and live programs of vital political, military, economic, social and sports activities; (ii) reprints of political news, Internet hosting, interviews, report and commentary services in entertainment, technology, financial, sports and educational audio-video programs, production and broadcasting of Internet dramas, compilation and broadcasting of entertainment, technology, financial, sports and education audio-video programs, and live broadcasting of cultural and sports activities; (iii) the aggregation of Internet audio-video programs, which means editing and arranging Internet audiovisual programs on the same website, providing search and viewing services to public users, and broadcasting user-uploaded audio-video programs; and (iv) retransmission of Internet audio-video programs.
The majority of our products and services are provided in the Chinese mainland through Sohu Media Portal, Sohu Video and Focus. Sources Sohu Media Portal Sohu Media Portal is a leading online news, information and content services provider in the Chinese mainland. We provide users comprehensive content by aggregating content from professional media organizations and partnering with independent contributors.
The majority of our products and services are provided in the Chinese mainland through Sohu Media Portal and Sohu Video. Sources Sohu Media Portal Sohu Media Portal is a leading online news, information and content services provider. We provide users comprehensive content by aggregating content from professional media organizations and partnering with independent contributors.
Currently we have three main types of pricing models, consisting of the Fixed Price model, the Cost Per Impression (“CPM”) model, and the Cost Per Click (“CPC”) model. Fixed Price model Under the Fixed Price model, a contract is signed to establish a fixed price for the advertising services to be provided.
We have three main types of pricing models, consisting of the Fixed Price model, the Cost Per Impression (“CPM”) model, and the Cost Per Click (“CPC”) model. Fixed Price model Under the Fixed Price model, a contract is signed to establish a fixed price for the advertising services to be provided.
The New Advertising Law, which was a major overhaul of an advertising law enacted in 1994, increases the potential legal liability of providers of advertising services, and includes provisions intended to strengthen identification of false advertising and the power of regulatory authorities.
The New Advertising Law, which was a major overhaul of an advertising law enacted in 1994, increases the potential legal liability of providers of advertising services, and includes provisions intended to strengthen identification of false advertising and the power of relevant regulatory authorities.
The Network Dissemination of Information Provisions stipulate that the dissemination by network users or network service providers of written works, performances or audio or video recordings without the permission of the holder of the rights to such dissemination will constitute infringement of such rights, and that network service providers that aid or abet any network user’s infringement of the rights of another to network dissemination of any works or recordings may be liable for such network user’s infringing activities. 90 Table of Contents Patent On March 12, 1984, the Standing Committee of the National People’s Congress promulgated the Patent Law, which was amended in 1992, 2000, 2008 and 2020.
The Network Dissemination of Information Provisions stipulate that the dissemination by network users or network service providers of written works, performances or audio or video recordings without the permission of the holder of the rights to such dissemination will constitute infringement of such rights, and that network service providers that aid or abet any network user’s infringement of the rights of another to network dissemination of any works or recordings may be liable for such network user’s infringing activities. 96 Table of Contents Patent On March 12, 1984, the Standing Committee of the National People’s Congress promulgated the Patent Law, which was amended in 1992, 2000, 2008 and 2020.
If an ICP operator knowingly transmits infringing content or fails to take remedial actions after receipt of a notice of infringement harming public interest, the ICP operator could be subject to administrative penalties, including an order to cease infringing activities; confiscation by the authorities of all income derived from the infringement activities; or payment of fines. 89 Table of Contents On May 18, 2006, the State Council promulgated the Regulations on the Protection of the Right to Network Dissemination of Information (as amended in 2013).
If an ICP operator knowingly transmits infringing content or fails to take remedial actions after receipt of a notice of infringement harming public interest, the ICP operator could be subject to administrative penalties, including an order to cease infringing activities; confiscation by the authorities of all income derived from the infringement activities; or payment of fines. 95 Table of Contents On May 18, 2006, the State Council promulgated the Regulations on the Protection of the Right to Network Dissemination of Information (as amended in 2013).
In addition, operators identified as engaging in dishonest activities under the Credit Measures may be subject to a series of regulatory measures, such as strict daily supervision and frequent random inspection from MCT or its local counterparts. 79 Table of Contents On July 1, 2016, the MCT issued a Notice on Strengthening the Administration of Online Performanc e (the “Online Performance Notice”) and on December 2, 2016, issued the Measures of Administration of Online Performance Operating Activities (the “Online Performance Measures”), which became effective on January 1, 2017.
In addition, operators identified as engaging in dishonest activities under the Credit Measures may be subject to a series of regulatory measures, such as strict daily supervision and frequent random inspection from MCT or its local counterparts. 84 Table of Contents On July 1, 2016, the MCT issued a Notice on Strengthening the Administration of Online Performanc e (the “Online Performance Notice”) and on December 2, 2016, issued the Measures of Administration of Online Performance Operating Activities (the “Online Performance Measures”), which became effective on January 1, 2017.
The majority of our products and services are provided in the Chinese mainland through Sohu Media Portal, Sohu Video and Focus. • Sohu Media Portal. Sohu Media Portal is a leading online news, information and content services provider in the Chinese mainland.
The majority of our products and services are provided in the Chinese mainland through Sohu Media Portal and Sohu Video. • Sohu Media Portal. Sohu Media Portal is a leading online news, information and content services provider.
The laws and regulations affecting the Internet industry in the Chinese mainland and other aspects of our business are evolving. There are substantial uncertainties regarding the interpretation and enforcement of laws and regulations of the Chinese mainland.
The laws and regulations affecting the Internet industry in the Chinese mainland and other aspects of our business are evolving. There are uncertainties regarding the interpretation and enforcement of laws and regulations of the Chinese mainland.
The Internet Publishing Rules define “Internet publications” as digital works that are edited, produced or processed to be published and provided to the public through the Internet, including (i) original digital works, such as pictures, maps, games, and comics; (ii) digital works with content that is consistent with the type of content that, prior to the Internet age, typically was published in media such as books, newspapers, periodicals, audio-visual products, and electronic publications; (iii) digital works in the form of online databases compiled by selecting, arranging and compiling other types of digital works; and (iv) other types of digital works identified by the SAPPRFT.
The Internet Publishing Rules define “Internet publications” as digital works that are edited, produced or processed to be published and provided to the public through the Internet, including (i) original digital works, such as pictures, maps, games, and comics; (ii) digital works with content that is consistent with the type of content that, prior to the Internet age, typically was published in media such as books, newspapers, periodicals, audiovisual products, and electronic publications; (iii) digital works in the form of online databases compiled by selecting, arranging and compiling other types of digital works; and (iv) other types of digital works identified by the SAPPRFT.
Requirements of News Regulations include, among other things, the following: • Internet news information service providers must be entities duly incorporated within the territory of the Chinese mainland; • Managers and chief editors of Internet news information service providers must be citizens of the Chinese mainland; • Internet news information service providers must have personnel who have appropriate qualification and professional training; • Internet news information service providers must have sound Internet news information service management systems; • Internet news information service providers must have rigorous information security management systems; • Internet news information service providers must have facilities that are suitable for their proposed services, and must be adequately funded; and • Internet news information service providers may only republish news published by governmental news agencies and must ensure the original sources are traceable.
Requirements of News Regulations include, among other things, the following: • Internet news information service providers must be entities duly incorporated within the territory of the Chinese mainland; • Managers and chief editors of Internet news information service providers must be citizens of the Chinese mainland; • Internet news information service providers must have personnel who have appropriate qualification and professional training; • Internet news information service providers must have sound Internet news information service management systems; 80 Table of Contents • Internet news information service providers must have rigorous information security management systems; • Internet news information service providers must have facilities that are suitable for their proposed services, and must be adequately funded; and • Internet news information service providers may only republish news published by governmental news agencies and must ensure the original sources are traceable.
The New Advertising Law and the Online Advertising Measures both provide that advertisements posted or published through the Internet may not affect users’ normal usage of a network, and advertisements published in the form of pop-up windows on the Internet must display a “close” sign prominently and ensure one-key closing of the pop-up windows.
The New Advertising Law and the Online Advertising Measures both provide that advertisements posted or published over the Internet may not affect users’ normal usage of a network, and advertisements published in the form of pop-up windows on the Internet must display a “close” sign prominently and ensure one-key closing of the pop-up windows.
On September 2, 2021, the NRTA issued the Notice on Further Strengthening the Management of Arts and Their Personnel , under which online audio-visual platforms are required to strictly control the selection of actors and are prohibited from engaging actors with political positions considered to be wrong or who engage in deeds or use words considered to be immoral, actors considered to not be adhering to an acceptable level of social fairness and justice, or actors violating laws, regulations, or the public order.
On September 2, 2021, the NRTA issued the Notice on Further Strengthening the Management of Arts and Their Personnel , under which online audiovisual platforms are required to strictly control the selection of actors and are prohibited from engaging actors with political positions considered to be wrong or who engage in deeds or use words considered to be immoral, actors considered to not be adhering to an acceptable level of social fairness and justice, or actors violating laws, regulations, or the public order.
The 2012 SAPPRFT Notice 53 further stipulates that online audio-visual service providers must review the content of Internet audiovisual programs prior to their transmission and must file certain information, such as the names of the Internet audiovisual programs, summaries of their content, and names of the persons conducting the reviews, with the appropriate provincial office of the SAPPRFT.
The 2012 SAPPRFT Notice 53 further stipulates that online audiovisual service providers must review the content of Internet audiovisual programs prior to their transmission and must file certain information, such as the names of the Internet audiovisual programs, summaries of their content, and names of the persons conducting the reviews, with the appropriate provincial office of the SAPPRFT.
Charles Zhang and Wei Li hold 80% and 20% interests, respectively, in this entity; • Beijing Sohu Internet Information Service Co., Ltd., or Sohu Internet, incorporated in 2003. High Century holds a 100% interest in this entity; 104 Table of Contents • Beijing Gamease Age Digital Technology Co., Ltd., or Gamease, incorporated in 2007.
Charles Zhang and Wei Li hold 80% and 20% interests, respectively, in this entity; • Beijing Sohu Internet Information Service Co., Ltd., or Sohu Internet, incorporated in 2003. High Century holds a 100% interest in this entity; 112 Table of Contents • Beijing Gamease Age Digital Technology Co., Ltd., or Gamease, incorporated in 2007.
We have registered 3,719 trademarks with the Trademark Office of the CNIPA, including the marks “SOHU.com,” “ChangYou.com,” and “cyou.com” and marks relating to our products such as Sohu.com, Sohu Fox, GoodFeel, Sohu Focus, Blade Online, and 17173, and the corresponding Chinese versions of the marks.
We have registered 3,538 trademarks with the Trademark Office of the CNIPA, including the marks “SOHU.com,” “ChangYou.com,” and “cyou.com” and marks relating to our products such as Sohu.com, Sohu Fox, GoodFeel, Sohu Focus, Blade Online, and 17173, and the corresponding Chinese versions of the marks.
Competition for Changyou’s Business Online Game Business In the online game industry, Changyou competes principally with online game developers and operators in the Chinese mainland, such as Archosaur, Century Huatong (formerly known as Shanda), Giant, IGG, Lilith, miHoYo, NetDragon, NetEase, Perfect World and Tencent. 70 Table of Contents Platform Channel Business In the platform channel business, Changyou’s game information portal operated through the 17173.com Website competes in the Chinese mainland with other game information portals, such as Game.sina.com.cn, operated by Sina Corporation.
Competition for Changyou’s Business Online Game Business In the online game industry, Changyou competes principally with online game developers and operators in the Chinese mainland, such as Archosaur, Century Huatong (formerly known as Shanda), Giant, IGG, Lilith, miHoYo, NetDragon, NetEase, Perfect World and Tencent. 74 Table of Contents Platform Channel Business In the platform channel business, Changyou’s game information portal operated through the 17173.com Website competes in the Chinese mainland with other game information portals, such as games.sina.com.cn, operated by Sina Corporation.
The “MCT” as used in this annual report refers to the regulatory authority that resulted from the merger, as well as to the MOC and the CNTA separately for periods prior to the merger; • the MPS; • the MOFCOM; 71 Table of Contents • the SAMR, which resulted from the merger of, and assumed the responsibilities previously held by, the State Administration for Industry and Commerce (the “SAIC”), the General Administration of Quality Supervision, Inspection and Quarantine (the “AQSIQ”), the Certification and Accreditation Administration, the Standardization Administration of China (the “SAC”), and the State Food and Drug Administration (the “SFDA”).
The “MCT” as used in this annual report refers to the regulatory authority that resulted from the merger, as well as to the MOC and the CNTA separately for periods prior to the merger; • the MPS; • the MOFCOM; • the SAMR, which resulted from the merger of, and assumed the responsibilities previously held by, the State Administration for Industry and Commerce (the “SAIC”), the General Administration of Quality Supervision, Inspection and Quarantine (the “AQSIQ”), the Certification and Accreditation Administration, the Standardization Administration of China (the “SAC”), and the State Food and Drug Administration (the “SFDA”).
Certain intermediate holding companies that are not significant to the Sohu Group have been eliminated. 102 Table of Contents 103 Table of Contents Principal Subsidiaries The following are our principal subsidiaries: • Sohu.com (Hong Kong) Ltd., or Sohu HK, established in 2000; • Beijing Sohu New Era Information Technology Co., Ltd., or Sohu Era, established in 2003; • Sohu.com (Search) Limited, or Sohu Search, established in 2005; • Beijing Sohu New Media Information Technology Co., Ltd., or Sohu Media, established in 2006; • Changyou.com Limited, or Changyou, established in 2007; • Changyou.com (HK) Limited, or Changyou HK, established in 2007; • Beijing AmazGame Age Internet Technology Group Co., Ltd., or AmazGame, established in 2007; • Sohu.com (Game) Limited, or Sohu Game, established in 2008; • Beijing Changyou Gamespace Software Technology Co., Ltd., or Gamespace, established in 2009; • Changyou.com Korea LLC, or Changyou Korea, established in 2010; • Beijing Sohu New Momentum Information Technology Co., Ltd., or Sohu New Momentum, established in 2010; • Fox Information Technology (Tianjin) Limited, or Video Tianjin, established in 2011; • Sohu Focus Limited, or Sohu Focus, established in 2013; • Sohu Focus (HK) Limited, or Focus HK, established in 2013; and • Beijing Changyou Chuangxiang Software Technology Co., Ltd., or Changyou Chuangxiang, established in 2016.
Certain intermediate holding companies that are not significant to the Sohu Group have been eliminated. 110 Table of Contents 111 Table of Contents Principal Subsidiaries The following are our principal subsidiaries: • Sohu.com (Hong Kong) Limited, or Sohu HK, established in 2000; • Beijing Sohu New Era Information Technology Co., Ltd., or Sohu Era, established in 2003; • Sohu.com (Search) Limited, or Sohu Search, established in 2005; • Beijing Sohu New Media Information Technology Co., Ltd., or Sohu Media, established in 2006; • Changyou.com Limited, or Changyou, established in 2007; • Changyou.com (HK) Limited, or Changyou HK, established in 2007; • Beijing AmazGame Age Internet Technology Group Co., Ltd., or AmazGame, established in 2007; • Sohu.com (Game) Limited, or Sohu Game, established in 2008; • Beijing Changyou Gamespace Software Technology Co., Ltd., or Gamespace, established in 2009; • Changyou.com Korea LLC, or Changyou Korea, established in 2010; • Beijing Sohu New Momentum Information Technology Co., Ltd., or Sohu New Momentum, established in 2010; • Fox Information Technology (Tianjin) Limited, or Video Tianjin, established in 2011; • Sohu Focus Limited, or Sohu Focus, established in 2013; • Sohu Focus (HK) Limited, or Focus HK, established in 2013; and • Beijing Changyou Chuangxiang Software Technology Co., Ltd., or Changyou Chuangxiang, established in 2016.
However, at a press conference held on February 3, 2008 the SAPPRFT and the MIIT clarified that online audio-visual service providers that were already lawfully operating prior to the issuance of Document 56 may re-register and continue to operate without becoming state-owned or controlled, provided that such providers do not engage in any unlawful activities.
However, at a press conference held on February 3, 2008 the SAPPRFT and the MIIT clarified that online audiovisual service providers that were already lawfully operating prior to the issuance of Document 56 may re-register and continue to operate without becoming state-owned or controlled, provided that such providers do not engage in any unlawful activities.
In addition, Changyou has the license rights to use the trademarks, such as TLBB, TLBB logos and TLBB 3D, for its mobile games TLBB 3D and Legacy TLBB Mobile and for its PC game TLBB under its existing license agreements with the holder of the intellectual property rights with respect to the popular Chinese martial arts novel Tian Long Ba Bu written by Louis Cha.
In addition, Changyou has the license rights to use the trademarks, such as TLBB, TLBB logos, TLBB 3D and New TLBB, for its PC game TLBB PC, and TLBB 3D, Legacy TLBB Mobile, TLBB Honor and New TLBB Mobile for its mobile games under Changyou’s existing license agreements with the holder of the intellectual property rights with respect to the popular Chinese martial arts novel Tian Long Ba Bu written by Louis Cha.
The “CBIRC” as used in this report refers to the regulatory authority that resulted from the merger during the period after the merger and prior to its integration into CNRA, to the CBRC and the CIRC separately for periods prior to the merger of the CBRC and the CIRC, and to the CNRA for the period after the integration of the CBIRC into the CNRA.
The “CBIRC” as used in this report refers to the regulatory authority that resulted from the merger during the period after the merger of the CBRC and the CIRC and prior to the CBIRC’s integration into CNRA, to the CBRC and the CIRC separately for periods prior to the merger of the CBRC and the CIRC, and to the CNRA for the period after the integration of the CBIRC into the CNRA.
Changyou also creates in-game events to attract existing and new game players through event-related features, such as offering special holiday-edition virtual items to enhance game player participation at holiday time. For overseas markets, Changyou promotes its games with a targeted marketing approach, leveraging its data collection and analysis system.
In addition, Changyou creates in-game promotional events to attract existing and new game players through event-related features, such as offering special holiday-edition virtual items to enhance game player participation at holiday time. For overseas markets, Changyou promotes its games with a targeted marketing approach, leveraging its data collection and analysis system.
Protection of Minors On April 12, 2022, several regulatory authorities in the Chinese mainland jointly promulgated the Notice on Strengthening the Management of Live Streaming of Games on Online Audio-Visual Program Platforms (“Notice 27”). Notice 27 prohibits minors from topping up and paying reward money, and establishes special handling channels for the refund of money paid by minors.
Protection of Minors On April 12, 2022, several regulatory authorities in the Chinese mainland jointly promulgated the Notice on Strengthening the Management of Live Streaming of Games on Online Audiovisual Program Platforms (“Notice 27”). Notice 27 prohibits minors from topping up and paying reward money, and establishes special handling channels for the refund of money paid by minors.
The Order states, in broad terms, that violators may face warnings, fines, and disclosure to the public and, in the most severe cases, criminal liability. 92 Table of Contents On January 5, 2015, the SAMR promulgated the Measures on Punishment for Infringement of Consumer Rights, which were amended on October 23, 2020.
The Order states, in broad terms, that violators may face warnings, fines, and disclosure to the public and, in the most severe cases, criminal liability. On January 5, 2015, the SAMR promulgated the Measures on Punishment for Infringement of Consumer Rights, which were amended on October 23, 2020.
Under the Internet Publishing Rules, Internet operators distributing such Internet publications via information networks, including Web portals such as ours, are required to apply to and register with the SAPPRFT before distributing Internet publications. 76 Table of Contents On June 5, 2020, the NPPA issued the Notice on Further Strengthening the Administration of Online Literature Publishing .
Under the Internet Publishing Rules, Internet operators distributing such Internet publications via information networks, including Web portals such as ours, are required to apply to and register with the SAPPRFT before distributing Internet publications. On June 5, 2020, the NPPA issued the Notice on Further Strengthening the Administration of Online Literature Publishing .
The VIEs Sohu Internet and Guangzhou Qianjun currently hold permits, both for PC and for Mobile Apps, for the Network Transmission of Audiovisual Programs. On March 30, 2009, the SAPPRFT released a Notice on Strengthening the Administration of Online Audiovisual Content (the “March 2009 SAPPRFT notice”).
The VIEs Sohu Internet and Guangzhou Qianjun currently hold permits, both for PC and for Mobile Apps, for the Network Transmission of Audiovisual Programs. 81 Table of Contents On March 30, 2009, the SAPPRFT released a Notice on Strengthening the Administration of Online Audiovisual Content (the “March 2009 SAPPRFT notice”).
Further, we continually develop and generate high quality livestreaming content, particularly science and knowledge-based live broadcasts, and promote our self-produced video programs across diversified online social media platforms to attract to our platform users and professional broadcasters in various fields. We work closely with mobile application stores as well as performance-based online advertising platforms.
Further, we continually develop and generate high-quality livestreaming content, particularly science and knowledge-based live broadcasts, and promote our self-developed video content across diversified online social media platforms to attract users and professional broadcasters in various fields to our platforms. We work closely with mobile application stores as well as performance-based online advertising platforms.
The Online Culture Operating Permit obtained by Sohu Internet includes a permit for operating Internet information services at “focus.cn.” On September 2, 2016, the SAPPRFT issued the Notice on Strengthening the Management of Live Online Social Video Services (the “Live Online Notice”), which requires interactive broadcasting service providers to procure a permit for the Network Transmission of Audiovisual Programs.
The Online Culture Operating Permit obtained by Sohu Internet includes a permit for operating Internet information services at “sohu.com.” On September 2, 2016, the SAPPRFT issued the Notice on Strengthening the Management of Live Online Social Video Services (the “Live Online Notice”), which requires interactive broadcasting service providers to procure a permit for the Network Transmission of Audiovisual Programs.
The Internet Cafés Notice also provides that virtual currency may only be used to purchase virtual items. 85 Table of Contents On June 4, 2009, the MCT and the MOFCOM jointly issued the Virtual Currency Notice, to regulate the trading of online game virtual currencies.
The Internet Cafés Notice also provides that virtual currency may only be used to purchase virtual items. On June 4, 2009, the MCT and the MOFCOM jointly issued the Virtual Currency Notice, to regulate the trading of online game virtual currencies.
On December 25, 2006, the PBOC issued the Administration Measures on Individual Foreign Exchange Control, and related Implementation Rules were issued by the SAFE on January 5, 2007 and amended on May 29, 2016. Both became effective on February 1, 2007.
On December 25, 2006, the PBOC issued the Administration Measures on Individual Foreign Exchange Control, and related Implementation Rules were issued by the SAFE on January 5, 2007 and amended on May 29, 2016 and March 23, 2023. Both became effective on February 1, 2007.
The monitor system was formally implemented commencing March 1, 2011. 84 Table of Contents In February 2013, 15 regulatory authorities in the Chinese mainland, including the SAPPRFT, the MOE, the MCT and the MIIT, jointly issued the Work Plan implementing integrated measures by different authorities to prevent minors from being addicted to online games.
The monitor system was formally implemented commencing March 1, 2011. In February 2013, 15 regulatory authorities in the Chinese mainland, including the SAPPRFT, the MOE, the MCT and the MIIT, jointly issued the Work Plan implementing integrated measures by different authorities to prevent minors from being addicted to online games.
Through virtual items, players are able to enhance their squad or characters, accelerate their progress in Changyou’s games, and share and trade with friends. 66 Table of Contents For players who choose to purchase virtual goods, Changyou delivers enhanced gameplay experiences and benefits, such as: Accelerated Progress.
Through virtual items, players are able to enhance their squad or characters, accelerate their progress in Changyou’s games, and share and trade with friends. For players who choose to purchase virtual goods, Changyou delivers enhanced gameplay experiences and benefits, such as: Accelerated Progress.
Over time, our competitors may gradually build certain competitive advantages over us in terms of: • greater brand recognition among Internet users and clients; • better products and services; • larger user and advertiser bases; • more extensive and well-developed marketing and sales networks; and • substantially greater financial and technical resources.
Over time, our competitors may gradually build certain competitive advantages over us in terms of: • greater brand recognition; • better products and services; • larger user and advertiser bases; • more extensive and well-developed marketing and sales networks; and • substantially greater financial and technical resources.
We recommend to users personalized content that may interest them, and encourage them to interact with each other based on our social distribution features. We provide content through the mobile phone application Sohu News APP, the mobile portal m.sohu.com and www.sohu.com for PCs. Sohu Video Sohu Video is an online video content and service provider in the Chinese mainland.
We recommend to users personalized content that may interest them, and encourage them to interact with each other based on our social distribution features. We provide content through the mobile phone application Sohu News App, the mobile portal m.sohu.com, and www.sohu.com and www.focus.cn for PCs. Sohu Video Sohu Video is an online video content and service provider.
On September 7, the CAOC issued the Administration Measures for Internet Users’ Social Account Information Services , which were effective on October 8, 2017 and amended on January 22, 2021.
On September 7, the CAOC issued the Administration Measures for Internet Users ’ Social Account Information Services , which were effective on October 8, 2017 and amended on January 22, 2021.
On February 24, 2023, the CSRC published the Archives Rules, which will take effect on March 31, 2023. The Archives Rules apply to indirect Offshore offerings and listings by Chinese mainland domestic companies.
On February 24, 2023, the CSRC published the Archives Rules, which took effect on March 31, 2023. The Archives Rules apply to indirect Offshore offerings and listings by Chinese mainland domestic companies.
Sohu’s Business Brand Advertising Business Sohu’s main business is the brand advertising business, which offers to users, over our matrices of Chinese language online media, various content, products and services across multiple Internet-enabled devices, such as mobile phones, tablets and PCs.
Sohu’s Business Brand Advertising Business Sohu’s main business is the brand advertising business, which offers to users over our online media various content, products and services across multiple Internet-enabled devices, such as mobile phones, tablets and PCs.
As an Internet portal, we compete with 58.com, Alibaba, Autohome, Baidu, Bilibili, BitAuto, Douyin, Douyu, Fang, Huya, iQIYI, JOYY, Kuaishou, Leju, Mango TV, Momo, NetEase, Phoenix, Qutoutiao, Sina, Tencent, TouTiao, and Youku. We also compete with traditional forms of media, such as newspapers, magazines, radio and television, for advertisers, advertising revenues and content.
As an Internet portal, we compete with 58.com, Alibaba, Autohome, Baidu, Bilibili, BitAuto, Douyin, Douyu, Hello Group, Huya, iQIYI, JOYY, Kuaishou, Leju, Mango TV, NetEase, Phoenix, Sina, Tencent, TouTiao, Xiaohongshu and Youku. We also compete with traditional forms of media, such as newspapers, magazines, radio and television, for advertisers, advertising revenues and content.
Other Sohu Business Sohu also engages in the other business, which consists primarily of paid subscription services, interactive broadcasting services, and revenue sharing from other platforms. Revenues generated by Sohu from the other business are classified as other revenues in our consolidated statements of comprehensive income.
Other Sohu Business Sohu’s other business consists primarily of paid subscription services, revenue sharing from other platforms, and interactive broadcasting services. Revenues generated by Sohu from the other business are classified as other revenues in our consolidated statements of comprehensive income.
To further implement the Antitrust Law and clarify certain issues, the State Council, the MOFCOM, the NDRC, and the SAMR issued several regulations and rules, including the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings issued by the State Council on August 3, 2008 and amended on September 18, 2018; the Regulations on the Prohibition of Monopolistic Agreements, which were issued by the SAMR on March 10, 2023 and will take effect on April 15, 2023 to replace the Interim Regulations on the Prohibition of Monopolistic Agreements issued by the SAMR on June 26, 2019 and amended on March 24, 2022; the Regulations on the Prohibition of Conduct Constituting an Abuse of a Dominant Market Position, which were issued by the SAMR on March 10, 2023 and will take effect on April 15, 2023 to replace the Interim Regulations on the Prohibition of Conduct Constituting an Abuse of a Dominant Market Position issued by the SAMR on June 26, 2019 and amended on March 24, 2022; the Declaration Rules for Concentrations of Undertakings issued by the MOFCOM on January 5, 2009, amended on June 6, 2014, and re-issued by the SAMR on September 29, 2018; and the Provisions on Reviewing Concentration of Undertakings, which were issued by the SAMR on March 10, 2023 and will take effect on April 15, 2023 to replace the Interim Provisions on Reviewing Concentration of Undertakings issued by the SAMR on October 23, 2020 and amended on March 24, 2022.
To further implement the Antitrust Law and clarify certain issues, the State Council, the MOFCOM, the NDRC, and the SAMR issued several regulations and rules, including the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings issued by the State Council on August 3, 2008 and amended on September 18, 2018; the Regulations on the Prohibition of Monopolistic Agreements , which were issued by the SAMR on March 10, 2023 and took effect on April 15, 2023 to replace the Interim Regulations on the Prohibition of Monopolistic Agreements ; the Regulations on the Prohibition of Conduct Constituting an Abuse of a Dominant Market Position , which were issued by the SAMR on March 10, 2023 and took effect on April 15, 2023 to replace the Interim Regulations on the Prohibition of Conduct Constituting an Abuse of a Dominant Market Position issued by the SAMR; the Declaration Rules for Concentrations of Undertakings issued by the MOFCOM on January 5, 2009, amended on June 6, 2014, and re-issued by the SAMR on September 29, 2018, and the Provisions on Reviewing Concentration of Undertakings, which were issued by the SAMR on March 10, 2023 and took effect on April 15, 2023 to replace the Interim Provisions on Reviewing Concentrations of Undertakings issued by the SAMR.
As of December 31, 2022, we leased office space of approximately 8,868 square meters in the Chinese mainland. Changyou In August 2009, Changyou purchased an office building of approximately 14,950 square meters in Beijing, for consideration of approximately $33.4 million. Since January 1, 2016, Changyou has leased out this building to third-party business tenants.
As of December 31, 2023, we leased office space of approximately 7,832 square meters in the Chinese mainland. Changyou In August 2009, Changyou purchased an office building of approximately 14,950 square meters in Beijing, for consideration of approximately $33.4 million. Since January 1, 2016, Changyou has leased out this building to third-party business tenants.
Changyou’s Business Changyou’s business lines consist of the online game business and the platform channel business, which consists primarily of online advertising and mobile game distribution services. Online Game Business Changyou’s online game business offers PC games and mobile games to game players.
The platform channel business consists primarily of online advertising and mobile game distribution services. Online Game Business Changyou’s online game business offers PC games and mobile games to game players. • PC games.
Dewen Chen and Yaobin Wang, two of our employees, hold 50% and 50% interests, respectively, in Changyou Star; • Shanghai ICE Information Technology Co., Ltd., or Shanghai ICE, which we began consolidating in 2010. Gamease holds a 100% interest in this entity; • Tianjin Jinhu Culture Development Co., Ltd, or Tianjin Jinhu, incorporated in 2011.
Dewen Chen, Changyou’s Chief Executive Officer, and Yaobin Wang, one of our employees, hold 50% and 50% interests, respectively, in Changyou Star; • Shanghai ICE Information Technology Co., Ltd., or Shanghai ICE, which we began consolidating in 2010. Gamease holds a 100% interest in this entity; • Tianjin Jinhu Culture Development Co., Ltd, or Tianjin Jinhu, incorporated in 2011.
We are the registered owner of 350 registered trademarks and have also applied for 10 trademarks in countries and regions outside of the Chinese mainland. In addition, certain of our marks have been recognized as well-known Chinese trademarks by Chinese mainland courts in a series of court rulings.
We are the registered owner of 360 registered trademarks and have applied for eight trademarks in countries and regions outside of the Chinese mainland. In addition, certain of our marks have been recognized as well-known Chinese trademarks by Chinese mainland courts in a series of court rulings.
Our remote control system allows us to track our concurrent online users in real time, and discover and fix hardware or software problems on our server network in a timely fashion. Sohu As of December 31, 2022, Sohu maintained approximately 10,681 servers in the Chinese mainland.
Our remote control system allows us to track our concurrent online users in real time, and discover and fix hardware or software problems on our server network in a timely fashion. Sohu As of December 31, 2023, Sohu maintained approximately 8,000 servers in the Chinese mainland.
The Overseas Listing Measures, which the CRSC adopted on February 17, 2023 and will take effect on March 31, 2023, will establish a new filing-based regime to regulate direct and indirect overseas offerings and listings by Chinese mainland domestic companies.
The Overseas Listing Measures, which the CSRC adopted on February 17, 2023 and took effect on March 31, 2023, establish a new filing-based regime to regulate direct and indirect overseas offerings and listings by Chinese mainland domestic companies.
As of December 31, 2022, Changyou leased office space of approximately 4,491 square meters in the Chinese mainland and in other countries. GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES The following description of laws and regulations of the Chinese mainland is based upon the opinion of Haiwen & Partners, or Haiwen, our Chinese mainland legal counsel.
As of December 31, 2023, Changyou leased office space of approximately 3,159 square meters in the Chinese mainland and in other countries. GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES The following description of laws and regulations of the Chinese mainland is based upon the opinion of Haiwen & Partners, or Haiwen, our Chinese mainland legal counsel.
On January 30, 2015, the MIIT issued to the VIE Guangzhou Qianjun a Value-Added Telecommunications Services Operating License, which was renewed on November 23, 2019, that authorizes the provision of Internet information services, which are also classified as value-added telecommunication services.
On January 30, 2015, the MIIT issued to the VIE Guangzhou Qianjun Network Technology Co., Ltd. (“Guangzhou Qianjun”) a Value-Added Telecommunications Services Operating License, which was renewed on November 23, 2019, that authorizes the provision of Internet information services, which are also classified as value-added telecommunication services.
For older games including Changyou’s PC games, Changyou also organizes a variety of offline activities, such as player meetups, offline competitions and carnival events, to connect with core players and maintain player engagement. In addition, Changyou launches in-game promotional events.
For older games including Changyou’s PC games, Changyou also organizes a variety of offline activities, such as player meetups, offline competitions and carnival events, to connect with core players and maintain player engagement.
The Notice on Strengthening the Approval and Administration of Imported Online Games , or the Imported Online Game Notice, which was issued by the SAPPRFT and took effect in July 2009, states that the SAPPRFT was, and the SPPA as a successor to the SAPPRFT is, the only regulatory authority authorized by the State Council to approve the importation of online games from Offshore copyright owners, and that any enterprise which engages in online game publication and operation services within the Chinese mainland must have the game examined and approved by the SAPPRFT or the SPPA and receive from the SAPPRFT or the SPPA an Internet publishing license (or after the New Internet Publication Measures became effective on March 10, 2016, an online publishing services license).
As of the date of this annual report, the Draft Online Games Administration Measures have not been formally adopted. 88 Table of Contents The Notice on Strengthening the Approval and Administration of Imported Online Games , or the Imported Online Game Notice, which was issued by the SAPPRFT and took effect in July 2009, states that the SAPPRFT was, and the SPPA as a successor to the SAPPRFT is, the only regulatory authority authorized by the State Council to approve the importation of online games from Offshore copyright owners, and that any enterprise which engages in online game publication and operation services within the Chinese mainland must have the game examined and approved by the SAPPRFT or the SPPA and receive from the SAPPRFT or the SPPA an Internet publishing license (or after the New Internet Publication Measures became effective on March 10, 2016, an online publishing services license).
In addition, Sohu has established branch nodes in different provinces throughout the Chinese mainland through different telecommunication operators in order to establish national coverage and provide fast and stable access to Sohu’s Internet platforms properties to users across the Chinese mainland.
In addition, Sohu has established branch nodes in different provinces throughout the Chinese mainland through different telecommunication operators in order to establish national coverage and provide fast and stable access to Sohu’s Internet platforms properties to users across the Chinese mainland. In addition, Sohu has developed cooperation with other Internet service providers.
Service providers who do not comply with the Internet Security Law may be subject to fines, suspension of their businesses, shutdown of their websites, and revocation of their business licenses. On July 30, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure (the “CII Regulations”), effective on September 1, 2021.
Service providers who do not comply with the Internet Security Law may be subject to fines, suspension of their businesses, shutdown of their websites, and revocation of their business licenses. On July 30, 2021, the State Council promulgated the CII Regulations, effective on September 1, 2021.
Changyou’s online game business includes games that it self-operates and games that it licenses out to third-party operators. Self-Operated Games For self-operated games, Changyou determines the price of virtual items based on the demand or expected demand for such virtual items. Changyou may change the pricing of certain virtual items based on their consumption patterns.
Changyou’s online games include games that it self-operates and games that it licenses out to third-party operators. 70 Table of Contents Self-Operated Games For self-operated games, Changyou determines the price of virtual items based on the demand or expected demand for such virtual items. Changyou may change the pricing of certain virtual items based on their consumption patterns.
The Brokerage Measures also require real estate brokerage companies to file with real estate regulatory authorities at the county level or above within 30 days after their business registration with the relevant local counterparts of the SAMR.
The Brokerage Measures also require real estate brokerage companies to file with real estate regulatory authorities at the county level or above within 30 days after their business registration with the relevant local counterparts of the SAMR. Focus Interactive has made the required filings.
Laws and Regulations Related to Encryption Software In October 1999, the State Council promulgated the Regulations for the Administration of Commercial Encryption , most recently amended on February 3, 2016, followed in November 1999 by the Notice of the General Office of the State Encryption Administration Commission promulgated by the State Commission for the Administration of Cryptography.
Laws and Regulations Related to Encryption Software In October 1999, the State Council promulgated the Regulations for the Administration of Commercial Encryption , most recently amended on April 27, 2023, followed in November 1999 by the Notice of the General Office of the State Encryption Administration Commission promulgated by the State Commission for the Administration of Cryptography.
Pursuant to the Radio Transmitting Equipment Regulations, each type of radio transmission equipment is subject to approval from State Radio Regulatory Bureau (“SRRC Certificate”) prior to production. 88 Table of Contents On May 10, 2001, the MIIT promulgated the Administration Measures of the Network Entry of Telecommunication Equipment (the “Telecommunication Equipment Measures”), which was amended on September 23, 2014.
Pursuant to the Radio Transmitting Equipment Regulations, each type of radio transmission equipment is subject to approval from State Radio Regulatory Bureau (“SRRC Certificate”) prior to production. On May 10, 2001, the MIIT promulgated the Administration Measures of the Network Entry of Telecommunication Equipment (the “Telecommunication Equipment Measures”), which were amended on September 23, 2014 and January 18, 2024.
We compete with our peers and competitors in the Chinese mainland primarily on the following basis: • access to financial resources; • gateway to host of Internet users’ activities; • technological advancements; • attractiveness of products; • brand recognition; • volume of traffic and users; • quality of Internet platforms and content; • quality and quantity of purchased video content, self-developed video content, and user-generated content; • strategic relationships; • quality of services; • effectiveness of sales and marketing efforts; • talent of staff; and • pricing.
We compete with our peers and competitors in the Chinese mainland primarily on the following basis: • access to financial resources; • technological advancements; • attractiveness of products; • brand recognition; • volume of traffic and users; • quality and stability of Internet platforms; • quality and quantity of content; • strategic relationships; • quality of services; • effectiveness of sales and marketing efforts; • talent of staff; and • pricing.
The “NRTA,” the “NFA” and the “SPPA” as used in this report refer to the respective regulatory authorities after the reorganization; the “SAPPRFT” as used in this report refers to the regulatory authority that resulted from the merger for the period after the merger and prior to the reorganization, as well as to the GAPP and the SARFT separately for periods prior to the merger; • the China State Council Information Office (the “SCIO”); • the CAOC; • the SAFE; and • the China Banking and Insurance Regulatory Commission (the “CBIRC”), which resulted from the merger of, assumed the responsibilities previously held by, the China Banking Regulatory Commission (the “CBRC”) and the China Insurance Regulatory Commission (the “CIRC”), and will be integrated into the China National Financial Regulatory Administration (the “CNRA”) pursuant to the Plan on Reforming State Council Institutions approved by the National People’s Congress on March 10, 2023.
The “NRTA,” the “NFA” and the “SPPA” as used in this report refer to the respective regulatory authorities after the reorganization; the “SAPPRFT” as used in this report refers to the regulatory authority that resulted from the merger for the period after the merger and prior to the reorganization, as well as to the GAPP and the SARFT separately for periods prior to the merger; • the China State Council Information Office (the “SCIO”); • the CAOC; • the SAFE; and • the China Banking and Insurance Regulatory Commission (the “CBIRC”), which resulted from the merger of, assumed the responsibilities previously held by, the China Banking Regulatory Commission (the “CBRC”) and the China Insurance Regulatory Commission (the “CIRC”) and has been integrated into the China National Financial Regulatory Administration (the “CNRA”).
On June 1, 2018 our ADSs began trading on the Nasdaq Global Select Market under the same “SOHU” symbol in place of the common stock of Sohu.com Inc. Sohu.com Limited replaced Sohu.com Inc. as the top-tier, publicly-traded holding company of the Sohu Group.
On June 1, 2018 our ADSs began trading on the Nasdaq Global Select Market under the same “SOHU” symbol in place of the common stock of Sohu.com Inc. Sohu.com Limited replaced Sohu.com Inc. as the top-tier, publicly-traded holding company of the Sohu Group. In 2005, our wholly-owned subsidiary Sogou Inc. was incorporated in the Cayman Islands.
BUSINESS OVERVIEW We are a leading Chinese online media, video, and game business group providing comprehensive online products and services on PCs and mobile devices in the Chinese mainland. Our businesses are conducted by the Sohu Group, which consists of Sohu and Changyou.
BUSINESS OVERVIEW We are a leading Chinese online media, video, and game business group providing comprehensive online products and services on PCs and mobile devices in the Chinese mainland. Our businesses are conducted by Sohu and Changyou. Sohu is a leading online media content and services provider. Changyou is a leading online game developer and operator in the Chinese mainland.
If business operators fail to comply with these mandatory declaration provisions and the concentration has or may have the effect of eliminating or restricting competition, the antitrust authority is empowered to terminate and/or unwind the transaction, dispose of relevant assets, shares or businesses and impose fines of no more than 10% of sales revenue from the previous year; if the concentration has no effect of eliminating or restricting competition, the antitrust authority may impose fines of up to RMB5.0 million (or approximately $0.7 million). 100 Table of Contents On February 7, 2021, the Anti-Monopoly Committee of the State Council issued the Platform Guidelines.
If business operators fail to comply with these mandatory declaration provisions and the concentration has or may have the effect of eliminating or restricting competition, the antitrust authority is empowered to terminate and/or unwind the transaction, dispose of relevant assets, shares or businesses and impose fines of no more than 10% of sales revenue from the previous year; if the concentration has no effect of eliminating or restricting competition, the antitrust authority may impose fines of up to RMB5.0 million (or approximately $0.7 million).
For the year ended December 31, 2022, revenues from Legacy TLBB Mobile were $72.6 million, accounting for approximately 12% of Changyou’s online game revenues, approximately 12% of Changyou’s total revenues, and approximately 10% of the Sohu Group’s total revenues. Platform Channel Business Changyou’s platform channel business consists primarily of the operation of the 17173.com Website.
For the year ended December 31, 2023, revenues from Legacy TLBB Mobile were $55.4 million, accounting for approximately 12% of Changyou’s online game revenues, approximately 11% of Changyou’s total revenues, and approximately 9% of the Sohu Group’s total revenues. Platform Channel Business Changyou’s platform channel business consists primarily of the operation of the 17173.com Website.
The VIEs Sohu Internet and Guangzhou Qianjun received renewed approval from the SAMR, on June 13, 2019 and November 23, 2018, respectively, to disseminate pharmaceuticals information over the Internet.
The VIEs Sohu Internet and Guangzhou Qianjun received renewed approval from the SAMR, on June 13, 2019 and September 5, 2023, respectively, to disseminate pharmaceuticals information over the Internet.
In November 2009, we entered into a contract for the purchase and development of an office building of approximately 41,283 square meters in Beijing to serve as our headquarters, for consideration of approximately $162 million. The office building was placed in service in May 2013.
Since March 2023, we have leased this entire building to third-party tenants. In November 2009, we entered into a contract for the purchase and development of an office building of approximately 41,283 square meters in Beijing to serve as our headquarters, for consideration of approximately $162 million. The office building was placed in service in May 2013.
Changyou has granted an exclusive license to Tencent to distribute and operate its mobile game Legacy TLBB Mobile within the Chinese mainland, and has licensed its PC game TLBB PC and mobile game Legacy TLBB Mobile to third-party operators in selected overseas markets outside of the Chinese mainland, including Vietnam and Malaysia.
Changyou has granted exclusive licenses to Tencent to distribute and operate its mobile games Legacy TLBB Mobile and New TLBB Mobile within the Chinese mainland, and has licensed its PC game TLBB PC and mobile game Legacy TLBB Mobile to third-party operators in selected markets outside of the Chinese mainland, including Hong Kong, Taiwan, Vietnam, and Malaysia.
Focus Interactive has made the required filings. 86 Table of Contents On July 29, 2016, the MHURD and six other regulatory authorities in the Chinese mainland jointly issued the Opinions on Strengthening the Administration of Sound Development of Real Estate Brokerage (the “MHURD Opinions”), to further regulate real estate brokerage services.
On July 29, 2016, the MHURD and six other regulatory authorities in the Chinese mainland jointly issued the Opinions on Strengthening the Administration of Sound Development of Real Estate Brokerage (the “MHURD Opinions”), to further regulate real estate brokerage services.
Registration of Software Copyrights The Measures Concerning Registration of Computer Software Copyright , or the Software Copyright Measures, issued by the NCA, which became effective in February 2002, encourage the registration of software and afford greater protection to registered software than that afforded to unregistered software.
Registration of Software Copyrights The Measures Concerning Registration of Computer Software Copyright , or the Software Copyright Measures, issued by the NCA, which became effective in February 2002, encourage the registration of software and afford greater protection to registered software than that afforded to unregistered software. Changyou has registered software copyrights covering all of its significant copyrightable products and enhancements.
On September 23, 2021, we completed the Tencent/Sohu Sogou Share Purchase contemplated by the Tencent/Sohu Sogou Share Purchase Agreement, in which our indirect wholly-owned subsidiary Sohu Search sold all of the Class A ordinary shares of Sogou and Class B ordinary shares of Sogou owned by Sohu Search to Tencent Merger Sub at a purchase price of $9.00 per share.
On November 13, 2017, Sogou completed its IPO on NYSE, trading under the symbol “SOGO.” On September 23, 2021, we completed the Tencent/Sohu Sogou Share Purchase contemplated by the Tencent/Sohu Sogou Share Purchase Agreement, in which our wholly-owned subsidiary Sohu Search sold all of the Class A ordinary shares of Sogou and Class B ordinary shares of Sogou owned by Sohu Search to Tencent Merger Sub at a purchase price of $9.00 per share.
Other Sohu Business Sohu also engages in the other business, which consists primarily of paid subscription services, interactive broadcasting services, and revenue sharing from other platforms. Revenues generated by Sohu from the other business are classified as other revenues in our consolidated statements of comprehensive income.
Other Sohu Business Sohu’s other business consists primarily of paid subscription services, revenue sharing from other platforms, and interactive broadcasting services. Revenues generated by Sohu from the other business are classified as other revenues in our consolidated statements of comprehensive income. Changyou’s Business Changyou’s business consists of the online game business and the platform channel business.
On April 13, 2016, the SAMR and sixteen other regulatory authorities in the Chinese mainland jointly issued a Notice of Campaign to Crack Down on Illegal Internet Finance Advertisements and Other Financial Activities in the Name of Investment Management (the ‘‘Campaign Notice’’), pursuant to which a campaign was conducted between April 2016 and January 2017 targeting, among other things, online advertisements for Internet finance and other financial activities posted on Internet search portals and other portal, financial, real estate, P2P and investment product sales services Websites.
The New Advertising Law and the Online Advertising Measures will require us to more stringently examine and monitor our advertisers and the content of their advertisements. 86 Table of Contents On April 13, 2016, the SAMR and sixteen other regulatory authorities in the Chinese mainland jointly issued a Notice of Campaign to Crack Down on Illegal Internet Finance Advertisements and Other Financial Activities in the Name of Investment Management (the ‘‘Campaign Notice’’), pursuant to which a campaign was conducted between April 2016 and January 2017 targeting, among other things, online advertisements for Internet finance and other financial activities posted on Internet search portals and other portal, financial, real estate, P2P and investment product sales services Websites.
Many of these requirements mirror Internet content restrictions that have been announced previously by ministries in the Chinese mainland, such as the MIIT, the MCT, and the SAPPRFT, that derive their authority from the State Council.
Many of these requirements mirror Internet content restrictions that have been announced previously by ministries in the Chinese mainland, such as the MIIT, the MCT, and the SAPPRFT, that derive their authority from the State Council. The VIEs Sohu Internet, Guangzhou Qianjun, Shanghai ICE Information Technology Co., Ltd.
On June 25, 2018, the MHURD and six other regulatory authorities jointly issued a Notice on Launching Special Actions to Combat the Infringement of the Interests of the Masses and Regulating the Real Estate Market in Some Cities , to prohibit certain additional behaviors of real estate developers and brokers, such as price manipulation and false advertising, in specified cities including Beijing, Shanghai, Guangzhou, and Tianjin.
On June 25, 2018, the MHURD and six other regulatory authorities jointly issued a Notice on Launching Special Actions to Combat the Infringement of the Interests of the Masses and Regulating the Real Estate Market in Some Cities , to prohibit certain additional behaviors of real estate developers and brokers, such as price manipulation and false advertising, in specified cities including Beijing, Shanghai, Guangzhou, and Tianjin. 92 Table of Contents On April 27, 2023, the MHURD and the SAMR issued the Opinions on Regulating Real Estate Brokerage Services (the “Real Estate Brokerage Services Opinions”), which propose regulatory measures for real estate brokers.
Although there are no explicit penalties set forth in these regulations for lack of such registration, failure to register an agreement where such registration is required may result in restrictions concerning foreign exchange, banking and taxation matters relating to such agreements.
As a result, such licenses are required to be registered with applicable regulatory authorities in the Chinese mainland. Although there are no explicit penalties set forth in these regulations for lack of such registration, failure to register an agreement where such registration is required may result in restrictions concerning foreign exchange, banking and taxation matters relating to such agreements.
Given that the fees are priced consistently throughout the contract and the unit prices are fixed in accordance with our pricing practices for similar advertisers, we recognize revenue based on the fixed unit prices and the number of qualifying displays upon their occurrence, provided all revenue recognition criteria have been met.
Given that the fees are priced consistently throughout the contract and the unit prices are fixed in accordance with our pricing practices for similar advertisers, we recognize revenue based on the fixed unit prices and the number of qualifying displays upon their occurrence, provided all revenue recognition criteria have been met. 69 Table of Contents CPC model Under the CPC model, there is no fixed price for advertising services stated in the contract with the advertiser.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

84 edited+15 added−12 removed29 unchanged
Biggest changeOur Offshore entities may not be able to obtain cash from distributions because our subsidiaries and the VIEs in the Chinese mainland are subject to restrictions imposed by Chinese mainland law on paying such dividends and making other payments,” and “- Dividends we receive from our operating subsidiaries located in the Chinese mainland are subject to Chinese mainland profit appropriation and withholding tax,” See also “Restrictions and Limitations on Cash Available to Sohu.com Limited.” below and Item 11 “Quantitative and Qualitative Disclosure About Market Risk - Foreign Currency Exchange Rate Risk.” 116 Table of Contents Cash Generating Ability Our cash flows were summarized below (in thousands): Year Ended December 31, 2020 2021 2022 Net cash provided by continuing operating activities $ 163,394 $ 113,610 $ 32,242 Net cash used in discontinued operating activities (68,187 ) (175,888 ) 0 Net cash provided by/(used in) operating activities 95,207 (62,278 ) 32,242 Net cash provided by/(used in) continuing investing activities 184,393 (537,419 ) (232,789 ) Net cash provided by discontinued investing activities 235,374 1,054,148 0 Net cash provided by/(used in) investing activities 419,767 516,729 (232,789 ) Net cash provided by/(used in) continuing financing activities 101,795 (424,968 ) (82,136 ) Net cash used in discontinued financing activities (8,209 ) (9,132 ) 0 Net cash provided by/(used in) financing activities 93,586 (434,100 ) (82,136 ) Effect of exchange rate change on cash, cash equivalents and restricted cash 36,984 20,997 (16,773 ) Net increase/(decrease) in cash, cash equivalents and restricted cash 645,544 41,348 (299,456 ) Cash, cash equivalents and restricted cash at beginning of period 314,026 959,570 1,000,918 Cash, cash equivalents and restricted cash at end of period $ 959,570 $ 1,000,918 $ 701,462 Less: Cash, cash equivalents and restricted cash of discontinued operations, end of year 310,203 0 0 Cash, cash equivalents and restricted cash of continuing operations, end of year 649,367 1,000,918 701,462 Net Cash Provided by/(Used in) Operating Activities For 2022, $32.2 million net cash provided by continuing operation activities was primarily attributable to our net loss of $17.3 million, adjusted by (i) the add back of non-cash items consisting of $31.3 million of depreciation and amortization expenses, $12.0 million of impairment of a long-term investment, $6.2 million of investment income from equity investments, $4.9 million of share-based compensation expense, and $2.0 million of impairment of other intangible assets and other assets, (ii) offset by $10.3 million of change in fair value of financial instruments, and $0.3 million from disposal of fixed assets.
Biggest changeOur Offshore entities may not be able to obtain cash from distributions because our Chinese mainland-based subsidiaries and the VIEs in the Chinese mainland are subject to restrictions imposed by Chinese mainland law on paying such dividends and making other payments,” and “- Dividends we receive from our operating subsidiaries located in the Chinese mainland are subject to Chinese mainland profit appropriation and withholding tax,” See also “Restrictions and Limitations on Cash Available to Sohu.com Limited” below and Item 11 “Quantitative and Qualitative Disclosure About Market Risk - Foreign Currency Exchange Rate Risk.” 124 Table of Contents Cash Generating Ability Our cash flows were summarized below (in thousands): Year Ended December 31, 2021 2022 2023 Net cash provided by/(used in) continuing operating activities $ 113,610 $ 32,242 $ (25,567 ) Net cash used in discontinued operating activities (175,888 ) 0 0 Net cash provided by/(used in) operating activities (62,278 ) 32,242 (25,567 ) Net cash used in continuing investing activities (537,419 ) (232,789 ) (291,665 ) Net cash provided by discontinued investing activities 1,054,148 0 0 Net cash provided by/(used in) investing activities 516,729 (232,789 ) (291,665 ) Net cash used in continuing financing activities (424,968 ) (82,136 ) (6,560 ) Net cash used in discontinued financing activities (9,132 ) 0 0 Net cash used in financing activities (434,100 ) (82,136 ) (6,560 ) Effect of exchange rate change on cash, cash equivalents and restricted cash 20,997 (16,773 ) (11,982 ) Net increase/(decrease) in cash, cash equivalents and restricted cash 41,348 (299,456 ) (335,774 ) Cash, cash equivalents and restricted cash at beginning of period 959,570 1,000,918 701,462 Cash, cash equivalents and restricted cash at end of period $ 1,000,918 $ 701,462 $ 365,688 Cash, cash equivalents and restricted cash of continuing operations, end of year 1,000,918 701,462 365,688 Net Cash Provided by/(Used in) Operating Activities For 2023, $25.6 million net cash used in continuing operation activities was primarily attributable to our net loss of $66.1 million, adjusted by (i) the add back of non-cash items consisting of $30.2 million of depreciation and amortization expenses, $5.8 million of impairment of other intangible assets and other assets, $0.7 million of share-based compensation expense, and $0.3 million of impairment of long-term investments, (ii) offset by $1.1 million of investment income from long-term investments, $0.5 million from disposal of fixed assets, $0.3 million of allowance for credit losses, and $0.2 million of change in fair value of financial instruments.
In addition, regulatory authorities in the Chinese mainland could impose restrictions on such payments or change the tax rates applicable to such payments. Capital Expenditure Our capital expenditures include the purchase of fixed assets, intangible assets and other assets.
In addition, regulatory authorities in the Chinese mainland could impose restrictions on such payments or change the tax rates applicable to such payments. Capital Expenditures Our capital expenditures include the purchase of fixed assets, intangible assets and other assets.
To attract and retain users, we have incurred expenditures for content and user acquisition, as well as for promotion of our products and services. We may increase such expenditures in the future.
To attract and retain users, we have incurred expenses for content and user acquisition, as well as for promotion of our products and services. We may increase such expenditures in the future.
Our Chinese mainland-based WFOEs are also required to set aside each year to their general reserves at least 10% of their after-tax profit based on Chinese mainland accounting standards, until the cumulative amount reaches 50% of their paid-in capital. These reserves may not be distributed as cash dividends, or as loans or advances.
Our Chinese mainland-based subsidiaries are also required to set aside each year to their general reserves at least 10% of their after-tax profit based on Chinese mainland accounting standards, until the cumulative amount reaches 50% of their paid-in capital. These reserves may not be distributed as cash dividends, or as loans or advances.
Assumptions: The provision for credit losses is estimated mainly based on past collection experience as well as consideration of current and future economic conditions and changes in our collection trends. We estimate the expected credit losses for financial assets with similar risk characteristics on a pool basis.
Assumptions: The provision for credit losses is estimated mainly based on past collection experience as well as consideration of current and future economic conditions and changes in our collection trends. We estimate the expected credit losses for financial assets with similar risk characteristics on a pooled basis.
Based on the annual impairment test conducted as of October 1, 2022, the fair value of the reporting unit exceeded the carrying value, indicating that the goodwill was not impaired. Our estimate of the key assumptions did not change significantly throughout the periods presented.
Based on the annual impairment test conducted as of October 1, 2023, the fair value of the reporting unit exceeded the carrying value, indicating that the goodwill was not impaired. Our estimate of the key assumptions did not change significantly throughout the periods presented.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or product development services with us. 119 Table of Contents IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The accounting standards that we adopted beginning January 1, 2022 did not have a significant impact on our consolidated financial statements.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or product development services with us. 127 Table of Contents IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The accounting standards that we adopted beginning January 1, 2023 did not have a significant impact on our consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES Resources Analysis Liquidity Sources and Balances Our principal sources of liquidity are cash and cash equivalents, short-term investments, long-term time deposits, and cash flows generated from our operations. Cash equivalents mainly consist of time deposits with original maturities of three months or less, notice deposits, and investments in money market funds.
LIQUIDITY AND CAPITAL RESOURCES Resources Analysis Liquidity Sources and Balances Our principal sources of liquidity are cash and cash equivalents, short-term investments, long-term time deposits, and cash flows generated from our operations. Cash equivalents mainly consist of time deposits with original maturities of three months or less, and notice deposits.
Our WFOEs may also allocate a portion of their after-tax profits, at the discretion of their Boards of Directors, to their staff welfare and bonus funds. Any amounts so allocated may not be distributed by Sohu.com Limited or Changyou.com Limited and, accordingly, would not be available for distribution to Sohu.com Limited.
Our Chinese mainland-based subsidiaries, may also allocate a portion of their after-tax profits, at the discretion of their Boards of Directors, to their staff welfare and bonus funds. Any amounts so allocated may not be distributed by Sohu.com Limited or Changyou.com Limited and, accordingly, would not be available for distribution to Sohu.com Limited.
As of December 31, 2022, we had obligations to provide, and advertisers had obligations to purchase, advertising services under existing contracts in the amount of $2.4 million that are required to be provided during the year ending December 31, 2023.
As of December 31, 2023, we had obligations to provide, and advertisers had obligations to purchase, advertising services under existing contracts in the amount of $4.8 million that are required to be provided during the year ending December 31, 2024.
As of December 31, 2022, we had accrued deferred tax liabilities in the amount of $239.0 million for withholding taxes associated with dividends paid by Changyou’s Chinese mainland-based WFOEs to Changyou’s Hong Kong subsidiary. 118 Table of Contents Under regulations of the SAFE, the RMB is not convertible into foreign currencies for capital account items, such as loans, repatriation of investments and investments outside of the Chinese mainland, unless prior approval of the SAFE is obtained and prior registration with the SAFE is made.
As of December 31, 2023, we had accrued deferred tax liabilities in the amount of $253.5 million for withholding taxes associated with dividends paid by Changyou’s Chinese mainland-based WFOEs to Changyou’s Hong Kong subsidiary. 126 Table of Contents Under regulations of the SAFE, the RMB is not convertible into foreign currencies for capital account items, such as loans, repatriation of investments and investments outside of the Chinese mainland, unless prior approval of the SAFE is obtained and prior registration with the SAFE is made.
(2) Quarterly Aggregate Active Paying Accounts for a given quarter refers to the number of accounts from which game points are used at least once during the quarter. Other Revenues Revenues from other services were $45.2 million for 2022, compared to $62.4 million and $66.7 million, respectively, for 2021 and 2020.
(2) Quarterly Aggregate Active Paying Accounts for a given quarter refers to the number of accounts from which game points are used at least once during the quarter. Other Revenues Revenues from other services were $32.3 million for 2023, compared to $45.2 million and $62.4 million, respectively, for 2022 and 2021.
OVERVIEW We are a leading Chinese online media, video, and game business group providing comprehensive online products and services on PCs and mobile devices in the Chinese mainland. Our businesses are conducted by the Sohu Group, which consists of Sohu and Changyou. Sohu is a leading Chinese language online media content and services provider.
OVERVIEW We are a leading Chinese online media, video, and game business group providing comprehensive online products and services on PCs and mobile devices in the Chinese mainland. Our businesses are conducted by Sohu and Changyou. Sohu is a leading online media content and services provider. Changyou is a leading online game developer and operator in the Chinese mainland.
There was no capitalized share-based compensation expense for the years ended December 31, 2020, 2021 and 2022. Operating Profit/(Loss) We had an operating loss of $0.9 million for 2022, compared to operating income of $97.5 million and $73.4 million, respectively, for 2021 for 2020.
There was no capitalized share-based compensation expense for the years ended December 31, 2021, 2022 and 2023. Operating Profit/(Loss) We had an operating loss of $87.3 million for 2023, compared to operating loss of $0.9 million and operating income of $97.5 million, respectively, for 2022 and 2021.
Going forward, Changyou plans to continue to enhance its capabilities in game design, game technology, and graphic quality; and attempt more joint development with third-party developers, which it believes will help improve development efficiencies, as well as to further invest in talent acquisition and development.
Going forward, Changyou plans to continue to enhance its capabilities in game design, game technology, and graphic quality; continue to work with third-party developers, which it believes will help improve development efficiencies; and further invest in talent acquisition and development.
Online Game Revenues Revenues from the online game business were $585.4 million for 2022, compared to $638.2 million and $536.7 million, respectively, for 2021 and 2020.
Online Game Revenues Revenues from the online game business were $479.7 million for 2023, compared to $585.4 million and $638.2 million, respectively, for 2022 and 2021.
Net income/(Loss) attributable to Sohu.com Limited As a result of the foregoing, we had a net loss from continuing operations of $17.3 million attributable to Sohu.com Limited for 2022, compared to net income of $69.3 million attributable to Sohu.com Limited and a net loss of $55.0 million attributable to Sohu.com Limited for 2021 and 2020, respectively.
Net income/(Loss) attributable to Sohu.com Limited As a result of the foregoing, we had a net loss from continuing operations of $65.8 million attributable to Sohu.com Limited for 2023, compared to net loss of $17.3 million attributable to Sohu.com Limited, and a net income of $69.3 million attributable to Sohu.com Limited, respectively, for 2022 and 2021.
PC games and Mobile Games Revenues from PC games were $425.7 million for 2022, compared to $469.3 million and $353.7 million, respectively, for 2021 and 2020, representing 73%, 74% and 66%, respectively, of Changyou’s online game revenues for the corresponding years. The dominant PC game operated by Changyou is TLBB.
Revenues from PC games were $368.7 million for 2023, compared to $425.7 million and $469.3 million, respectively, for 2022 and 2021, representing 77%, 73% and 74%, respectively, of Changyou’s online game revenues for the corresponding years. The dominant PC game operated by Changyou is TLBB.
Other information Sales to our five largest advertising agencies and advertisers comprised approximately 34% of total brand advertising revenues for 2022, compared to 29% and 27%, respectively, for 2021 and 2020. As of December 31, 2022, 2021 and 2020, we recorded $2.8 million, $4.5 million and $5.6 million, respectively, of receipts in advance from advertisers.
Other information Sales to our five largest advertising agencies and advertisers comprised approximately 28% of total brand advertising revenues for 2023, compared to 34% and 29%, respectively, for 2022 and 2021. As of December 31, 2023, 2022 and 2021, we recorded $2.7 million, $2.8million and $4.5 million, respectively, of receipts in advance from advertisers.
Expected Credit Losses Nature of estimate: Effective January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires us to record the full amount of expected credit losses for the life of a financial asset at the time it is originated or acquired, and adjusted for changes in expected lifetime credit losses subsequently, which requires earlier recognition of credit losses.
Expected Credit Losses Nature of estimate: Accounting Standards Update (ASU) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” requires us to record the full amount of expected credit losses for the life of a financial asset at the time it is originated or acquired, adjusted for subsequent changes in expected lifetime credit losses, which require earlier recognition of credit losses.
Chinese Mainland Restrictions Related to the VIE Structure A significant portion of our operations are conducted through VIEs, which generate a significant amount of our revenues. As of December 31, 2022, there were significant cash balances held by certain of the VIEs that we consolidate in our financial statements under U.S. GAAP (ASC 810).
Chinese Mainland Restrictions Related to the VIE Structure A significant portion of our operations is conducted through VIEs, which generate a significant amount of our revenues. As of December 31, 2023, none of the VIEs that we consolidate in our financial statements under U.S. GAAP (ASC 810) held significant cash balances.
The number of advertisers on the 17173.com Website was 67, 76 and 108, respectively, for 2022, 2021 and 2020. The average amount spent per advertiser was approximately $103,000, $142,000 and $107,000, respectively, for 2022, 2021 and 2020.
The number of advertisers on the 17173.com Website was 60, 67 and 76, respectively, for 2023, 2022 and 2021. The average amount spent per advertiser was approximately $83,000, $103,000 and $142,000, respectively, for 2023, 2022 and 2021.
Our online game gross margin was 84%, 86% and 83%, respectively, for 2022, 2021 and 2020. Cost of Other Revenues Cost of other revenues was $13.9 million for 2022, compared to $17.5 million and $20.3 million, respectively, for 2021 and 2020.
Our online game gross margin was 86% for 2023, compared to 84% and 86%, respectively, for 2022 and 2021. Cost of Other Revenues Cost of other revenues was $9.6 million for 2023, compared to $13.9 million and $17.5 million, respectively, for 2022 and 2021.
Our capital expenditures were $33.8 million, $42.2 million, and $23.8 million, respectively, for the years ended December 31, 2020, 2021 and 2022.
Our capital expenditures were $42.2 million, $23.8 million, and $18.4 million, respectively, for the years ended December 31, 2021, 2022 and 2023.
The decrease mainly consisted of a $17.0 million decrease in salary and benefits expenses, a $7.3 million decrease in bad debt expenses, and a $1.6 million decrease in share-based compensation expense, offset by a $1.5 million increase in professional fees. The year-on-year increase for 2021 was $24.5 million, representing a year-on-year increase of 43%.
The decrease mainly consisted of a $17.0 million decrease in salary and benefits expenses, a $7.3 million decrease in bad debt expenses, and a $1.6 million decrease in share-based compensation expense, offset by a $1.5 million increase in professional fees.
We had net income from discontinued operations of nil for 2022, compared to net income of $864.9 million, and a net loss of $91.8 million, respectively, for 2021 and 2020. 115 Table of Contents Net Income/(loss) Attributable to Noncontrolling Interest Our net income from continuing operations attributable to noncontrolling interest was $2,000 for 2022, compared to a net loss attributable to noncontrolling interest of $3,000 for 2021, and net income attributable to noncontrolling interest of $18.4 million for 2020.
We had net income from discontinued operations of $35.4 million for 2023, compared to net income of nil and $864.9 million, respectively, for 2022 and 2021. 123 Table of Contents Net Income/(loss) Attributable to Noncontrolling Interest Our net loss from continuing operations attributable to noncontrolling interest was $265,000 for 2023, compared to net income from continuing operations attributable to noncontrolling interest of $2,000, and a net loss attributable to noncontrolling interest of $3,000, respectively, for 2022 and 2021.
Net Cash Provided by/(Used in) Financing Activities For 2022, $82.1 million net cash used in continuing financing activities was primarily attributable to $82.1 million used in repurchase of shares.
Net Cash Provided by/(Used in) Financing Activities For 2023, $6.6 million net cash used in continuing financing activities was used in repurchase of shares. For 2022, $82.1 million net cash used in continuing financing activities was used in repurchase of shares.
Share-based Compensation Expense Share-based compensation expense was recognized in costs and expenses for the years ended December 31, 2020, 2021 and 2022 as follows (in thousands): Year Ended December 31, Share-based compensation expense 2020 2021 2022 Cost of revenues $ 720 $ 277 $ 191 Product development expenses 7,325 3,904 2,026 Sales and marketing expenses 460 166 128 General and administrative expenses 5,975 4,231 2,594 $ 14,480 $ 8,578 $ 4,939 114 Table of Contents Share-based compensation expense was recognized for share-based awards of Sohu (excluding Fox Video Limited (“Fox Video”)), Changyou, and Fox Video as follows (in thousands): Year Ended December 31, Share-based compensation expense 2020 2021 2022 For Sohu (excluding Fox Video) share-based awards $ 2,633 $ 1,849 $ 677 For Changyou share-based awards 12,545 7,773 4,262 For Fox Video share-based awards (698 ) (1,044 ) 0 $ 14,480 $ 8,578 $ 4,939 The negative amounts in the tables above resulted from re-measured compensation expense based on the then-current fair value of the awards on the reporting date.
Share-based Compensation Expense Share-based compensation expense was recognized in costs and expenses for the years ended December 31, 2021, 2022 and 2023 as follows (in thousands): Year Ended December 31, Share-based compensation expense 2021 2022 2023 Cost of revenues $ 277 $ 191 $ 17 Product development expenses 3,904 2,026 156 Sales and marketing expenses 166 128 26 General and administrative expenses 4,231 2,594 509 $ 8,578 $ 4,939 $ 708 122 Table of Contents Share-based compensation expense was recognized for share-based awards of Sohu (excluding Fox Video Limited (“Fox Video”)), Changyou, and Fox Video as follows (in thousands): Year Ended December 31, Share-based compensation expense 2021 2022 2023 For Sohu (excluding Fox Video) share-based awards $ 1,849 $ 677 $ 96 For Changyou share-based awards 7,773 4,262 612 For Fox Video share-based awards (1,044 ) 0 0 $ 8,578 $ 4,939 $ 708 The negative amounts in the tables above resulted from re-measured compensation expense based on the then-current fair value of the awards on the reporting date.
The increase in cash from $134.3 million in working capital items is also included in operating cash flow.
The increase in cash from $5.6 million in working capital items is also included in operating cash flow.
The following table sets forth certain operating data for Changyou’s PC games and mobile games for the periods indicated: Average Monthly Active Accounts (1) Three Months Ended March 31 Three Months Ended June 30 Three Months Ended September 30 Three Months Ended December 31 (in millions) PC games Mobile games PC games Mobile games PC games Mobile games PC games Mobile games 2020 2.1 3.4 1.9 3.1 2.0 3.8 2.3 2.4 2021 2.3 2.0 2.1 1.9 2.0 4.6 2.0 2.5 2022 2.0 2.4 2.3 2.0 2.1 2.5 2.3 1.8 Quarterly Aggregate Active Paying Accounts (2) Three Months Ended March 31 Three Months Ended June 30 Three Months Ended September 30 Three Months Ended December 31 (in millions) PC games Mobile games PC games Mobile games PC games Mobile games PC games Mobile games 2020 1.0 1.0 0.9 0.6 1.0 0.6 0.9 0.6 2021 0.9 0.5 0.9 0.5 1.0 1.0 0.9 0.5 2022 1.0 0.5 1.0 0.4 1.0 0.6 0.9 0.4 (1) Average Monthly Active Accounts for a given period refers to the number of registered accounts that were logged in to these games at least once during the period.
The year-on-year decrease in mobile game revenues for 2023 was $48.7 million, mainly due to a natural decline in older games. 117 Table of Contents The following table sets forth certain operating data for Changyou’s PC games and mobile games for the periods indicated: Average Monthly Active Accounts (1) Three Months Ended March 31 Three Months Ended June 30 Three Months Ended September 30 Three Months Ended December 31 (in millions) PC games Mobile games PC games Mobile games PC games Mobile games PC games Mobile games 2021 2.3 2.0 2.1 1.9 2.0 4.6 2.0 2.5 2022 2.0 2.4 2.3 2.0 2.1 2.5 2.3 1.8 2023 2.2 1.6 2.2 1.3 2.2 2.3 2.3 1.7 Quarterly Aggregate Active Paying Accounts (2) Three Months Ended March 31 Three Months Ended June 30 Three Months Ended September 30 Three Months Ended December 31 (in millions) PC games Mobile games PC games Mobile games PC games Mobile games PC games Mobile games 2021 0.9 0.5 0.9 0.5 1.0 1.0 0.9 0.5 2022 1.0 0.5 1.0 0.4 1.0 0.6 0.9 0.4 2023 0.9 0.3 0.9 0.3 1.0 0.5 0.9 0.3 (1) Average Monthly Active Accounts for a given period refers to the number of registered accounts that were logged in to these games at least once during the period.
Net Cash Provided by/(Used in) Investing Activities For 2022, $232.8 million net cash used in continuing investing activities was primarily attributable to (i) $2.15 billion used in purchase of short-term investments, and $23.8 million used in purchase of fixed assets and intangible assets, offset by (ii) $1.94 billion in proceeds from bank investments and $6.3 million cash received from other investing activities. 117 Table of Contents For 2021, $537.4 million net cash used in continuing investing activities was primarily attributable to (i) $1.22 billion used in purchase of short-term investments, $42.2 million used in purchase of fixed assets and intangible assets, and $15.9 million used in the purchase of long-term investments, offset by (ii) $740.7 million in proceeds from bank investments and $2.5 million cash received from other investing activities.
For 2021, $537.4 million net cash used in continuing investing activities was primarily attributable to (i) $1.22 billion used in purchase of short-term investments and time deposits, $42.2 million used in purchase of fixed assets and intangible assets, and $15.9 million used in the purchase of long-term investments, offset by (ii) $740.7 million in proceeds from short-term investments and $2.5 million cash received from other investing activities.
The decrease included an $8.0 million decrease in revenue-sharing payments to licensors, game developers, and platforms, and a $3.0 million decrease in salary and benefits expenses, offset by a $4.2 million increase in content and license costs, a $1.9 million increase in bandwidth service costs, and a $0.8 million increase in tax surcharges.
The increase included a $3.7 million increase in revenue-sharing payments to licensors, game developers, and third-party Internet platforms, and a $2.0 million increase in salary and benefits expenses, offset by a $1.4 million decrease in content and license costs, and a $0.5 million decrease in tax surcharges.
Our net income from discontinued operations attributable to noncontrolling interest was nil for 2022, compared to net income attributable to noncontrolling interest of $6.5 million for 2021, and a net loss attributable to noncontrolling interest of $60.7 million for 2020.
Our net income from discontinued operations attributable to noncontrolling interest was nil for 2023, compared to net income attributable to noncontrolling interest of nil and $6.5 million, respectively, for 2022 and 2021.
OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of third parties. We are not subject to any additional potential payments.
As a result, this amount is not included in the table above. OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of third parties. We are not subject to any additional potential payments.
We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.
We consider an accounting estimate to be critical if: - the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made; and - changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. 114 Table of Contents There are other items within our financial statements that require estimation but are not deemed critical, as defined above.
We had net income from discontinued operations of nil attributable to Sohu.com Limited for 2022, compared to net income of $858.5 million attributable to Sohu.com Limited and a net loss of $31.1 million attributable to Sohu.com Limited for 2021 and 2020, respectively.
We had net income from discontinued operations of $35.4 million attributable to Sohu.com Limited for 2023, compared to net income of nil and $858.5 million attributable to Sohu.com Limited, respectively, for 2022 and 2021.
Other Income/(Expense) Other income was $17.6 million for 2022, compared to $29.4 million and $26.0 million, respectively, for 2021 and 2020. Interest Income Interest income was $17.3 million for 2022, compared to $15.6 million and $7.4 million, respectively, for 2021 and 2020.
Other Income/(Expense) Other income was $35.7 million for 2023, compared to $17.6 million and $29.4 million, respectively, for 2022 and 2021. Interest Income Interest income was $45.2 million for 2023, compared to $17.3 million and $15.6 million, respectively, for 2022 and 2021.
Interest Expense Interest expense was nil for 2022, compared to $7.5 million and $6.2 million, respectively, for 2021 and 2020. Income Tax Expense Income tax expense was $57.9 million for 2022, compared to $62.3 million and $133.2 million, respectively, for 2021 and 2020.
Interest Expense Interest expense was nil for 2023, compared to nil and $7.5 million, respectively, for 2022 and 2021. Income Tax Expense Income tax expense was $60.4 million for 2023, compared to $57.9 million and $62.3 million, respectively, for 2022 and 2021.
General and Administrative Expenses General and administrative expenses were $56.9 million for 2022, compared to $81.9 million and $57.4 million, respectively, for 2021 and 2020. The year-on-year decrease for 2022 was $25.0 million, representing a year-on-year decrease of 30%.
General and Administrative Expenses General and administrative expenses were $48.9 million for 2023, compared to $56.9 million and $81.9 million, respectively, for 2022 and 2021. The year-on-year decrease for 2023 was $8.0 million, representing a year-on-year decrease of 14%.
The average amount spent per advertiser was approximately $76,000, $68,000 and $44,000, respectively, for 2022, 2021 and 2020. • Sohu Video Revenues from Sohu Video were $19.6 million for 2022, compared to $26.8 million and $25.3 million, respectively, for 2021 and 2020. The number of advertisers for Sohu Video was 81, 77 and 106, respectively, for 2022, 2021 and 2020.
The average amount spent per advertiser was approximately $47,000, $52,000 and $47,000, respectively, for 2023, 2022 and 2021. • Sohu Video Revenues from Sohu Video were $17.6 million for 2023, compared to $19.6 million and $26.8 million, respectively, for 2022 and 2021. The number of advertisers for Sohu Video was 93, 81 and 77, respectively, for 2023, 2022 and 2021.
The average amount spent per advertiser was approximately $18,000, $20,000 and $17,000, respectively, for 2022, 2021 and 2020. Changyou • 17173.com Website Revenues from the 17173.com Website were $6.9 million for 2022, compared to $10.8 million and $11.6 million, respectively, for 2021 and 2020.
The average amount spent per advertiser was approximately $189,000, $242,000 and $348,000, respectively, for 2023, 2022 and 2021. Changyou • 17173.com Website Revenues from the 17173.com Website were $5.0 million for 2023, compared to $6.9 million and $10.8 million, respectively, for 2022 and 2021.
Changyou is a leading online game developer and operator in the Chinese mainland. Through the operation of Sohu and Changyou, we generate brand advertising revenues, online games revenues and other revenues. Brand advertising and online games are our core businesses. Most of our operations are conducted through our Chinese mainland-based subsidiaries and the VIEs that we consolidate under U.S.
Through the operation of Sohu and Changyou, we generate brand advertising revenues, online games revenues and other revenues. Most of our operations are conducted through our Chinese mainland-based subsidiaries and the VIEs that we consolidate under U.S. GAAP (ASC 810).
For 2020, $163.4 million net cash provided by continuing operation activities was primarily attributable to our net loss of $36.5 million, adjusted by (i) the add back of non-cash items consisting of $39.9 million of depreciation and amortization expenses, $14.5 million of share-based compensation expense, $4.9 million of allowance for credit losses, $4.2 million of impairment of intangible assets, $1.8 million of change in fair value of financial instruments, $0.5 million of investment income from equity investments, and $0.2 million cash provided by other continuing operating activities, (ii) offset by $0.4 million from disposal of fixed assets.
For 2022, $32.2 million net cash provided by continuing operation activities was primarily attributable to our net loss of $17.3 million, adjusted by (i) the add back of non-cash items consisting of $31.3 million of depreciation and amortization expenses, $12.0 million of impairment of a long-term investment, $6.2 million of investment income from equity investments, $4.9 million of share-based compensation expense, and $2.0 million of impairment of other intangible assets and other assets, (ii) offset by $10.3 million of change in fair value of financial instruments, and $0.3 million from disposal of fixed assets.
Of our cash and cash equivalents, $506.5 million was held in financial institutions inside the Chinese mainland and $191.3 million was held in financial institutions outside of the Chinese mainland. Of the cash and cash equivalents held in financial institutions inside the Chinese mainland, $21.7 million was held by VIEs and $484.8 million was held by our Chinese mainland-based subsidiaries.
Of our cash and cash equivalents, $238.2 million was held in financial institutions inside the Chinese mainland and $124.3 million was held in financial institutions outside of the Chinese mainland. Of the cash and cash equivalents held in financial institutions inside the Chinese mainland, $6.7 million was held by VIEs and $231.5 million was held by our Chinese mainland-based subsidiaries.
The historical results of Sogou’s business are reported as “discontinued operations.” 107 Table of Contents Revenues The following table presents our revenues by revenue source and by proportion for the periods indicated (in thousands, except percentages): Year ended December 31, 2020 2021 2022 2021 VS 2020 2022 VS 2021 Amount Percentage Amount Percentage Amount Percentage Amount Incremental ratio Amount Incremental ratio Revenues: Brand advertising $ 146,526 20 % $ 134,967 16 % $ 103,233 14 % $ (11,559 ) (8 )% $ (31,734 ) (24 )% Online games 536,684 72 % 638,225 76 % 585,424 80 % 101,541 19 % (52,801 ) (8 )% Others 66,680 8 % 62,384 8 % 45,215 6 % (4,296 ) (6 )% (17,169 ) (28 )% Total revenues $ 749,890 100 % $ 835,576 100 % $ 733,872 100 % $ 85,686 11 % $ (101,704 ) (12 )% 108 Table of Contents Brand Advertising Revenues Brand advertising revenues were $103.2 million for 2022, compared to $135.0 million and $146.5 million, respectively, for 2021 and 2020.
The historical results of Sogou’s business are reported as “discontinued operations.” Revenues The following table presents our revenues by revenue source and by proportion for the periods indicated (in thousands, except percentages): Year ended December 31, 2021 2022 2023 2022 VS 2021 2023 VS 2022 Amount Percentage Amount Percentage Amount Percentage Amount Incremental ratio Amount Incremental ratio Revenues: Brand advertising $ 134,967 16 % $ 103,233 14 % $ 88,689 15 % $ (31,734 ) (24 )% $ (14,544 ) (14 )% Online games 638,225 76 % 585,424 80 % 479,697 80 % (52,801 ) (8 )% (105,727 ) (18 )% Others 62,384 8 % 45,215 6 % 32,286 5 % (17,169 ) (28 )% (12,929 ) (29 )% Total revenues $ 835,576 100 % $ 733,872 100 % $ 600,672 100 % $ (101,704 ) (12 )% $ (133,200 ) (18 )% 116 Table of Contents Brand Advertising Revenues Brand advertising revenues were $88.7 million for 2023, compared to $103.2 million and $135.0 million, respectively, for 2022 and 2021.
As of December 31, 2022, we had cash and cash equivalents of approximately $697.8 million, restricted cash of $3.6 million, short-term investments of $473.6 million, and long-term time deposits of $265.8 million.
As of December 31, 2023, we had cash and cash equivalents of approximately $362.5 million, restricted cash of $3.2 million, short-term investments of $597.8 million, and long-term time deposits of $388.6 million.
The increase mainly consisted of a $39.6 million increase in salary and benefits expenses, a $3.5 million increase in travel and entertainment expenses, and a $2.2 million increase in professional fees, offset by a $14.4 million decrease in content and license costs, and a $3.4 million decrease in share-based compensation expense.
The increase mainly consisted of a $6.8 million increase in bandwidth service expenses, a $5.2 million increase in salary and benefits expenses, a $4.0 million increase in content and license costs, and a $3.9 million increase in content and license impairments, offset by a $1.9 million decrease in share-based compensation expense.
The income approach considers a number of factors that include expected future cash flows, revenue growth rates, discount rates, and requires us to make certain assumptions and estimates regarding future profitability of the business. The market approach considers earnings multipliers based on market data of comparable companies engaged in similar business.
Assumptions: The Sohu reporting unit estimated the fair values by using the income approach and the market approach. The income approach considers a number of factors that include expected future cash flows, revenue growth rates, discount rate and profitability. The market approach considers earnings multipliers based on market data of comparable companies engaged in a similar business.
For Sohu Media portal and Sohu Video, we have continued to refine our flagship Apps and enhance user experience by introducing premium content and innovative features to meet user demand and upgrading our technology and algorithms.
We have focused our efforts on developing a portfolio of mobile products across our business lines. For Sohu Media portal and Sohu Video, we have continued to refine our flagship Apps and enhance user experience by expanding premium content offerings, upgrading technology and algorithms, and introducing innovative features to meet user demand.
See Note 2 - “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for more information regarding expected credit losses.
See “Note 2 - Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for more information regarding goodwill.
RESULTS OF OPERATIONS Unless indicated otherwise, results of operations data for all periods presented relate to our continuing operations only, and exclude results from Sogou’s businesses, as a result of the fact that in September 2021 we sold all of the Sogou ordinary shares owned by us to Tencent.
See “Note 2 - Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for more information regarding expected credit losses. 115 Table of Contents RESULTS OF OPERATIONS Unless indicated otherwise, results of operations data for all periods presented relate to our continuing operations only, and exclude results from Sogou’s businesses, as a result of the fact that in September 2021 we sold all of the Sogou ordinary shares owned by us to Tencent.
Sales and Marketing Expenses Sales and marketing expenses were $225.5 million for 2022, compared to $182.7 million and $159.8 million, respectively, for 2021 and 2020. The year-on-year increase for 2022 was $42.8 million, representing a year-on-year increase of 23%.
Sales and Marketing Expenses Sales and marketing expenses were $213.4 million for 2023, compared to $225.5 million and $182.7 million, respectively, for 2022 and 2021. The year-on-year decrease for 2023 was $12.1 million, representing a year-on-year decrease of 5%.
The year-on-year increase for 2021 was $27.0 million, representing a year-on-year increase of 11%.
The year-on-year increase for 2023 was $19.0 million, representing a year-on-year increase of 7%.
Net Income/(Loss) As a result of the foregoing, we had a net loss from continuing operations of $17.3 million for 2022, compared to net income of $69.3 million and a net loss of $36.5 million, respectively, for 2021 and 2020.
The difference in income tax expense for 2022 compared to 2021 resulted primarily from deferred tax expense of $3.8 million. Net Income/(Loss) As a result of the foregoing, we had a net loss from continuing operations of $66.1 million for 2023, compared to a net loss of $17.3 million, and net income of $69.3 million, respectively, for 2022 and 2021.
As the VIEs are not owned by our Chinese mainland-based subsidiaries or any of our subsidiaries outside of the Chinese mainland, they are not able to make dividend payments to those subsidiaries.
However, such VIEs have in the past, and may again in the future, hold significant cash balances. As the VIEs are not owned by our Chinese mainland-based subsidiaries or any of our subsidiaries outside of the Chinese mainland, they are not able to make dividend payments to those subsidiaries.
The worldwide COVID-19 pandemic has had, and may continue to have, a negative impact on the Chinese economy and, in particular, on advertiser spending in the Chinese mainland market in which we operate, which in turn has had, and may continue to have, an adverse impact on our future business and results of operations.
The worldwide COVID-19 pandemic had a negative impact on the Chinese economy in 2021 and 2022 and, in particular, on advertiser spending, which in turn had an adverse impact on our business and results of operations for those years.
The $17.2 million year-on-year decrease from 2021 to 2022 was mainly attributable to a $10.1 million decrease in revenue from Sohu’s paid subscription services, a $4.2 million decrease in Sohu’s interactive broadcasting services, and a $2.5 million decrease in Sohu’s revenue sharing from other platforms.
The year-on-year decrease for 2023 was $12.9 million, which was mainly attributable to a $12.3 million decrease in revenue from Sohu’s paid subscription services, a $1.4 million decrease in Sohu’s interactive broadcasting services, and a $0.8 million increase in Sohu’s revenue sharing from other platforms.
The $4.3 million year-on-year decrease from 2020 to 2021 was mainly attributable to a $4.3 million decrease in revenue from Sohu’s sub-licensing of its purchased video content to third parties. 110 Table of Contents Costs and Expenses Cost of Revenues The following table presents our cost of revenues by source and by proportion for the periods indicated (in thousands, except percentages): Year ended December 31, 2020 2021 2022 2021 VS 2020 2022 VS 2021 Amount Percentage Amount Percentage Amount Percentage Amount Incremental ratio Amount Incremental ratio Cost of revenues: Brand advertising $ 105,604 49 % $ 99,522 49 % $ 86,642 45 % $ (6,082 ) (6 )% $ (12,880 ) (13 )% Online games 91,526 42 % 87,616 43 % 91,001 48 % (3,910 ) (4 )% 3,385 4 % Others 20,307 9 % 17,533 8 % 13,930 7 % (2,774 ) (14 )% (3,603 ) (21 )% Total cost of revenues $ 217,437 100 % $ 204,671 100 % $ 191,573 100 % $ (12,766 ) (6 )% $ (13,098 ) (6 )% 111 Table of Contents Cost of Brand Advertising Revenues Cost of brand advertising revenues was $86.6 million for 2022, compared to $99.5 million and $105.6 million, respectively, for 2021 and 2020.
The year-on-year decrease for 2022 was $17.2 million, which was mainly attributable to a $10.1 million decrease in revenue from Sohu’s paid subscription services, a $4.2 million decrease in Sohu’s interactive broadcasting services, and a $2.5 million decrease in Sohu’s revenue sharing from other platforms. 118 Table of Contents Costs and Expenses Cost of Revenues The following table presents our cost of revenues by source and by proportion for the periods indicated (in thousands, except percentages): Year ended December 31, 2021 2022 2023 2022 VS 2021 2023 VS 2022 Amount Percentage Amount Percentage Amount Percentage Amount Incremental ratio Amount Incremental ratio Cost of revenues: Brand advertising $ 99,522 49 % $ 86,642 45 % $ 71,103 48 % $ (12,880 ) (13 )% $ (15,539 ) (18 )% Online games 87,616 43 % 91,001 48 % 65,029 45 % 3,385 4 % (25,972 ) (29 )% Others 17,533 8 % 13,930 7 % 9,625 7 % (3,603 ) (21 )% (4,305 ) (31 )% Total cost of revenues $ 204,671 100 % $ 191,573 100 % $ 145,757 100 % $ (13,098 ) (6 )% $ (45,816 ) (24 )% 119 Table of Contents Cost of Brand Advertising Revenues Cost of brand advertising revenues was $71.1 million for 2023, compared to $86.6 million and $99.5 million, respectively, for 2022 and 2021.
Factors and Trends Affecting our Business The range of mobile Internet services continues to expand, reflecting a continual shift in user activity from PCs to mobile devices and an increase in the number of Internet users. At Sohu, we have focused our efforts on developing a portfolio of mobile products across our business lines.
See “Item 4. Information on the Company - History and Development of the Company.” Factors and Trends Affecting our Business The range of mobile Internet services continues to expand, reflecting a continual shift in user activity from PCs to mobile devices and an increase in the number of Internet users.
At this time, we are unable to make a reasonably reliable estimate of the timing of payments of long-term liabilities in individual years beyond 12 months due to uncertainties in the timing of the tax impact of the transactions. As a result, this amount is not included in the table above.
See “Note 15 - Taxation” of the Notes to Consolidated Financial Statements for more information. At this time, we are unable to make a reasonably reliable estimate of the timing of payments of long-term liabilities in individual years beyond 12 months due to uncertainties in the timing of the tax impact of the transactions.
The year-on-year decrease for 2021 was $2.8 million, which was mainly due to a $2.1 million decrease in content and license costs related to paid subscription services. 112 Table of Contents Operating Expenses The following table presents our operating expenses by nature and by proportion for the periods indicated (in thousands, except percentages): Year ended December 31, 2020 2021 2022 2021 VS 2020 2022 VS 2021 Amount Percentage Amount Percentage Amount Percentage Amount Incremental ratio Amount Incremental ratio Operating expenses: Product development $ 241,941 53 % $ 268,863 50 % $ 260,772 48 % $ 26,922 11 % $ (8,091 ) (3 )% Sales and marketing 159,787 35 % 182,690 34 % 225,480 41 % 22,903 14 % 42,790 23 % General and administrative 57,354 12 % 81,880 16 % 56,920 11 % 24,526 43 % (24,960 ) (30 )% Total operating expenses $ 459,082 100 % $ 533,433 100 % $ 543,172 100 % $ 74,351 16 % $ 9,739 2 % 113 Table of Contents Product Development Expenses Product development expenses were $260.8 million for 2022, compared to $268.9 million and $241.9 million, respectively, for 2021 and 2020.
The year-on-year decrease for 2022 was $3.6 million, which was mainly due to a $4.2 million decrease in revenue-sharing payments related to interactive broadcasting services, offset by a $0.6 million increase in revenue-sharing payments related to payment channels. 120 Table of Contents Operating Expenses The following table presents our operating expenses by nature and by proportion for the periods indicated (in thousands, except percentages): Year ended December 31, 2021 2022 2023 2022 VS 2021 2023 VS 2022 Amount Percentage Amount Percentage Amount Percentage Amount Incremental ratio Amount Incremental ratio Operating expenses: Product development $ 268,863 50 % $ 260,772 48 % $ 279,842 52 % $ (8,091 ) (3 )% $ 19,070 7 % Sales and marketing 182,690 34 % 225,480 41 % 213,449 39 % 42,790 23 % (12,031 ) (5 )% General and administrative 81,880 16 % 56,920 11 % 48,934 9 % (24,960 ) (30 )% (7,986 ) (14 )% Total operating expenses $ 533,433 100 % $ 543,172 100 % $ 542,225 100 % $ 9,739 2 % $ (947 ) 0 % 121 Table of Contents Product Development Expenses Product development expenses were $279.8 million for 2023, compared to $260.8 million and $268.9 million, respectively, for 2022 and 2021.
The increase included a $3.7 million increase in revenue-sharing payments to licensors, game developers, and platforms, and a $2.0 million increase in salary and benefits expenses, offset by a $1.4 million decrease in content and license costs, and a $0.5 million decrease in tax surcharges. The year-on-year decrease in cost of online game revenues for 2021 was $3.9 million.
The decrease included a $22.0 million decrease in revenue-sharing payments to licensors, game developers, and third-party Internet platforms, and a $1.1 million decrease in bandwidth service costs and a $0.6 million decrease in tax surcharges. The year-on-year increase in cost of online game revenues for 2022 was $3.4 million.
The goodwill impairment assessment is sensitive to our estimates in these factors. When one of our assumptions relating to these factors decreased/increased by 5% while holding all other assumptions constant, the result of the goodwill impairment assessment would not be impacted and the fair value of the reporting unit would still be above its carrying value.
If we decreased/increased by 5% one of our assumptions relating to these factors while holding all other assumptions constant, the fair value of the Sohu reporting unit would not be significantly impacted and would still be above its carrying value. The market capitalization of the Sohu Group was also considered in determining the reasonableness of estimated fair value.
The year-on-year decrease in PC game revenues for 2022 was mainly due to a natural decline in TLBB PC. 109 Table of Contents Revenues from mobile games were $159.7 million for 2022, compared to $168.9 million and $183.0 million, respectively, for 2021 and 2020. The dominant mobile game operated by Changyou was Legacy TLBB Mobile.
Revenues from mobile games were $111.0 million for 2023, compared to $159.7 million and $168.9 million, respectively, for 2022 and 2021. The dominant mobile game operated by Changyou was Legacy TLBB Mobile.
The year-on-year decrease for 2022 was $3.6 million, which was mainly due to a $4.2 million decrease in revenue-sharing payments related to interactive broadcasting services, offset by a $0.6 million increase in revenue-sharing payments related to paid subscription services.
The year-on-year decrease for 2023 was $4.3 million, which was mainly due to a $4.6 million decrease in revenue-sharing payments related to payment channels.
CONTRACTUAL OBLIGATIONS The following table sets forth our contractual obligations as of December 31, 2022 (in thousands): 2023 2024 2025 2026 2027 Thereafter Total Royalties and expenditures for licensed content of games $ 10,279 5,600 2,513 0 0 0 18,392 Purchase of bandwidth 11,555 450 30 14 8 0 12,057 Purchase of content and services 8,963 329 74 0 0 0 9,366 Operating lease obligations 5,197 2,588 123 0 0 0 7,908 Others 292 18 3 0 0 0 313 Total Payments Required $ 36,286 8,985 2,743 14 8 0 48,036 OTHER LONG-TERM LIABILITIES We recorded long-term tax liabilities of $200.2 million, consisting primarily of a $7.5 million in interest on the unrecognized tax benefit related to the Toll Charge, and $192.7 million related to certain business transactions that took place in previous years and management determined may result in additional tax obligations under relevant tax rules.
CONTRACTUAL OBLIGATIONS The following table sets forth our contractual obligations as of December 31, 2023 (in thousands): 2024 2025 2026 2027 2028 Thereafter Total Royalties and expenditures for licensed content of games $ 15,224 1,412 1,059 0 0 0 17,695 Operating lease obligations 4,826 2,357 1,994 0 0 0 9,177 Purchase of content and services 8,029 290 23 0 0 0 8,342 Purchase of bandwidth 7,021 40 14 8 0 0 7,083 Others 295 0 0 0 0 0 295 Total Payments Required $ 35,395 4,099 3,090 8 0 0 42,592 OTHER LONG-TERM LIABILITIES We recorded long-term tax liabilities of $212.9 million, consisting primarily of a $12.9 million in interest on the unrecognized tax benefit related to the Toll Charge, and $200.0 million related to certain business transactions that took place in previous years and management determined may result in additional tax obligations under relevant tax rules.
Cost of Online Game Revenues Cost of online game revenues was $91.0 million for 2022, compared to $87.6 million and $91.5 million, respectively, for 2021 and 2020. The year-on-year increase in cost of online game revenues for 2022 was $3.4 million.
Our brand advertising gross margin was 20% for 2023, compared to 16% and 26%, respectively, for 2022 and 2021. Cost of Online Game Revenues Cost of online game revenues was $65.0 million for 2023, compared to $91.0 million and $87.6 million, respectively, for 2022 and 2021. The year-on-year decrease in cost of online game revenues for 2023 was $26.0 million.
In 2022, the mobile game Legacy TLBB Mobile generated $72.6 million in revenues, accounting for approximately 12% of Changyou’s online game revenues, approximately 12% of Changyou’s total revenues, and approximately 10% of the Sohu Group’s total revenues. The year-on-year decrease in mobile game revenues for 2022 was $9.2 million, mainly due to a natural decline in older games.
In 2023, TLBB PC generated revenues of $321.4 million, accounting for approximately 67% of Changyou’s online game revenues, approximately 66% of Changyou’s total revenues, and approximately 53% of the Sohu Group’s total revenues. The year-on-year decrease in PC game revenues for 2023 was $57.0 million, mainly due to a natural decline in TLBB PC.
For 2020, $184.4 million net cash provided by continuing investing activities was primarily attributable to (i) $1.42 billion in proceeds from short-term investments, and $1.2 million cash received from other investing activities, (ii) offset by $1.21 billion used in purchase of short-term investments, and $33.8 million used in purchase of fixed assets and intangible assets.
Net Cash Provided by/(Used in) Investing Activities For 2023, $291.7 million net cash used in continuing investing activities was primarily attributable to (i) $1.80 billion used in purchase of short-term investments and time deposits, $22.1 million used in the purchase of long-term investment, and $18.4 million used in purchase of fixed assets and intangible assets, offset by (ii) $1.54 billion in proceeds from short-term investments and time deposits, and $3.6 million cash received from other investing activities. 125 Table of Contents For 2022, $232.8 million net cash used in continuing investing activities was primarily attributable to (i) $2.15 billion used in purchase of short-term investments and time deposits, and $23.8 million used in purchase of fixed assets and intangible assets, offset by (ii) $1.94 billion in proceeds from short-term investments and $6.3 million cash received from other investing activities.
The year-on-year decrease for 2021 was $6.1 million, which mainly consisted of a $7.3 million decrease in content and license costs and a $3.0 million decrease in bandwidth service costs, offset by a $5.3 million increase in salary and benefits expenses.
The year-on-year decrease for 2023 was $15.5 million, which mainly consisted of an $8.0 million decrease in bandwidth service costs, a $4.1 million decrease in costs incurred for content marketing campaigns, a $2.5 million decrease in depreciation and amortization expenses, and a $1.4 million decrease in salary and benefits expenses.
GAAP (ASC 810). Between our entry into the Tencent/Sohu Sogou Share Purchase Agreement on September 29, 2020 and the completion of the Tencent/Sohu Sogou Share Purchase on September 23, 2021, Sogou, which generated search and search related advertising revenues, met the criteria for discontinued operations.
Diluted net loss from continuing operations per share attributable to Sohu.com Limited was $1.93 in 2023, compared to diluted net loss from continuing operations per share attributable to Sohu.com Limited of $0.50 in 2022. 113 Table of Contents Between our entry into the Tencent/Sohu Sogou Share Purchase Agreement on September 29, 2020 and the completion of the Tencent/Sohu Sogou Share Purchase on September 23, 2021, Sogou, which generated search and search related advertising revenues, met the criteria for discontinued operations.
In 2022, TLBB PC generated revenues of $378.5 million, accounting for approximately 65% of Changyou’s online game revenues, approximately 64% of Changyou’s total revenues and approximately 52% of the Sohu Group’s total revenues.
In 2023, the mobile game Legacy TLBB Mobile generated revenues of $55.4 million, accounting for approximately 12% of Changyou’s online game revenues, approximately 11% of Changyou’s total revenues, and approximately 9% of the Sohu Group’s total revenues.
The increase mainly consisted of a $24.7 million increase in salary and benefits expenses and a $2.4 million increase in bad debt expenses, offset by a $1.7 million decrease in share-based compensation expense and a $1.6 million decrease in professional fees.
The decrease mainly consisted of a $3.5 million decrease in salary and benefits expenses, a $2.1 million decrease in share-based compensation expense, and a $1.4 million decrease in professional fees. The year-on-year decrease for 2022 was $25.0 million, representing a year-on-year decrease of 30%.
We have also continued to explore new application scenarios using our advanced live broadcasting technology, and host innovative marketing events, both online and offline, which have not only generated a large amount of premium content but also attracted considerable attention and interest from users and advertisers through our online platforms, which has further strengthened our brand influence across the market and consolidated our position as a mainstream media platform.
Further, we have continued to host various innovative marketing events, both online and offline, which have not only generated a large amount of premium content but also gained widespread recognition from users. These events demonstrated our competitive advantage and have further consolidated our position as a mainstream media platform.
Meanwhile, we have launched a series of science related live broadcastings, including the highly regarded IPs, and attracted hundreds of leading professional broadcasters in a variety of fields to our platform, which have reinforced our reputation as a credible, leading science and knowledge-based live broadcasting platform.
We have worked closely with professional media organizations and other content providers on the production of high-quality content while continuing to concentrate on our self-developed video content. We have launched a series of science related live broadcastings, including the highly regarded IPs, which have reinforced our reputation as a leading science and knowledge-based live broadcasting platform.
The goodwill balance associated with the Sohu brand advertising reporting unit was $37.2 million as of December 31, 2022. We conduct an annual impairment test as of October 1 of each year, or more frequently if events or circumstances indicate an impairment may exist.
We conduct an annual impairment test as of October 1 of each year, or more frequently if events or circumstances indicate an impairment may exist. We conduct impairment tests by quantitatively comparing the fair value of the reporting unit to its carrying value.
The year-on-year increase for 2021 was $22.9 million, representing a year-on-year increase of 14%. The increase mainly consisted of a $13.8 million increase in advertising and promotional expenses, and an $8.6 million increase in salary and benefits expenses.
The decrease mainly consisted of a $13.3 million decrease in advertising and promotional expenses, offset by a $1.5 million increase in professional fees. The year-on-year increase for 2022 was $42.8 million, representing a year-on-year increase of 23%.
While maintaining its core competitiveness in MMORPGs, Changyou is also expanding its game portfolio with additional types of card-based RPGs, casual games and strategy games. For the three months ended December 31, 2022, the PC games and mobile games that Changyou operates had approximately 4.1 million total average monthly active accounts and approximately 1.3 million total active paying accounts.
While maintaining its core competitiveness in MMORPGs, Changyou is also expanding its game portfolio with additional types of card-based RPGs, sports games, casual games and strategy games.
The difference in income tax expense for 2022 compared to 2021 resulted primarily from deferred tax expense of $3.8 million. The difference in income tax expense for 2021 compared to 2020 resulted primarily from accrued regular income tax expense of $48.4 million.
The difference in income tax expense for 2023 compared to 2022 resulted primarily from accrued regular income tax expense of $9.7 million, offset by $5.3 million for U.S. corporate income tax, resulting primarily from accrued interest on an unrecognized tax benefit.
See “Item 4. Information on the Company - History and Development of the Company.” 105 Table of Contents For the year ended December 31, 2022, our total revenues were approximately $733.9 million, representing a decrease of 12% compared to 2021, and our gross margin decreased from 76% to 74%.
For the year ended December 31, 2023, our total revenues were approximately $600.7 million, representing a decrease of 18% compared to 2022, and our gross margin increased from 74% to 76%. Our brand advertising business generated revenues of $88.7 million, with a 14% annual decrease, representing 15% of total revenues.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeThe full responsibilities of our nominating committee are set forth in its charter, which is posted on our Web site at http://investors.sohu.com/committee-details/nominating-committee It is a policy of our nominating committee that candidates for director (i) be determined to have unquestionable integrity and honesty, (ii) have the ability to exercise sound, mature and independent business judgment which is in the best interests of the shareholders as a whole, (iii) have a background and experience in fields which will complement the talents of the other Board members, (iv) have the willingness and capability to take the time to actively participate in Board and committee meetings and related activities, (v) have the ability to work professionally and effectively with other Board members and our management, (vi) have the ability to remain on our Board long enough to make a meaningful contribution and (vii) have no material relationships with competitors or other third parties that could create a reasonable likelihood of a conflict of interest or other legal issues. 123 Table of Contents Neither our nominating committee nor our Board of Directors has a policy with regard to the consideration of diversity when identifying and evaluating proposed director candidates, although both may consider diversity when identifying and evaluating proposed director candidates, and one of the enumerated factors under our nominating committee’s charter that the committee may consider when identifying potential nominees is the interplay of the candidate’s experience with the experience of the other board members.
Biggest changeThe full responsibilities of our Nominating Committee are set forth in its charter, which is posted on our Web site at http://investors.sohu.com/committee-details/nominating-committee It is a policy of our Nominating Committee that candidates for director (i) be determined to have unquestionable integrity and honesty, (ii) have the ability to exercise sound, mature and independent business judgment which is in the best interests of the shareholders as a whole, (iii) have a background and experience in fields which will complement the talents of the other Board members, (iv) have the willingness and capability to take the time to actively participate in Board and committee meetings and related activities, (v) have the ability to work professionally and effectively with other Board members and our management, (vi) have the ability to remain on our Board long enough to make a meaningful contribution and (vii) have no material relationships with competitors or other third parties that could create a reasonable likelihood of a conflict of interest or other legal issues.
Awards granted under the Changyou Share Incentive Plans are evidenced by an award document that sets forth the terms and conditions applicable to each of the awards, as determined by our Board of Directors or compensation committee in its sole discretion.
Awards granted under the Changyou Share Incentive Plans are evidenced by an award document that sets forth the terms and conditions applicable to each of the awards, as determined by our full Board of Directors or our Compensation Committee in its sole discretion.
We intend to continually assess our industry and the status of our business and may decide in the future, should future circumstances make it appropriate, to seek to meet the diversity objectives contemplated by Rule 5606(f)(2)(B) of the Nasdaq Listing Rules. 122 Table of Contents Committees of the Board of Directors Audit Committee The members of our audit committee currently are Dr.
We intend to continually assess our industry and the status of our business and may decide in the future, should future circumstances make it appropriate, to seek to meet the diversity objectives contemplated by Rule 5606(f)(2)(B) of the Nasdaq Listing Rules. Committees of the Board of Directors Audit Committee The members of our Audit Committee currently are Dr.
Charles Zhang has a Ph.D. in experimental physics from MIT and a Bachelor of Science degree from Tsinghua University. Dewen Chen is the Chief Executive Officer of Changyou and was one of the principal founders of Changyou’s online game business. Mr. Chen was named as one of our executive officers effective November 1, 2016. Mr.
Charles Zhang has a Ph.D. in experimental physics from MIT and a Bachelor of Science degree from Tsinghua University. 128 Table of Contents Dewen Chen is the Chief Executive Officer of Changyou and was one of the principal founders of Changyou’s online game business. Mr. Chen was named as one of our executive officers effective November 1, 2016. Mr.
The audit committee is responsible for, among other things: • selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; • overseeing our accounting and financial reporting processes and audits of the financial statements of our company; • reviewing with the independent auditors any audit problems or difficulties and management’s response; • reviewing and approving all proposed related party transactions, as defined in the Nasdaq Listing Rules; • discussing the annual audited financial statements with management and the independent auditors; • reviewing major issues as to the adequacy of our internal controls over financial reporting and any special audit steps adopted in the light of any significant deficiencies or materially weakness in our internal controls; and • meeting separately and periodically with management and the independent auditors.
The Audit Committee is responsible for, among other things: • selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; • overseeing our accounting and financial reporting processes and audits of the financial statements of our company; • reviewing with the independent auditors any audit problems or difficulties and management’s response; • reviewing and approving all proposed related party transactions, as defined in the Nasdaq Listing Rules; • discussing the annual audited financial statements with management and the independent auditors; • reviewing major issues as to the adequacy of our internal controls over financial reporting and any special audit steps adopted in the light of any significant deficiency or material weakness in those internal controls; and • meeting separately and periodically with management and the independent auditors.
Our directors currently consist of Dr. Charles Zhang, Zhonghan Deng, and Dave De Yang, whose terms will expire at our 2024 annual general meeting of shareholders, and Charles Huang, Dave Qi, and Shi Wang, whose terms will expire at our 2023 annual meeting of shareholders.
Our directors currently consist of Dr. Charles Zhang, Zhonghan Deng, and Dave De Yang, whose terms will expire at our 2024 annual general meeting of shareholders, and Charles Huang, Dave Qi, and Shi Wang, whose terms will expire at our 2025 annual meeting of shareholders.
Zhang, Ms. Lv and Mr. Chen has entered into an employee non-competition, non-solicitation, confidential information, and work product agreement with us or Changyou, respectively. Under these agreements, Dr. Zhang, Ms. Lv or Mr.
Each of Dr. Zhang, Ms. Lv and Mr. Chen has entered into an employee non-competition, non-solicitation, confidential information, and work product agreement with us or Changyou, respectively. Under these agreements, Dr. Zhang, Ms. Lv or Mr.
Awards Granted under Sohu 2018 Share Incentive Plan Directors and Executive Officers Ordinary Shares underlying outstanding options Exercise price Date of grant Expiration date Charles Zhang 75,000 (1) $ 0.001 2/16/2015 2/15/2025 Charles Zhang 70,000 (2) $ 0.001 7/1/2019 6/30/2029 Joanna Lv 7,500 (3) $ 0.001 2/16/2015 2/15/2025 Joanna Lv 40,000 (4) $ 0.001 7/1/2019 6/30/2029 Joanna Lv 10,000 (5) $ 0.001 9/1/2020 8/31/2030 (1) Consists of options to purchase our ordinary shares at a nominal exercise price, of which 75,000 options are vested and exercisable as of March 10, 2023.
Awards Granted under Sohu 2018 Share Incentive Plan Directors and Executive Officers Ordinary Shares underlying outstanding options Exercise price Date of grant Expiration date Charles Zhang 75,000 (1) $ 0.001 2/16/2015 2/15/2025 Charles Zhang 70,000 (2) $ 0.001 7/1/2019 6/30/2029 Joanna Lv 7,500 (3) $ 0.001 2/16/2015 2/15/2025 Joanna Lv 40,000 (4) $ 0.001 7/1/2019 6/30/2029 Joanna Lv 10,000 (5) $ 0.001 9/1/2020 8/31/2030 (1) Consists of options to purchase our ordinary shares at a nominal exercise price, all of which options are vested and exercisable as of February 29, 2024.
Charles Zhang, have service contracts that provide for benefits upon termination of employment. Employment Agreements with Executive Officers Employment Agreements with Dr. Charles Zhang, Ms. Joanna Lv and Mr. Dewen Chen . We have entered into a three-year employment agreement with our Chief Executive Officer, Dr. Charles Zhang, and a three-year employment agreement with our Chief Financial Officer, Ms.
Charles Zhang, have service contracts that provide for benefits upon termination of employment. 132 Table of Contents Employment Agreements with Executive Officers Employment Agreements with Dr. Charles Zhang, Ms. Joanna Lv and Mr. Dewen Chen . We have entered into a three-year employment agreement with our Chief Executive Officer, Dr.
“Good reason” includes (i) any significant change in the executive officer’s duties and responsibilities inconsistent in any material and adverse respect with his or her title and position, and (ii) any material breach of the employment agreement by us, including any reduction in the executive officer’s base salary or our failure to pay to him or her any portion of his or her compensation. 124 Table of Contents Each of Dr.
“Good reason” includes (i) any significant change in the executive officer’s duties and responsibilities inconsistent in any material and adverse respect with his or her title and position, and (ii) any material breach of the employment agreement by us, including any reduction in the executive officer’s base salary or our failure to pay to him or her any portion of his or her compensation.
Share incentive awards that were granted, or may be granted, under the Sohu 2018 Share Incentive Plan include, among other forms, options, restricted share units and restricted shares, and the maximum term of any share incentive award granted is ten years from the grant date.
Share incentive awards that were granted, or may be granted, under the Changyou Share Incentive Plans include, among other forms, options, restricted share units and restricted shares, and the maximum term of any share incentive award granted is ten years from the grant date.
For more information about the classification of our Board of Directors, see “- Board of Directors.” Officers are elected by and serve at the discretion of the Board of Directors. Compensation of Executive Officers and Directors During the year ended December 31, 2022, we paid an aggregate of approximately $16.2 million in cash compensation to our executive officers.
For more information about the classification of our Board of Directors, see “- Board of Directors.” Officers are elected by and serve at the discretion of the Board of Directors. Compensation of Executive Officers and Directors During the year ended December 31, 2023, we paid an aggregate of approximately $3.0 million in cash compensation to our executive officers.
Huang served as Executive Director and Head of the Asia Securitization Group of Deutsche Bank, New York and Hong Kong, as well as a Senior Vice President of Prudential Securities Inc., New York. Mr. Huang is also a Chartered Financial Analyst, and serves as director of ZTO Express (Cayman) Inc. (New York Stock Exchange). Mr.
Prior to founding Netbig in 1999, Mr. Huang served as Executive Director and Head of the Asia Securitization Group of Deutsche Bank, New York and Hong Kong, as well as a Senior Vice President of Prudential Securities Inc., New York. Mr. Huang is also a Chartered Financial Analyst, and serves as director of ZTO Express (Cayman) Inc.
Qi has a Ph.D. in accounting from the Eli Broad Graduate School of management of Michigan State University, a Master of Business Administration from the University of Hawaii at Manoa and a Bachelor of Science and a Bachelor of Arts degree from Fudan University. Dr. Dave Qi is currently a member of the American Accounting Association. Mr.
Qi has a Ph.D. in accounting from the Eli Broad Graduate School of management of Michigan State University, a Master of Business Administration from the University of Hawaii at Manoa and a Bachelor of Science and a Bachelor of Arts degree from Fudan University. Dr.
We paid an aggregate of approximately $0.6 million in cash compensation to our directors other than Dr. Charles Zhang. In 2022, the total compensation expense for our non-executive directors and executive officers recorded in our consolidated statements of comprehensive income was $7.1 million. None of our directors, other than Dr.
We paid an aggregate of approximately $0.58 million in cash compensation to our directors other than Dr. Charles Zhang. In 2023, the total compensation expense for our non-executive directors and executive officers recorded in our consolidated statements of comprehensive income was $5.4 million. None of our directors, other than Dr.
Directors and Executive Officers Age Position Charles Zhang 58 Chairman of the Board and Chief Executive Officer Dewen Chen 47 Chief Executive Officer of Changyou Joanna Lv 52 Chief Financial Officer Charles Huang 53 Director Zhonghan Deng (1) (2) (3) 55 Independent Director Dave De Yang (1) 57 Independent Director Dave Qi (1) (2) (3) 59 Independent Director Shi Wang (3) 72 Independent Director (1) Member of the audit committee of our Board of Directors.
Directors and Executive Officers Age Position Charles Zhang 59 Chairman of the Board and Chief Executive Officer Dewen Chen 48 Chief Executive Officer of Changyou Joanna Lv 53 Chief Financial Officer Charles Huang 54 Director Zhonghan Deng (1) (2) (3) 56 Independent Director Dave De Yang (1) 58 Independent Director Dave Qi (1) (2) (3) 60 Independent Director Shi Wang (3) 73 Independent Director (1) Member of the Audit Committee of our Board of Directors.
Joanna Lv, and Changyou has entered into an employment agreement with Mr. Dewen Chen, Changyou’s Chief Executive Officers. Under these agreements we or Changyou may terminate Dr. Zhang’s, Ms. Lv’s or Mr.
Charles Zhang, and a three-year employment agreement with our Chief Financial Officer, Ms. Joanna Lv, and Changyou has entered into an employment agreement with Mr. Dewen Chen, Changyou’s Chief Executive Officers. Under these agreements we or Changyou may terminate Dr. Zhang’s, Ms. Lv’s or Mr.
A director may vote with respect to any contract, proposed contract, or arrangement in which he is materially interested, provided the nature of such interest is disclosed prior to any vote thereon. 121 Table of Contents Board Diversity Disclosure Board Diversity Matrix The following table provides the diversity statistics of our Board of Directors required by Rule 5606 of the Nasdaq Listing Rules: Board Diversity Matrix (As of March 10, 2023) Country of Principal Executive Offices: People’s Republic of China Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No Total Number of Directors 6 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 0 6 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 Disclosure Pursuant to Rule 5605(f)(3) of the Nasdaq Listing Rules Rule 5605(f)(2)(B) of the Nasdaq Listing Rules requires us to have, or to explain why we do not have, at least two members of our Board of Directors who are “Diverse” directors, at least one of whom self-identifies as “Female,” subject to transition periods specified by Rule 5605(f)(7) of the Nasdaq Listing Rules.
Board Diversity Disclosure Board Diversity Matrix The following table provides the diversity statistics of our Board of Directors required by Rule 5606 of the Nasdaq Listing Rules: Board Diversity Matrix (As of February 29, 2024) Country of Principal Executive Offices: People’s Republic of China Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No Total Number of Directors 6 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 0 6 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 Disclosure Pursuant to Rule 5605(f)(3) of the Nasdaq Listing Rules Rule 5605(f)(2)(B) of the Nasdaq Listing Rules requires us to have, or to explain why we do not have, at least two members of our Board of Directors who are “Diverse” directors, at least one of whom self-identifies as “Female,” subject to transition periods specified by Rule 5605(f)(7) of the Nasdaq Listing Rules.
Share incentive awards that were granted, or may be granted, under the Changyou Share Incentive Plans include, among other forms, options, restricted share units and restricted shares, and the maximum term of any share incentive award granted is ten years from the grant date. 125 Table of Contents Our Board of Directors administers the Changyou Share Incentive Plans following the completion of the Changyou Merger, and determines the terms and conditions of awards under the Changyou Share Incentive Plans.
Share incentive awards that were granted, or may be granted, under the Sohu 2018 Share Incentive Plan include, among other forms, options, restricted share units and restricted shares, and the maximum term of any share incentive award granted is ten years from the grant date. 133 Table of Contents Our Compensation Committee, or our full Board of Directors in the absence of such a committee, administers the Sohu 2018 Share Incentive Plan, and determines the terms and conditions of awards under the Sohu 2018 Share Incentive Plans.
In addition, we have faced in the past few years, and may continue to face in the future, significant uncertainties due to the negative impact of the COVID-19 pandemic on the Chinese economy in general, and on our business operations in particular.
In addition, we have faced in the past few years, and may continue to face in the future, significant uncertainties due to the volatility of the macroeconomic environment in the Chinese mainland and global geopolitical tensions on the Chinese economy in general, and on our business operations in particular.
As of December 31, 2022, options for the purchase of 4,972,800 Fox Video ordinary shares had vested. On June 16, 2022, Fox Video (HK) Limited (“Video HK”), a wholly-owned subsidiary of Fox Video, transferred all of its equity interests in Video Tianjin to AmazGame and Fox Video was dissolved on March 9, 2023.
On June 16, 2022, Fox Video (HK) Limited (“Video HK”), a wholly-owned subsidiary of Fox Video, transferred all of its equity interests in Video Tianjin to AmazGame and Fox Video was dissolved on March 9, 2023.
Lv brings extensive experience in financial management and has been involved in multiple strategic financial projects for us. Ms. Lv received a bachelor’s degree in economics from the Capital University of Economics and Business in Beijing and an EMBA degree from Tsinghua University. 120 Table of Contents Mr.
Lv brings extensive experience in financial management and has been involved in multiple strategic financial projects for us. Ms. Lv received a bachelor’s degree in economics from the Capital University of Economics and Business in Beijing and an EMBA degree from Tsinghua University. Mr. Charles Huang is the Founder, Chief Executive Officer and Chairman of Netbig Education Holdings Ltd. (“Netbig”).
(2) Consists of options to purchase our ordinary shares at a nominal exercise price, of which options for the purchase of 52,500 ordinary shares are vested and exercisable as of March 10, 2023. (3) Consists of options to purchase our ordinary shares at a nominal exercise price, of which 7,500 options are vested and exercisable as of March 10, 2023.
(4) Consists of options to purchase our ordinary shares at a nominal exercise price, all of which options are vested and exercisable as of February 29, 2024. (5) Consists of options to purchase our ordinary shares at a nominal exercise price, of which options for the purchase of 7,500 ordinary shares are vested and exercisable as of February 29, 2024.
A number of our employees hold share-based awards granted by Sohu and Changyou, which provide additional financial incentives to them. Most of these awards vest over a period of four years. Share Ownership Refer to “ Item 7. Major Shareholders and Related Party Transactions ” below for a description of the share ownership of our directors and senior executive officers.
Most of these awards vest over a period of four years. 135 Table of Contents Share Ownership Refer to “ Item 7. Major Shareholders and Related Party Transactions ” below for a description of the share ownership of our directors and senior executive officers.
The full responsibilities of our compensation committee are set forth in its charter, which is posted on our Web site at http://investors.sohu.com/committee-details/compensation-committee Nominating Committee The members of our nominating committee currently are Dr. Dave Qi, Mr. Shi Wang and Dr. Zhonghan Deng, who are each independent as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules.
The full responsibilities of our Compensation Committee are set forth in its charter, which is posted on our Web site at http://investors.sohu.com/committee-details/compensation-committee 131 Table of Contents Nominating Committee The members of our Nominating Committee currently are Dr. Dave Qi, Mr. Shi Wang and Dr.
Dave De Yang has served as the Chief Financial Officer and a Partner of Dalton International, an investment firm based in Chicago, since 2017. From 2012 through 2016, Mr.
Deng received a Ph.D. in electrical engineering and computer sciences, a Master of Science degree in economics and a Master of Science degree in physics from the University of California, Berkeley Dave De Yang has served as the Chief Financial Officer and a Partner of Dalton International, an investment firm based in Chicago, since 2017. From 2012 through 2016, Mr.
Rule 5605(f)(7) of the Nasdaq Listing Rules requires us to have, or explain why we do not have, (i) by December 31, 2023, at least one Diverse director and (ii) by December 31, 2025, at least two Diverse directors, at least one of whom self-identifies as Female.
Rule 5605(f)(7) of the Nasdaq Listing Rules requires us to have, or explain why we do not have, (i) by December 31, 2023, at least one Diverse director and (ii) by December 31, 2025, at least two Diverse directors, at least one of whom self-identifies as Female. 130 Table of Contents As of the date of this annual report, our Board of Directors has determined that we will satisfy the requirements of Rule 5605(f)(2)(B) of the Nasdaq Listing Rules by explaining why we did not have by December 31, 2023, and currently expect that we will not have by December 31, 2025, any Diverse directors.
Fox Video Share Incentive Plan On January 4, 2012, Fox Video, a Cayman Islands company that was wholly owned by Sohu.com Limited and was the Offshore holding entity of our online video business, adopted a 2011 Share Incentive Plan (the “Fox Video Share Incentive Plan,” which was referred to in our previous annual reports as the “Sohu Video Share Incentive Plan”) which provided for the issuance of up to 25,000,000 ordinary shares of Fox Video (representing approximately 10% of the outstanding Fox Video ordinary shares on a fully-diluted basis) to management and key employees of our online video business and to Sohu management.
Fox Video Share Incentive Plan On January 4, 2012, Fox Video, a Cayman Islands company that was wholly-owned by Sohu.com Limited and before June 16, 2022 was the Offshore holding entity of our online video business, adopted a 2011 Share Incentive Plan (the “Fox Video Share Incentive Plan,” which was referred to in our previous annual reports on Form 20-F as the “Sohu Video Share Incentive Plan”).
(4) Consists of options to purchase our ordinary shares at a nominal exercise price, of which options for the purchase of 30,000 ordinary shares are vested and exercisable as of March 10, 2023.
(2) Consists of options to purchase our ordinary shares at a nominal exercise price, all of which options are vested and exercisable as of February 29, 2024. (3) Consists of options to purchase our ordinary shares at a nominal exercise price, all of which options are vested and exercisable as of February 29, 2024.
Grants of Shares and Options to Directors and Executive Officers The following tables set forth summaries of all outstanding equity awards granted by us to, and held by each of our directors and executive officers as of March 10, 2023.
As of December 31, 2022, options for the purchase of 4,972,800 Fox Video ordinary shares had vested. 134 Table of Contents Grants of Shares and Options to Directors and Executive Officers The following tables set forth summaries of all outstanding equity awards granted by us to, and held by each of our directors and executive officers as of February 29, 2024.
(5) Consists of options to purchase our ordinary shares at a nominal exercise price, of which options for the purchase of 5,000 ordinary shares are vested and exercisable as of March 10, 2023. 126 Table of Contents Awards Granted under Changyou 2019 Share Incentive Plan Directors and Executive Officers Ordinary Shares underlying outstanding options Exercise price Date of grant Expiration date Dewen Chen 1,288,000 (1) $ 0.01 8/26/2019 9/30/2029 (1) Consists of options, granted on August 26, 2019 and effective as of October 1, 2019, that are subject to vesting in equal annual installments over a four-year period commencing on October 1, 2019.
Awards Granted under Changyou 2019 Share Incentive Plan Directors and Executive Officers Ordinary Shares underlying outstanding options Exercise price Date of grant Expiration date Dewen Chen 1,238,774 (1) $ 0.01 8/26/2019 9/30/2029 (1) Consists of options, granted on August 26, 2019 and effective as of October 1, 2019, all of which options are vested as of February 29, 2024.
Zhonghan Deng also worked as a research scientist for International Business Machines Corporation at the T.J. Watson Research Center in Yorktown Heights, New York. Dr. Deng received a Ph.D. in electrical engineering and computer sciences, a Master of Science degree in economics and a Master of Science degree in physics from the University of California, Berkeley.
(New York Stock Exchange). Mr. Huang holds a Master of Science degree in Computer Science from MIT. Dr. Zhonghan Deng is the Chief Scientist of Vimicro International Corporation (“Vimicro”), which he co-founded in 1999. Dr. Zhonghan Deng also worked as a research scientist for International Business Machines Corporation at the T.J. Watson Research Center in Yorktown Heights, New York. Dr.
Shi Wang is the Honorary Chairman of the Board of Directors of Vanke, of which he also served as General Manager from 1991 to 1999. In 1984 Mr. Shi Wang founded the Shenzhen Exhibition Center of Modern Science and Education Equipment, which is the predecessor of Vanke. Mr.
Dave Qi is currently a member of the American Accounting Association. 129 Table of Contents Mr. Shi Wang is the Honorary Chairman of the Board of Directors of Vanke, of which he also served as General Manager from 1991 to 1999. In 1984, Mr.
Our compensation committee, or our Board of Directors in the absence of such a committee, administers the Sohu 2018 Share Incentive Plan, and determines the terms and conditions of awards under the Sohu 2018 Share Incentive Plans.
Our Board of Directors administers the Changyou Share Incentive Plans following the completion of the Changyou Merger, and determines the terms and conditions of awards under the Changyou Share Incentive Plans.
As of December 31, 2022, options for the purchase of 27,500 Fox Video ordinary shares had vested. As a result of the dissolution of Fox Video on March 9, 2023, there are no longer any options for the purchase of Fox Video ordinary shares.
As a result of the dissolution of Fox Video on March 9, 2023, there are no longer any options for the purchase of Fox Video ordinary shares. Employees As of December 31, 2023, we had approximately 4,700 employees, including 2,800 employees for Sohu and 1,900 employees for Changyou. None of our personnel are represented under collective bargaining agreements.
Shi Wang is the Executive Manager of the China Real Estate Association and is Deputy Director of the City Housing Development Council of the China Real Estate Association. Mr. Shi Wang also serves as the Chairman of the Board of Directors of Destone Acquisition Corp.
Shi Wang founded the Shenzhen Exhibition Center of Modern Science and Education Equipment, which is the predecessor of Vanke. Mr. Shi Wang is the Executive Manager of the China Real Estate Association and is Deputy Director of the City Housing Development Council of the China Real Estate Association. Mr.
A director is not required to hold any shares in our company by way of qualification.
A director is not required to hold any shares in our company by way of qualification. A director may vote with respect to any contract, proposed contract, or arrangement in which he is materially interested, provided the nature of such interest is disclosed prior to any vote thereon.
Employees As of December 31, 2022, we had approximately 4,900 employees, including 3,000 employees for Sohu and 1,900 employees for Changyou. None of our personnel are represented under collective bargaining agreements. We have entered into standard employment agreements with our employees through our subsidiaries and the VIEs. Sohu’s employees have entered into confidentiality, non-competition and non-solicitation agreements with Sohu.
We have entered into standard employment agreements with our employees through our subsidiaries and the VIEs. Sohu’s employees have entered into confidentiality, non-competition and non-solicitation agreements with Sohu. Changyou’s employees have entered into confidentiality agreements with Changyou. A number of our employees hold share-based awards granted by Sohu and Changyou, which provide additional financial incentives to them.
Removed
Charles Huang is the Founder, Chief Executive Officer and Chairman of Netbig Education Holdings Ltd. (“Netbig”), a leading education enterprise in China. Prior to founding Netbig in 1999, Mr.
Added
Shi Wang also serves as the Chairman of the Board of Directors of Destone Acquisition Corp.
Removed
Huang holds a Master of Science degree in Computer Science from MIT and a Bachelor of Science degree from the University of Science and Technology of China. Dr. Zhonghan Deng is the Chief Scientist and Chairman of the Board of Directors of Vimicro International Corporation (“Vimicro”), which he co-founded in 1999. Dr.
Added
Zhonghan Deng, who are each independent as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules.
Removed
As of the date of this annual report, our Board of Directors has determined that we will satisfy the requirements of Rule 5605(f)(2)(B) of the Nasdaq Listing Rules by explaining why we will not have any Diverse directors by either December 31, 2023 or December 31, 2025.
Added
Neither our Nominating Committee nor our full Board of Directors has a policy with regard to the consideration of diversity when identifying and evaluating proposed director candidates, although both may consider diversity when identifying and evaluating proposed director candidates, and one of the enumerated factors under our Nominating Committee’s charter that the committee may consider when identifying potential nominees is the interplay of the candidate’s experience with the experience of the other board members.
Removed
Changyou’s employees have entered into confidentiality agreements with Changyou. However, the degree of protection afforded to an employer pursuant to confidentiality and non-competition agreements governed by Chinese mainland law may be more limited when compared to the degree of protection afforded under the laws of other jurisdictions.
Added
The Fox Video Share Incentive Plan provided for the issuance of up to 25,000,000 ordinary shares of Fox Video (representing approximately 10% of the outstanding Fox Video ordinary shares on a fully-diluted basis) to management and key employees of our online video business and to Sohu management.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

24 edited+4 added−6 removed31 unchanged
Biggest change(12) Data based on a Schedule 13G/A filed with the SEC on February 14, 2023. The principal business address of Macquarie Investment Management Business Trust is 2005 Market Street, Philadelphia, PA 19103.
Biggest change(12) Data based on a Schedule 13G/A filed jointly by Macquarie Group Limited, Macquarie Management Holdings Inc. and Macquarie Investment Management Business Trust with the SEC on February 14, 2024. Each of Macquarie Group Limited and Macquarie Management Holdings Inc. reported that it was deemed to beneficially own 3,429,040 ordinary shares beneficially owned by Macquarie Investment Management Business Trust.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS Major Shareholders The following table sets forth certain information regarding the beneficial ownership of our ordinary share as of March 10, 2023 by (i) each person (including any “group” as that term is used in Section 13(d)(3) of the Exchange Act known by us to be the beneficial owner of more than 5% of our ordinary share (assuming conversion of all outstanding exercisable options and warrants held by that person), (ii) each current director, (iii) each named executive officer and (iv) all of our current directors and named executive officers as a group.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS Major Shareholders The following table sets forth certain information regarding the beneficial ownership of our ordinary shares as of February 29, 2024 by (i) each person (including any “group” as that term is used in Section 13(d)(3) of the Exchange Act known by us to be the beneficial owner of more than 5% of our ordinary share (assuming conversion of all outstanding exercisable options and warrants held by that person), (ii) each current director, (iii) each named executive officer and (iv) all of our current directors and named executive officers as a group.
(10) Includes 170,000 ordinary shares that such persons have the right to acquire pursuant to currently exercisable options or options that may be exercised within 60 days of March 10, 2023. (11) Photon Group Limited’s address is c/o Sohu.com Limited, Sohu.com Media Plaza, Block 3, No. 2 Kexueyuan South Road, Haidian District, Beijing 100190, People’s Republic of China.
(10) Includes 200,000 ordinary shares that such persons have the right to acquire pursuant to currently exercisable options or options that may be exercised within 60 days of February 29, 2024. (11) Photon Group Limited’s address is c/o Sohu.com Limited, Sohu.com Media Plaza, Block 3, No. 2 Kexueyuan South Road, Haidian District, Beijing 100190, People’s Republic of China.
Charles Zhang disclaims beneficial ownership of such shares except to the extent of his pecuniary interest in such shares. Dr. Charles Zhang’s address is c/o Sohu.com Limited., Level 18, Sohu.com Media Plaza, Block 3, No. 2 Kexueyuan South Road, Haidian District, Beijing 100190, People’s Republic of China. (3) Mr. Charles Huang’s address is Suite 5206, Central Plaza, Wanchai, Hong Kong.
Charles Zhang disclaims beneficial ownership of such shares except to the extent of his pecuniary interest in such shares. Dr. Charles Zhang’s address is c/o Sohu.com Limited., Level 18, Sohu.com Media Plaza, Block 3, No. 2 Kexueyuan South Road, Haidian District, Beijing 100190, People’s Republic of China. (3) Mr.
In connection with such loan arrangements, we recorded in our audited consolidated balance sheets as of December 31, 2022 loans receivable from Fox Financial in a total amount of $34.1 million as prepaid and other current assets, and loans payable to Fox Financial in a total amount of $34.1 million as other short-term liabilities. Transactions with Vanke Co., Ltd.
In connection with such loan arrangements, we recorded in our audited consolidated balance sheets as of December 31, 2023 loans receivable from Fox Financial in a total amount of $33.7 million as prepaid and other current assets, and loans payable to Fox Financial in a total amount of $34.1 million as other short-term liabilities. 137 Table of Contents Transactions with Vanke Co., Ltd.
Under this supplemental agreement, if Fox Financial fails to repay the RMB-denominated loan principal and corresponding interest owed to Changyou, Changyou will have the right to apply the amount of a security deposit, consisting of the outstanding U.S. dollar-denominated loan principal and corresponding interest owed by Changyou to Fox Financial, to repay the RMB-denominated loan principal and interest owed by Fox Financial to Changyou.
Under these supplemental agreements, if Fox Financial fails to repay the RMB-denominated loan principal and corresponding interest owed to Changyou, Changyou will have the right to apply the amount of a security deposit, consisting of the outstanding U.S. dollar-denominated loan principal and corresponding interest owed by Changyou to Fox Financial, to repay the RMB-denominated loan principal and interest owed by Fox Financial to Changyou, and vice versa.
Each agreement terminates only when AmazGame, Gamespace or Changyou Chuangxiang is dissolved. Services and maintenance agreements between AmazGame and Gamease, between Gamespace and Guanyou Gamespace, and between Changyou Chuangxiang and Gamease.
Each agreement terminates only when AmazGame, Gamespace or Changyou Chuangxiang is dissolved. 139 Table of Contents Services and maintenance agreements between AmazGame and Gamease, between Gamespace and Guanyou Gamespace, and between Changyou Chuangxiang and Gamease.
The number of shares beneficially owned by a person includes the number of ordinary shares subject to options or restricted stock units held by that person that are currently exercisable or settleable or that are exercisable or settleable within 60 days of March 10, 2023.
The number of shares beneficially owned by a person includes the number of ordinary shares subject to options or restricted stock units held by that person that are currently exercisable or settleable or that are exercisable or settleable within 60 days of February 29, 2024.
If the shareholders breach their obligations under any VIE-related agreements (Gamease’s or Guanyou Gamespace’s breach of any of its obligations under the various applicable VIE-related agreements will be treated as its shareholder’s breach of its obligations), including the equity pledge agreements, AmazGame and Gamespace are entitled to exercise their rights as the beneficiaries under the applicable equity pledge agreements, including all rights the respective shareholders have as shareholders of Gamease or Guanyou Gamespace. 130 Table of Contents Equity interest purchase right agreements among AmazGame, Gamease and the sole shareholder of Gamease and among Gamespace, Guanyou Gamespace and the sole shareholder of Guanyou Gamespace.
If the shareholders breach their obligations under any VIE-related agreements (Gamease’s or Guanyou Gamespace’s breach of any of its obligations under the various applicable VIE-related agreements will be treated as its shareholder’s breach of its obligations), including the equity pledge agreements, AmazGame and Gamespace are entitled to exercise their rights as the beneficiaries under the applicable equity pledge agreements, including all rights the respective shareholders have as shareholders of Gamease or Guanyou Gamespace.
The security deposit will be required to be replenished by Fox Financial if the amount of the security deposit is insufficient to repay the loan principal and interest of the RMB-denominated loan owed to Changyou, and any remaining security deposit will be returned to Fox Financial if there is a surplus after the repayment of the RMB-denominated loan principal and interest.
The security deposit will be required to be replenished by Fox Financial or Changyou, as the case may be, if the amount of the security deposit is insufficient to repay the applicable loan principal and interest, and any remaining security deposit will be returned to Fox Financial or Changyou, as the case may be, if there is a surplus after the repayment of the loan principal and interest.
(4) Mr. Shi Wang’s address is Vanke Architecture Research Center, No. 68 Meilin Road, Futian District, Shenzhen 518049, People’s Republic of China. (5) Dr. Dave Qi’s address is 3/F, Tower E3, Oriental Plaza, 1 East Chang An Avenue, Beijing 100005, People’s Republic of China. (6) Dr.
Charles Huang’s address is Suit 611, Chinachem Tower, 34-37 Connaught Road Central, Hong Kong. (4) Mr. Shi Wang’s address is Vanke Architecture Research Center, No. 68 Meilin Road, Futian District, Shenzhen 518049, People’s Republic of China. (5) Dr. Dave Qi’s address is 3/F, Tower E3, Oriental Plaza, 1 East Chang An Avenue, Beijing 100005, People’s Republic of China. (6) Dr.
(2) Includes (i) 127,500 ordinary shares subject to options exercisable within 60 days of March 10, 2023 and (ii) 11,048,400 ordinary shares beneficially owned by Photon Group Limited. Dr. Charles Zhang is a Director of Photon Group Limited, and may be deemed to be a beneficial owner of shares owned by it. Dr.
(2) Includes (i) 145,000 ordinary shares subject to options exercisable within 60 days of February 29, 2024 and (ii) 11,048,400 ordinary shares beneficially owned by Photon Group Limited. Dr. Charles Zhang is a Director of Photon Group Limited, and may be deemed to be a beneficial owner of shares owned by it. Dr.
Zhonghan Deng’s address is 16/F, Shining Tower, No. 35, Xueyuan Road, Haidian District, Beijing 100191, People’s Republic of China. (7) Mr. Dave De Yang’s address is 11132 Egeria Drive, Odessa, FL 33556, United States.. (8) Includes 42,500 ordinary shares subject to options exercisable within 60 days of March 10, 2023. Ms.
Zhonghan Deng’s address is 16/F, Shining Tower, No. 35, Xueyuan Road, Haidian District, Beijing 100191, People’s Republic of China. 136 Table of Contents (7) Mr. Dave De Yang’s address is 11132 Egeria Drive, Odessa, FL 33556, United States. (8) Includes 55,000 ordinary shares subject to options exercisable within 60 days of February 29, 2024. Ms.
Due to the depreciation of the RMB against the U.S. dollar in 2018, the principal amounts of Changyou’s outstanding RMB-denominated loans to Fox Financial as of December 31, 2018 were adjusted upward to amounts equal to the principal amounts of Fox Financials’ outstanding U.S. dollar denominated loans to Changyou as of December 31, 2018, multiplied by the monthly average RMB to U.S. dollar exchange rate published by the Bank of China for the month of December 2018.
In January 2019, Changyou advanced additional RMB denominated loans to Fox Financial, such that the principal amounts of Changyou’s outstanding RMB-denominated loans to Fox Financial as of December 31, 2018 were equal to the principal amounts of Fox Financials’ outstanding U.S. dollar denominated loans to Changyou as of December 31, 2018, multiplied by the monthly average RMB to U.S. dollar exchange rate published by the Bank of China for the month of December 2018.
Except as otherwise provided in the footnotes to this table, we believe that the persons named in this table have voting and investment power with respect to all of the ordinary shares stated to be beneficially owned by them.
Except as otherwise provided in the footnotes to this table, we believe that the persons named in this table have voting and investment power with respect to all of the ordinary shares stated to be beneficially owned by them. Each ordinary share is entitled to one vote on all matters subject to a shareholder vote.
Pursuant to the agreement, the shareholders executed in blank transfers of their equity interests in Heng Da Yi Tong, which are held by the Sohu Group’s legal department and may be completed and effected at Focus HK’s election.
Pursuant to the agreement, the shareholders executed in blank transfers of their equity interests in Heng Da Yi Tong, which are held by the Sohu Group’s legal department and may be completed and effected at Focus HK’s election. 138 Table of Contents Loan agreements and equity pledge agreements between AmazGame and the sole shareholder of Gamease and between Gamespace and the sole shareholder of Guanyou Gamespace.
As of the date of this annual report, Changyou has not received any response from Fox Financial and accordingly, with an abundance of caution, has not so applied any of the security deposit. Changyou performed an assessment of its expected credit losses for the RMB-denominated loans receivable from Fox Financial.
As of the date of this annual report, Changyou has not received any response from Fox Financial and accordingly, with an abundance of caution, has not so applied any of the security deposit.
In the 2020, 2021 and 2022 fiscal years, Vanke Co., Ltd. purchased $226,528, $173,276 and $139,428, respectively, in advertising services from us. Mr. Shi Wang, one of our directors, is the Honorary Chairman of the Board of Vanke Co., Ltd.
In 2021, 2022 and 2023, Vanke Co., Ltd. purchased $173,276, $139,428 and $208,092, respectively, in advertising services from us. Mr. Shi Wang, one of our directors, is the Honorary Chairman of the Board of Vanke Co., Ltd. Transactions with Deeprock Management Consultancy (Shenzhen) Co., Ltd.
Each ordinary share is entitled to one vote on all matters subject to a shareholder vote. 127 Table of Contents Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership (1) Percent of Class (1) Charles Zhang 11,444,600 (2) 33.79 % Charles Huang (3) 76,265 * Shi Wang (4) 34,132 * Dave Qi (5) 28,940 * Zhonghan Deng (6) 5,878 * Dave De Yang (7) — — Joanna Lv 45,500 (8) * Dewen Chen (9) — — All directors, nominees and executive officers as a group (8 persons) 11,635,315 (10) 34.31 % Photon Group Limited (11) 11,048,400 32.75 % Macquarie Investment Management Business Trust (12) 3,462,264 10.26 % * Less than 1%.
Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership (1) Percent of Class (1) Charles Zhang 11,462,100 (2) 34.41 % Charles Huang (3) 76,265 * Shi Wang (4) 34,132 * Dave Qi (5) 28,940 * Zhonghan Deng (6) 5,878 * Dave De Yang (7) — — Joanna Lv 58,000 (8) * Dewen Chen (9) — — All directors, nominees and executive officers as a group (8 persons) 11,665,315 (10) 34.96 % Photon Group Limited (11) 11,048,400 33.31 % Macquarie Investment Management Business Trust (12) 3,429,040 10.16 % * Less than 1%.
All of the loans carry a fixed rate of interest which approximated the market interest rate at the inception of the loans. 128 Table of Contents In December 2018 and 2019, Changyou entered into supplemental agreements with Fox Financial pursuant to which all accrued and unpaid interest on the loans as of December 31, 2018 and December 31, 2019 was added to the principal of the corresponding loans.
All of the loans carry a fixed rate of interest which approximated the market interest rate at the inception of the loans. In December 2018 and 2019, Changyou entered into several supplemental agreements with Fox Financial.
Loan agreements and equity pledge agreements between AmazGame and the sole shareholder of Gamease and between Gamespace and the sole shareholder of Guanyou Gamespace.
Equity interest purchase right agreements among AmazGame, Gamease and the sole shareholder of Gamease and among Gamespace, Guanyou Gamespace and the sole shareholder of Guanyou Gamespace.
To comply with Chinese mainland law, we conduct a significant part of our value-added telecommunications, online game, and other business activities through contractual arrangements between our principal Chinese mainland subsidiaries and the corresponding VIEs and their respective shareholders. 129 Table of Contents Before December 12, 2022, we conducted our online video business through contractual arrangements between our indirect wholly-owned subsidiary Video Tianjin, the corresponding VIE Tianjin Jinhu, and two of our employees, who were also the nominee shareholders of Tianjin Jinhu.
To comply with Chinese mainland law, we conduct a significant part of our value-added telecommunications, online game, and other business activities through contractual arrangements between our principal Chinese mainland subsidiaries and the corresponding VIEs and their respective shareholders.
The parties entered into an additional supplemental agreement pursuant to which Changyou provided security for its repayment obligations to Fox Financial.
In December 2019, Changyou entered into additional supplemental agreements with Fox Financial pursuant to which Fox Financial provided security for its repayment obligations to Changyou, and Changyou similarly provided security for its repayment obligations to Fox Financial.
GAAP (ASC 810) in the VIEs and has also been granted powers of attorney by the shareholders of the VIEs, the contractual arrangements can be, and are expected to be, renewed at the subsidiaries’ election. 131 Table of Contents Other Transactions with Certain Directors, Shareholders and Affiliates See “Directors, Senior Management and Employees - Compensation of Executive Officers and Directors.” Employment Agreements See “Directors, Senior Management and Employees - Employment Agreements with Executive Officers.” Share Incentive Plans See “Directors, Senior Management and Employees - Share Incentive Plans.” Interests of Experts and Counsel Not applicable.
Other Transactions with Certain Directors, Shareholders and Affiliates See “Directors, Senior Management and Employees - Compensation of Executive Officers and Directors.” Employment Agreements See “Directors, Senior Management and Employees - Employment Agreements with Executive Officers.” Share Incentive Plans See “Directors, Senior Management and Employees - Share Incentive Plans.” Interests of Experts and Counsel Not applicable.
Removed
As a result of such adjustment, Changyou advanced additional RMB-denominated loans in the principal amount of RMB8.2 million (approximately $1.2 million) to Fox Financial in January 2019. In December 2019, Changyou entered into a supplemental agreement with Fox Financial pursuant to which Fox Financial provided security for its repayment obligations to Changyou.
Added
The principal business address of Macquarie Group Limited is 50 Martin Place Sydney, New South Wales, Australia. The principal business address of Macquarie Management Holdings Inc. and Macquarie Investment Management Business Trust is 610 Market Street, Philadelphia, PA 19106.
Removed
Under this supplemental agreement, if Changyou fails to repay the U.S. dollar-denominated loan principal and corresponding interest owed to Fox Financial, Fox Financial will have the right to apply the amount of a security deposit, consisting of the outstanding RMB-denominated loan principal and corresponding interest owed by Fox Financial to Changyou, to repay the U.S. dollar-denominated loan principal and interest owed by Changyou to Fox Financial.
Added
Pursuant to the supplemental agreements, all accrued and unpaid interest on the loans as of December 31, 2018 and December 31, 2019 was added to the principal of the corresponding loans.
Removed
The security deposit will be required to be replenished by Changyou if the amount of the security deposit is insufficient to repay the U.S. dollar-denominated loan principal and interest owed by Changyou to Fox Financial, and any remaining security deposit will be returned to Changyou if there is a surplus after the repayment of the U.S. dollar-denominated loan principal and interest.
Added
In 2023, we paid $218,256 to Deeprock Management Consultancy (Shenzhen) Co., Ltd. for services it provided to us. Mr. Shi Wang, one of our directors, holds 99% of the outstanding shares of Deeprock Management Consultancy (Shenzhen) Co., Ltd.
Removed
As of December 31, 2022, we had accrued a cumulative allowance for credit losses of $0.1 million based on Changyou’s estimate of the net of the outstanding amount of such loans receivable from Fox Financial over the amount of the security deposit and on the lack of solvency of Fox Financial.
Added
GAAP (ASC 810) in the VIEs and has also been granted powers of attorney by the shareholders of the VIEs, the contractual arrangements can be, and are expected to be, renewed at the subsidiaries’ election.
Removed
After December 12, 2022, the two employees ceased to be the nominee shareholders of Tianjin Jinhu, as they transferred all of their equity interests in Tianjin Jinhu to High Century, one of the principal VIEs that we consolidate under U.S.
Removed
GAAP (ASC 810), which became the direct 100% parent of Tianjin Jinhu; and all VIE contractual arrangements between Video Tianjin and Tianjin Jinhu and its nominee shareholders terminated on December 12, 2022.