Different Fate for Chinese Online Game Companies

China's proprietary online games generated sales revenues of CNY 16.525 billion, rising 50.1% from a year earlier, and accounting for 64.5% of the total, disclosed the General Administration of Press and Publication (GAPP).

The country's nine leading online game companies obtained gross revenues of USD 762.5 million or CNY 5.2 billion, including Tencent Holdings Limited (SEHK: 0700), NetEase.com Inc. (Nasdaq: NTES), Beijing Perfect World Co., Ltd. (Nasdaq: PWRD), Giant Interactive Group Inc. (NYSE: GA), Kingsoft Corporation Limited (SEHK: 3888), NetDragon Websoft Inc. (SEHK: 0777), and The9 Limited (Nasdaq: NCTY).

iResearch Consulting Group points out in a report that the Chinese online gaming market reached CNY 7.17 billion in the third quarter of 2009, of which the nine companies took up 73%.

Tencent and Shanda Interactive Entertainment Ltd. (Nasdaq: SNDA) ranked the top two among Chinese online game companies. Their operating revenues respectively hit USD 223.9 million and USD 186.3 million, much more than USD 114 million of NetEase.com.

Last year, Sohu.com Inc. (Nasdaq: SOHU) spun off Changyou.com Ltd. (Nasdaq: CYOU) for a listing; Shanda Games Limited (SDG; Nasdaq: GAME) under the aegis of Shanda also floated shares on the Nasdaq, raising USD 1.044 billion.

Perfect World Board Chairman and CEO Michael Chi predicts that the company's online game exports will reach or approach USD 100 million, swelling from USD 20 million the year before.

9you, although encountered a setback in fulfilling its listing target, has not given up its plan to kick off an oversea IPO. Its top executives hint that the company will probably go public in 2010.

After losing the operating right of World of Warcraft (WoW), The9 only got operating revenues of USD 3.7 million in the third quarter of 2009, plunging from USD 59.8 million a year earlier.

Analysys International issues an analysis report, saying that The9's ranking among Chinese online game companies has dropped from the eighth to the twelfth place. Although it is still operating games like Atlantica and FIFA Online 2, their user bases are too small to greatly boost the company's performance.

On December 28, 2009, SDG and Kingsoft announced the setup of a joint venture, whose game products will be promoted abroad. Previously, both sides cooperated in terms of joint operation.

Kingsoft CEO Kau Pak Kwan reiterates that JX3 Online, costing six years and hundreds of millions Chinese yuan, will become the company's first online game to have more than 500,000 peak concurrent players. However, the figure for the game only recorded hundreds of thousands later on.

Unwillingly, Kingsoft handed JX3 Online to SDG for operation. The establishment of a venture signals that Kingsoft is spinning off its business for game operation.

(USD 1 = CNY 6.83)

Source: www.hexun.com (January 21, 2010)

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