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29Aug/0710

Shanda, NetEase and The9 Account for 60% of China’s Online Gaming Market

Motley Fool has a good wrap up of Shanda's just released Q2 numbers. I've included a couple quotes from the article below.

Further to my previous article on the potential acquisition costs of the Asian F2P leaders, Shanda seems already unaffordable for all but the most well-heeled Western suitors.

Revenue soared 39% to hit $74.1 million in the second quarter. Earnings, before a one-time gain related to the company's sale of its stake in SINA (Nasdaq: SINA), soared 78% to $0.42 per American depositary share (ADS).

Wall Street was expecting the company to earn just $0.36 per ADS on $72.4 million in revenue. The pros have been perpetually humbled by Shanda. This is now the fifth consecutive quarter in which the company lapped the market's profit targets by at least $0.06 per ADS.

And most interestingly:

Yes, China's online gaming market is getting crowded, but just three players -- NetEase (Nasdaq: NTES), The9 (Nasdaq: NCTY), and Shanda -- account for roughly 60% of the market. [Ed: emphasis mine]

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Comments (10) Trackbacks (0)
  1. Don’t forget Tencent – they made $20 million in the last quarter from gaming (a lot of casual games), and $116 million overall. There are a lot of other players involved who are not US-listed (and hence get no attention here).

    Also, those revenues are up from last year, they are up only 6% over the last quarter… and the revenue per paying players dropped 1.6%… not so good.

  2. Don’t forget Tencent – they made $20 million in the last quarter from gaming (a lot of casual games), and $116 million overall. There are a lot of other players involved who are not US-listed (and hence get no attention here).

    Also, those revenues are up from last year, they are up only 6% over the last quarter… and the revenue per paying players dropped 1.6%… not so good.

  3. Don’t forget Tencent – they made $20 million in the last quarter from gaming (a lot of casual games), and $116 million overall. There are a lot of other players involved who are not US-listed (and hence get no attention here).

    Also, those revenues are up from last year, they are up only 6% over the last quarter… and the revenue per paying players dropped 1.6%… not so good.

  4. Don’t forget Tencent – they made $20 million in the last quarter from gaming (a lot of casual games), and $116 million overall. There are a lot of other players involved who are not US-listed (and hence get no attention here).

    Also, those revenues are up from last year, they are up only 6% over the last quarter… and the revenue per paying players dropped 1.6%… not so good.

  5. Good call, Steven. Thanks for the comment.

    Tencent is a huge player, of course. Some quick stats on Tencent from my previously posted Virtual Goods Summit notes:

    - 4000 employees, 30% of whom are in R&D
    - 65% of Tencent revenue is from virtual goods
    - $9-10M in revenue per quarter from ads
    - Tencent’s QQ.com portal is #1 in traffic in China
    - Tencent’s QQ IM is the #1 IM client in China with 250M active users
    - Tencent’s QQ game portal is the #1 portal in China with 3.2M PCU
    - Tencent’s Qzone is the #1 blog site in China with 62M active users

  6. Yes, I didn’t go into Tencent overall, just their gaming business.

    I think they’re bigger than Google in China… which means something. A lot of people don’t know about their QQ message service outside of China, but it is a monster.

    They don’t get coverage here since they only have a small ADR listing, not a major listing like the other guys you mentioned.

    (and I own their stock)

    I am actually going to blog about Shanda’s last quarter. There are some troubling indications if you look at the lower level numbers.

  7. Yes, I didn’t go into Tencent overall, just their gaming business.

    I think they’re bigger than Google in China… which means something. A lot of people don’t know about their QQ message service outside of China, but it is a monster.

    They don’t get coverage here since they only have a small ADR listing, not a major listing like the other guys you mentioned.

    (and I own their stock)

    I am actually going to blog about Shanda’s last quarter. There are some troubling indications if you look at the lower level numbers.

  8. Yes, I didn’t go into Tencent overall, just their gaming business.

    I think they’re bigger than Google in China… which means something. A lot of people don’t know about their QQ message service outside of China, but it is a monster.

    They don’t get coverage here since they only have a small ADR listing, not a major listing like the other guys you mentioned.

    (and I own their stock)

    I am actually going to blog about Shanda’s last quarter. There are some troubling indications if you look at the lower level numbers.

  9. Yes, I didn’t go into Tencent overall, just their gaming business.

    I think they’re bigger than Google in China… which means something. A lot of people don’t know about their QQ message service outside of China, but it is a monster.

    They don’t get coverage here since they only have a small ADR listing, not a major listing like the other guys you mentioned.

    (and I own their stock)

    I am actually going to blog about Shanda’s last quarter. There are some troubling indications if you look at the lower level numbers.

  10. Yup, Tencent is bigger than Google in China.

    Looking forward to reading your analysis of Shanda’s last quarter!


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