Posts Tagged ‘Shanda’

Square Enix and Shanda Games to bring Final Fantasy to Chinese Market

Friday, September 17th, 2010

Marking the first ever appearance of FINAL FANTASY on Chinese shores, Shanda Games Limited and Square Enix Co., Ltd. have announced a strategic partnership that will employ Square Enix’s library of content and Shanda’s experience in game development, publishing, and distributing in China. To kick things off with a bang, both parties have agreed to launch with FINAL FANTASY XIV, a title that’s sold 97 copies worldwide, and has never before been seen in China.

square_enix_logoSeeking a win/win situation, Square Enix points to globalization as one of it’s top priorities, and has been appropriately developing and distributing global titles targeted at Japan, North America, and Europe. This partnership with Shanda will now give Square Unix unprecedented access to the lucrative Chinese market.

“The media entertainment markets are increasingly becoming more and more global in nature. Under this environment, we are speeding up our globalization strategy aimed at transforming our Group into a truly world-class enterprise.” said Yoichi Wada, president and representative director of Square Enix Holdings Co., Ltd. “Through this partnership with Shanda Games, a company with great success in online game operations in China, we are taking an important step in increasing the reach of high quality content from the Square Enix Group to even more customers around the world.”

On Shanda’s side of the table, they’ve just scored a well respected and experienced games maker to call one of their own. That’s not to say that their current stable of offerings isn’t impressive enough, they’re now just adding to the quality count.

“We are excited to have Square Enix as a partner and I look forward to leveraging our capabilities and synergies for the benefit of both companies,” said Mr. Alan Tan, Chairman and CEO of Shanda Games. “Our in-house game development team is well-qualified to assist in the localization of FINAL FANTASY XIV to the China market, while our strong sales and marketing capabilities and extensive game operation platform can provide access to the broad audience of Chinese gamers. Since its debut in 1987, the FINAL FANTASY franchise has attracted many devoted fans worldwide and, based on our experience and expertise in the China market, we are confident in the success of FINAL FANTASY XIV as well as other future collaborations with Square Enix in China.”

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Shanda Games acquires Mochi Media

Tuesday, January 12th, 2010

China based Shanda Games Ltd., the gaming unit of Shanda Interactive Entertainment Ltd., announced today that they’ve reached an agreement to acquire browser based games network Mochi Media. The total selling price was set at $60 million in cash and $20 million in equity retention arrangements.

Shanda Games, by name a newcomer to the gaming world, but in practicality, around for quite some time now. As we reported back in September, Shanda Interactive Entertainment spun off a gaming division, aiming to focus the holding company’s efforts on e-book publishing and distribution, as well as a digital music service. Shanda Games currently manages and operates both in-house developed games, as well as co-developing games with developers acquired either through investments or a third party license.

Perhaps a coincidence, but this announcement also appears just one day after holding company Shanda Interactive Entertainment announced that they’ve appointed Xu Chaojun as Chief Operating Officer.  In their last quarter, Shanda Interactive Entertainment brought home a healty $63.7 million in profit on $202.5 million in sales. I guess it’s fair to say we know where that profit margin will be headed.

“We are excited to be bringing two of the best teams in the online game industry together in the perfect marriage of content and platform. Mochi Media’s impressive array of browser-based games is an ideal complement to Shanda Games’ portfolio of nearly 70 multi-player online games,” commented, Diana Li, chief executive officer of Shanda Games.

With approximately 15,000 games being displayed on almost 40,000 publisher websites, and 140 million active monthly users, Mochi is/was a prime candidate for purchase. San Francisco based Mochi Media is an open platform that offers game developers products and services to help them push their product. These tools range everywhere from analytics and tracking data, to distribution and microtransaction monetization methods.

“The additions of Shanda Games’ extensive content catalog and proven monetization capabilities unlock tremendous value on our platform for everyone involved,” noted Jameson Hsu, co-founder and CEO of Mochi Media.

This buy signals a very strong foothold for Shanda in the North American gaming market. As well, Shanda is not only buying into an established player in the field, but one that’s been pushing the envelop from the very beginning and is looking down the road; most recently evidenced by their Flash Games survey.

The final sale is expected to close in the first quarter 2010.

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Q2 sees China’s Online Game Revenue jump 40 percent to $906 million

Wednesday, October 14th, 2009

Perhaps it’s just simply a matter of timing, but recent figures from research firm Analysys International arrive hot on the heels of the Chinese Government’s announcement that they’re banning foreign investment, or ‘influence’ in the domestic online gaming market. Their recent report indicates that the Chinese online gaming market grew 39.5 percent year over year in Q2 2009 to a massive 6.18 billion yuan, or approximately $906 million.

W020090123324470898658Coming out on top was popular online messaging platform Tencent Holdings. While the company’s QQ messenger is still the primary driver for Tencent, they also operate a number of free-to-play games in the Chinese domestic market. In this Q2 report, Tencent managed to carve out 20.2 percent of market revenues totaling 1.24 billion yuan (~$182 million).

Taking the number 2 Q2 spot was Shanda Games, the recent spinoff from Shanda Interactive Entertainment, which pulled down 20 percent of market revenues with a revenue total of 1.23 billion yuan (~$180 million).

Rounding out the top three, NetEase.com, the recent winners of the highly lucrative Blizzard/Activision World of Warcraft operators license in China managed a healthy 12.7 percent of Chinese domestic market share. While only culling 780 million yuan (~$114 million), in Q2, it’s important to remember that NetEase.com has been through the ringer with Chinese regulators regarding the support levels that Blizzard would fill in the contract.

If these Q2 numbers are any indication, it seems like Niko Partners, who made projections and put some numbers to the page back in May of this year, are right on track. Their report indicates that by 2013, the Chinese online gaming market should reach an annual revenue number value of $8.9 billion. While the market shows no signs of slowing, in fact these numbers clearly indicate a continued growth, it will be interesting to see how the governments’ recent decision to pull the plug on foreign investments in the domestic gaming will effect this growth, and associated revenue streams, if at all.

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China says ‘No Way José’ to foreign investment in online games industry

Tuesday, October 13th, 2009

It’s quite possible that the Chinese government would like to keep this one on the down low, it’s been revealed that they’ve officially cut off foreign investments in their lucrative online gaming industry. Apparently, the move is to strengthen the governments’ control and oversight of virtual worlds.

g228586_chinese-flag-640The General Administration of Press and Publication (GAPP), China’s video game industry regulator and overseer, released a paper on Saturday stating that the government will now prohibit the investment of foreign funds and interest in domestic online gaming operations. This ban is includes joint ventures, wholly owned enterprises and cooperatives.

If the phrase ‘joint venture’ and China rings a recent bell, you’ll recall that the holdup for millions of Chinese World of Warcraft players was due in part to Chinese regulators that were concerned over publisher Blizzard’s provisions of technical support to NetEase, the Chinese game developer that earlier this year won the lincense to operate the title within China. This new directive seeks to cover this issue but also stating that foreign firms will no longer be allowed to “influence Chinese gaming firms through agreements or technology support.”

With China having one of the world’s fastest growing online gaming markets, with, according to the GAPP, growth estimates projected at anywhere between 30 and 50 percent this year to a whopping 24 – 27 billion yuan ($3.5 – 4 billion), it’s easy to see why investors would want to get involved.

What’s important to keep in mind here is that the timing of this announcement couldn’t be better for the Chinese government. With the GDC: China taking place in Shanghai, China is currently playing host to some of the most important and influential decision makers in the industry. A coincidence that they chose the day prior to the official opening day of the GDC to make the announcement? Highly suspect.

Ultimately, as the decree states, foreign investment has been cut off to games and publishers that operate in the Chinese domestic market.  It’ll be interesting to see how this effects gaming powerhouses such as Shanda, which have a number of partnerships and joint ventures currently in operation.

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Shanda Interactive Entertainment spins off Shanda Games – seeks IPO

Monday, September 7th, 2009

Late last week, Chinese online gaming giant Shanda Interactive Entertainment announced that they will be spinning off their gaming division, now to be known as Shanda Games Ltd., and will be seeking a new NASDAQ IPO. The parent company is currently trading under the symbol SNDA, and Shanda Games is expected to trade under the symbol GAME.

ShandaLike many of their Chinese competition, Shanda operates a number of freemium/item sales (microtransaction based) titles, along with pay-to-play time based games. Amongst the Shanda stables of games, they operate NCSoft’s Aion: The Tower of Eternity, the company’s top money maker. This pay-to-play, time based title is singularly responsible for Shanda’s record breaking revenue highs in 2009. With 8.6 million paying accounts, Shanda operates eighteen MMORPG’s and eleven casual games, with another sixteen MMO’s and eight casual’s in development, the firm shows no signs of slowing their rapid growth.

95 percent of Shanda’s revenues are generated by their gaming unit, thereby making Shanda Games, technically the subsidiary, a much larger organization than the (technically) parent company. Outside of games, the company is also working in the e-book publishing and distribution service, as well as a digital music service. This move harkens to Shanda’s competitor Sohu’s spin off of their gaming unit Changyou, which garnered a $146 million NASDAQ IPO earlier this year.

Now in the hands of the SEC (Securities and Exchange Commission), with underwriting provided by Goldman Sachs Asia and JP Morgan Securities. Shanda Games is looking to raise as much as $800 million in this IPO. The IPO follows a record quarter of growth, with Q2 revenues up 48 percent year-over-year to $181 million.

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Free-to-play Maple Story ranks among top moneymaking MMO’s of 2008.

Monday, February 2nd, 2009

DFC Intelligence is gearing up to publish a comprehensive study of MMO worlds next month, according to GigaOm.  Wagner James Au got a special preview of the report and shares some initial estimates.

DFC’s David Cole says that the 2008 numbers are on the “very conservative” side, indicating that the 2008 numbers are still being crunched, and more exact numbers will be reflected in the February 16th reports.  “We indicate ranges because these numbers are estimates for 2008 based on where we think these products will end up,” said Cole.  And while the numbers are still being tallied, Cole estimates that the rankings should stay more or less the same, with “maybe a slot here or there” changing.

And while it shouldn’t come as a shock that the Blizzard powerhouse World of Warcraft takes the number one spot, Cole believes that if viewed from a pure profit margin, WoW wouldn’t be taking home the gold.  Asian MMO’s, which are traditionally developed at far lower budgets, have a much higher profit margin.  “Profit margin on Asian games is incredibly high,” says Cole, noting that Asian MMOs charge on or around 5-6 cents per hour with prepaid usage cards, a business model that has yet to proliferate the western gaming market.

What’s interesting to note in this projected report is the high ranking of Nexon’s free-to-play Maple Story (supported by microtransactions, prepaid cards, and international licensing), and the catalogue of Shanda’s games (Virtual item sales, prepaid cards, and freemium subscriptions).

1. World of Warcraft, launched 2004
Genre/Platform: Western MMORPG; client install with 3D graphics
Revenue sources: Monthly subscription, retails sales, prepaid cards (in Asia)
DFC estimated 2008 revenue: $500 million-plus

2. Fantasy Westward Journey, launched 2004
Genre/Platform: Asian MMORPG, client install with 2.5D graphics
Revenue sources: Prepaid cards
DFC estimated 2008 revenue: $150-$500 million

3. Maple Story, launched 2003
Genre/Platform: Asian MMORPG for kids, client install with 2D graphics
Revenue sources: Microtransactions, prepaid cards, international licensing
DFC estimated 2008 revenue: $150-$500 million

4. Shanda (company, includes Legend of Mir and World of Legend series), launched 2003
Genre/Platform: Asian MMORPG, client install with 2.5 graphics
Revenue sources: Prepaid cards, virtual item sales, freemium subscriptions
DFC estimated 2008 revenue: $150-$500 million

5. Lineage I and Lineage II , launched 1998 and 2003
Genre/Platform: Asian MMORPG, client install with 2.5 graphics (Lineage) and 3D graphics (Lineage II)
Revenue sources: Subscription, prepaid cards
DFC estimated 2008 revenue: $150-$500 million

6. Runescape
Genre/Platform: Western MMORPG for kids, web-based with 2.5D graphics
Revenue sources: Premium subscription, prepaid cards, real-world advertising
DFC estimated 2008 revenue: $50-$150 million

7. Club Penguin, launched 2006
Genre/Platform: Virtual world for kids, web-based 2.5D graphics
Revenue sources: Premium subscriptions, prepaid game cards
DFC estimated 2008 revenue: $50-$150 million

8. Lord of the Ring Online
Genre/Platform: Western MMORPG, client install with 3D graphics
Revenue sources: Subscription, retail sales
DFC estimated 2008 revenue: $50-$150 million

9. Warhammer Online
Genre/Platform: Western MMORPG, client install with 3D graphics
Revenue sources: Subscription, retail sales
DFC estimated 2008 revenue: $50-$150 million

10. Age of Conan
Genre/Platform: Western MMORPG, client install with 3D graphics
Revenue sources: Subscription, retail sales
DFC estimated 2008 revenue: $50-$150 million

Wagner continues his conversation with Cole around the most popular, in terms of active players, MMO of 2008.  To answer this question, we’ve got to go even a bit further out on the speculation branch, but Cole points out that Fantasy Westward Journey registered 2-3 million concurrent players back in August.  And although Warcraft likes to beat it’s own drum regarding their estimated 11 million+ players, “You’re lucky to get 5-10 percent [of them] playing at the same time,” says Cole.  Minho Kim, developer of Maple Story said in December that the title has 87+ million registrations, but wouldn’t comment on how many of these registered users were/are active monthly users.  Joost van Dreunen from DFC’ estimates the number to be more in the 13 – 17.4 million regular Maple Story players, roughly 15-20 percent of Kim’s estimation.

Cole admits that this year’s list looks remarkably similar to the 2007 list with Conan and Warhammer being released in 2008.  And while only 2 of the top 10 contain some type of microtransaction support, I’d estimate that this list might look very different one year from now with a number of highly anticipated (think Free Realms and Battlefield Heroes) free-to-plays coming online in ’09.

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China’s IGA market poised to pounce in 2009

Wednesday, January 14th, 2009

In game advertising started in the Chinese market back in 2007 with a few game operators casually slipping a bit of code into some of their games, with a modest $8.77M ROI.  While this might seem a pretty decent take on an ‘experiment’, according to iResearch, it accounted for only four percent of the market’s total revenues of approximately $2B.

Fast forward one year later, with Chinese IGA revenues topping out at $19M.  Still a relatively small number in the overall scheme of things, but other Chinese firms started to take notice, with several independent third-party IGA providers popping up like daisies.

Two of China’s largest IGA providers, In-Game Media and Bihu.com both believe that the solid foundations laid over the past few years, combined with the current global economic downturn have prepared the market for explosive growth.

Bihu.com

Established in 2004, Bihu previous provided in-game value added services, i.e. in-game messaging, etc.  In 2008 they decided to regroup and refocus, turning the torchlight on in game advertising.  Back in April, Bihu announced their own independent IGA system with allows game developers and operators to insert advertising code into a game without altering the core technology.  Apparently, this was a wise move on Bihu’s part, as their client list shot up from 2 to 10, with major players Dell, Samsung and Intel among the roster.

“With 10 game firms accounting for over 20 online games, we have formed an online-game advertising network, which is a basic step toward attracting advertisers,” says Li Liujun, founder and CEO of Bihu.

Li says that the IGA market in China has been partially held back by the success of virtual item sales, and convincing gaming companies to form IGA relationships to diversify revenue streams.  “China’s game firms mainly earned money through the sale of virtual products, which has been very profitable. This means they were lacking in motivation to find new revenue models,”.  He also points out that a number of developers were a bit skeptical, as inserting IGA’s would require an alteration of the core code of the game, potentially having a negative impact on the game itself.  “Our independent system that can insert adverts without changing a game’s code helps drives our business,” says Li.

Li views the global financial downturn as a time ripe to harvest the benefits of IGA, as many companies will seek to lower costs, and invest more of their advertising budgets in the emerging online media.

In-Game Media

Echoing Li’s statements, strategy director at In-Game Media, Johan Wong says, “People will likely cut down on consumption and stay at home this year, which could lead to an increase in the number of game players,”

Given the global tightening of the collective belt, Wong predicts the Chinese market will see a notable increase in the overall average age of those playing online games.  This ‘raising of the bar’ will open a number of IGA opportunities for Chinese firms ranging from high(er) priced consumer goods and real estate.

Still a relative newcomer, opening in January of 2008, In-Game Media, a subsidiary of Chinese online giant Shanda Interactive Entertainment Inc. had only been delivering IGA to Shanda’s own titles.  But in December 2008 the company opened it’s doors to further expansion, signing contracts with 20 games companies across China.

Over the course of 2008, In-Game Media developed a number of IGAs for Shanda, their most successful involving the Puma brand in Shanda’s Crazy Kart racing game.  In-Game Media was responsible for the Puma branding of virtual characters clothing, which offered users the opportunity to enter and participate in specialized promotional races via the Puma website.

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David Perry at GCDC: Free to play is the future

Wednesday, August 20th, 2008

While Leipzig might be a brand new town for David Perry, video games, development, and the industry are not.  Perry, a 27 year veteran of the gaming industry lead the panel at the Games Convention Developers Conference yesterday.  His topics ranged from personal history (the PS9 spoof was outstanding), statistics on the current status quo, and important players to look at in developing markets in China, Korea, and India.

Perry’s ‘time capsule’ intro included insight to Perry’s first programming tool – a Sinclair ZX81 with 1KB of memory, right on through to today’s complex media.  He covered the landscape from old media (cassettes) to new (Blu-ray, DVD, etc.) and on to developing storage media (hard drives).  Perry firmly believes that the industry will continue to push towards a global digital distribution outlet, with hard drives being the main storage media.  He did however also highlight another possible step after storage: virtual media.  Perry envisions a world where full games and even processing power wouldn’t be sitting on your desktop or console, but rather a cloud computing scenario where games would be broadcast across the internet.  He also admits that there are problems with this theory, and that today’s internet would maxed and taxed by this scenario, and fast and strong broadband is needed.

Exploring expanding game markets, Perry launched first into China, which has seen 65.9% overall industry growth over the past year.  Perry highlighted China’s must successful publisher Shanda as a benchmark as to where companies in that market are headed.  While Perry was visiting the Shanda offices, he shared a note that lots of team members were playing western videogames in an effort to match the quality seen herein.  While Chinese and Korean titles may not match western quality, they are certainly doing their homework, and should be on par shortly.

Creativity and risk are two key factors that allow eastern publishers to florish.  The free-to-play MMO Dance! Introduced new social systems by simply adding a chat feature, along with reasons for people to keep talking – embarrassing scenarios where players are forced to dance in strange costumes and marriage systems that allow players to look each other up and play together.  While these social additions sport high numbers, Stardoll (19 million members) and Zynga (55 million members), Perry is quick to point out that they lack one crucial component: the viral factor.

Using facebook as a testing ground, Perry highlighted his new Facebook Create a potato app as a viral experiement.  He says that he hopes to identify nodes within the network that will help spread the word about the game (and future viral projects).  He also spoke to Blizzards recent testing and entry into the viral market with their aggressive ‘recruit a friend – get an exclusive mount’ program.  Perry sees this as a failure waiting to happen.

Heading into the final stretch of his presentation, Perry made it clear : Free-to-play models are the future.  This shift will be possible in part by something he calls the “money wall” – the tipping point at which certain consumers will no longer be willing to pay for entertainment.  With consoles ranking in huge entry fees, and the average game cost of $59.99, this “money wall” is already keeping a large portion of ‘potential’ gamers out of the mix.

Perry left us with two scenarios regarding the outbreak of free-to-play models in the western market.  1. A publisher decides to release a major tier 1 game (think Halo, WoW, StarCraft) as a free to play, or…2. The Korean, Indian, of Chinese market begins producing games on the level of their Japanese neighbors like Miyamoto of Hojima, creators who inevitably will realease their games under the free-to-play model which is already strongly in place in the region.  Either of these events would set the ball in motion, says Perry.

While Perry’s presentation went well over the 1 hour time he was given, he managed to present listeners with an insightful view of the gaming industry.  Certainly there will always be those that disagree and see it in 22 different ways, but a growing number of industry experts are echoing, and adding to, Perry’s vision of a free-to-play global economy.  fatfoogoo is preparing for this future today.  What are you doing?

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Chinese online gaming market hits $645 Million in Q2

Monday, August 18th, 2008

A recent press release by Digitimes places the combined market value of the China online gaming market at $645 M (4.43 billion yuan).

With an explosive growth rate, this places the market at an 11.2% growth over Q1, and a 65.9% increase on the year.  Big players Shanda (Who recently partnered with THQ to release Company of Heroes in a microtransaction format), Netease, and Giant (formerly Zheng Tu) took the top three spots respectively.

While the Chinese output is already an impressive showing of growth, with more and more chinese titles being filtered, translated and repackaged for North American shores, one can only wonder if the sky truly is the limit for Chinese developers?  Will these titles in combination with EA’s Battlefield Heroes, and ID’s Quake microtransaction based games finally break the mold and lead to overall acceptance by the North American gaming community?  Only time will tell.

via Digitimes

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