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Chinese MMO Firm Shanda Sees Reduced Q3 2005

Shanda Interactive Entertainment, one of the largest Chinese MMORPG developers and the publisher of the one-time leading Asian MMO The Legend Of Mir, has released ...
Shanda Interactive Entertainment, one of the largest Chinese MMORPG developers and the publisher of the one-time leading Asian MMO The Legend Of Mir, has released somewhat declining quarterly results for the third quarter of fiscal year 2005, a period ending September 30th, 2005. The company's revenue fell slightly compared to Q3 2004, with revenues of 499.7 million Chinese yuan ($61.7 million USD) marking a 7.4% drop from 2004's take. However, the year-over-year net revenue continues to improve on 2004's situation by 41.4% percent, and the company's net income of 261.1 million yuan ($32.3 million USD) for the quarter is still a 17.1% increase over Q3 2004's net income. However, the reason for the lowered revenue is the trailing off of interest in the company's Mir II sequel, an extremely popular, but somewhat waning online game in China, as other titles such as The9 and Blizzard's World Of WarCraft have begun to break through in the territory. The number of average concurrent users of Shanda's MMORPGs in commercial service decreased to approximately 630,000 in the third quarter of 2005 from 763,000 in the previous quarter. Though the game's profits once accounted for much of the company's success, executives were quick to point out that the company is no longer entirely reliant on the Mir series. "While the circumstances with Mir II have led to quarter-over-quarter revenue decline, we are pleased to see that the rest of our game portfolio performed well during the summer season," said Shanda CEO Tianqiao Chen. "This is evidence of the strength of a diversified content platform, which we continued to expand during the last two years." The company's stock still fell as a result of the news, dropping 10% to $20 a share. The lowered investor confidence may be due to the fact that prior to the third quarter report, Shanda had seen comparative gains each quarter since its March 2004 public debut. However, still to come in early 2006 is Shanda's initial launch of Dungeons & Dragons Online, licensed from American company Turbine and a possible major adversary for World Of WarCraft. In addition, the company plans to launch three new titles from The Legend Of Mir developer Actoz in 2006. Interestingly, the company is also moving into the hardware market with its Shanda EZ Series of PC-based 'gaming consoles', which, according to an Interfax Chinese news report, are able to support broadband, IPTV, and cable TV connections, and "will offer users news, online radio broadcasting, online Karaoke services, stock and financial information, access to 50 TV stations, 50 electronic games, 30,000 online novels via the Shanda-owned literature website Qidian.com, and 800 pay-per-view TV programs and films", as well as play Internet-delivered online games. Shanda's Chen commented of this move into hardware that this new EZ Series "...is expected to contribute new revenue streams starting from the fourth quarter of 2005."

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