In Gamasutra's latest China Angle column, Pacific Epoch's Shang Koo reports rumors of IDG putting $15 million into a new game company to operate the sequel to hit dance MMO Audition, and operator Shanda offering $26,000 bounties for gold farming plug-in creators. Causes And Effects: How New Game Companies Are Formed Wang Feng, a former vice president at Chinese software and online game developer Kingsoft, has received US$15 million from IDG Technology Venture Investment (IDGVC) and set up a game company named "LineKong" in Beijing, according to a rumor reported by Chinese IT website ChinaByte. Former Kingsoft online game operation department vice general manager Liao Mingxiang and former Guangyu Huaxia COO Wang Lei have also joined LineKong. Kingsoft is known for its office suite and translation software, as well as several Chinese fantasy MMORPGs. The investment amount seems suspiciously high for a new company, but the rumor claims LineKong has already signed a licensing deal for the sequel to China's hottest online casual game - Audition. Audition is an online dancing game developed by Korea's T3 Entertainment. The game is operated in China by 9you, which also operates T3 Entertainment's first music game O2Jam. The two games combine for around 900,000 peak concurrent users in China. 9you has stated that the Chinese licensing rights for Audition's sequel has not been decided. However, T3 Entertainment has plenty of reason to find a new partner for its new games, as 9you has used its marketing power from Audition and O2Jam's success to develop and market its own music games - Super Dancer Online and Burst a Fever. 9you's license then clone strategy is not new, China's godfather of online games Shanda Entertainment licensed China's first mega-hit MMORPG Legend of Mir 2 from Korea's Actoz and Wemade in 2001, and then released its in-house developed MMORPG World of Legend in 2003. Not surprisingly, Shanda did not receive the license to operate Legend of Mir 3. And Consequences As a side effect from the bitter legal battle between Shanda and Legend of Mir's license owners, Shanda lost most of its technical support for its only product. Korean MMORPGs were always known for ease of making new plug-in exploits, but lack of tech support to fix new problems with Legend of Mir 2 crippled Shanda, limiting the company's opportunity to enter lower tier rural markets. Plug-ins and robots plagued the game, but as the game charged by the hour at the time, Shanda was not overly concerned. Legend of Mir 2 also became the most pirated online game in China, with Internet cafes and college students/entrepreneurs opening their own private Mir 2 servers. Shanda combated its piracy problems by placing bounties on pirate server operators, but met little success as many of the pirate operators had powerful protectors. The company eventually caved in and formed a franchising strategy to allow regional operators for the game. However, Shanda continues to offer bounties on plug-ins. In 2005, Shanda switched all of its online games to free to play and instead charges for virtual items. Gold farming plug-ins became a much bigger threat to the company. This month, Shanda paid a total of 80,000 Yuan to five people for information about plug-in makers for Legend of Mir 2. The payments are part of a one million Yuan ($130,000) campaign to crack-down on plug-in makers. Shanda will pay up to 50,000 Yuan ($6,500) for clues about plug-in makers and up to 200,000 Yuan ($26,000) for turning in plug-in makers. [Shang Koo is an editor at Shanghai-based Pacific Epoch, and oversees research and daily news content on China's new media industries, with a concentration in online games. Pacific Epoch itself provides investment and trade news and publishes a number of subscription products regarding the Chinese technology market. Readers wanting to contact him can e-mail [email protected].]