Tencent Holdings Ltd

Social networking is name of the game

PUBLISHED : Thursday, 02 June, 2011, 12:00am
UPDATED : Thursday, 02 June, 2011, 12:00am


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Shanda Games, the mainland's third-largest online games operator and publisher, plans to make an aggressive push to develop new social-networking-based offerings and acquire games studios to expand its domestic market share and pick up new business overseas.

The Shanghai-based company, which reported a 4.9 per cent decline in first-quarter net profit, was confident of generating more than 20 per cent of its revenue from international markets in three years' time.

'We intend to develop more games that have social features,' chairman and chief executive Allan Tan Qunzhao said yesterday during a conference call with analysts.

Tan said Shanda Games was in negotiations to serve as a third-party online games provider to the mainland's most popular social networking services providers, including Renren, Sina Corp's Weibo and Tencent Holdings' QQ platform.

A new range of games run on personal computers and mobile phones would be introduced in the second half of this year, he added.

Nasdaq-listed Shanda Games, which has built its business on multiplayer, online role-playing games, last month started live testing of its first title with a social networking function, Legend of Immortal. It is also scheduled for release in South Korea and Taiwan.

The new title is designed to link up with Renren and Facebook, allowing gamers to share their status, scores and other information with friends on a real-time basis.

'The registered accounts of the social networking users of the game exceeded 3.5 million on the first test day on May 16. This should be positive to Shanda Games,' a report by JP Morgan Securities (Asia-Pacific) said.

Tan pointed out the newer titles in the pipeline would 'help further diversify our revenue base'. He said the expansion would open up more opportunities to attract gamers and acquire specialist design studios in Southeast Asia, Europe and North America.

Shanda Games reported lower net profit in the first quarter to 312.9 million yuan (HK$375 million) from 329 million yuan a year earlier due to rising research and development costs. Total revenue climbed 9.6 per cent to 1.25 billion yuan from 1.14 billion yuan. Sales of multiplayer online role-playing games and advanced casual game sales accounted for 87.2 per cent and 7.4 per cent respectively.