Games developer NetDragon moves into online education market with US$130m Promethean acquisition

PUBLISHED : Tuesday, 03 November, 2015, 7:16pm
UPDATED : Wednesday, 22 March, 2017, 9:31pm

NetDragon Websoft, a leading online games developer and operator in China, expects to carve out a profitable niche in the global online education market after completing its US$130 million acquisition of London-listed Promethean World, a provider of interactive learning technologies.

In a regulatory filing on Tuesday, NetDragon chairman Liu Dejian said the cash transaction was made through the company’s subsidiary, Digital Train.

Shares of Hong Kong-listed NetDragon, which is based in Fujian province, rose as much as HK$21.75 after the noon break, following that announcement. The stock rose 1.42 per cent to close at HK$21.40 on Tuesday.

“We believe the combined entity will create value for our shareholders, and more importantly, have a transformational impact on how people learn around the world,” NetDragon vice-chairman Simon Leung Lim-kin said.

Promethean, one of the recognised global leaders in the international education market, has two flagship products: Its ActivBoards line of interactive whiteboards and software called ClassFlow.

Besides its well-known brand, Promethean has an extensive sales and marketing network.

The company, which has headquarters in both Britain and the United States, claimed that its products are used by two million teachers and about 30 million students in more than 100 countries.

Jim Marshall, the chief executive at Promethean, said the merger is expected to continue the firm’s mission of “empowering students and teachers by encouraging them to engage, interact and collaborate”.

“We started building interactive whiteboards over 15 years ago, and have since brought together teachers and students in over 1.3 million classrooms around the world. We look forward to working with NetDragon in expanding our presence in more schools,” Marshall said.

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Since last year, NetDragon has been accelerating the development of its online and mobile education business, which includes social networks, cloud platforms, media tablets, and interactive classroom software for children in primary and secondary schools.

In addition, it is developing vocational, non-academic credentials and other educational products, such as those that use an interactive gaming model to make learning fun and more engaging.

NetDragon is also focused on licensing and purchasing a wide variety of content from domestic and foreign publishers of course textbooks and other educational products.

In June, NetDragon signed a stock purchase agreement for an undisclosed amount to acquire ChiVox, which is based in Suzhou in east China’s Jiangsu province.

ChiVox develops so-called intelligent voice and language technologies, and provides services for voice assessment and oral exams to leading education service providers in mainland China.

“Our online education business remains a key strategic focus,” Liu said in August.

“We aim to provide on our platform the richest education content in terms of both volume and quality.”

In January, NetDragon raised US$52.5 million from new investors to support its online education subsidiary. These investors included IDG Capital Partners, Vertex Venture and Shenzhen-listed animation producer Alpha Animation.

Internet consultancy iResearch has estimated mainland China’s online education market will post total revenue of 119.2 billion yuan (US$18.8 billion) this year, up from a projected 99.8 billion yuan in 2014.

It predicted that a combination of on-demand and live-transmission courses will become dominant in online education in the future.

Established in 1999, NetDragon played a pioneering role in the overseas expansion of Chinese online games companies. It has been operating various game titles in more than 10 languages since 2003.

In August, NetDragon reported a 14.5 per cent increase in first-half revenue to 512.2 million yuan, up from 447.2 million yuan in the same period last year, on the back of its strong online games business in China.