Shanda Interactive Entertainment, the mainland's second-largest online game operator, intends to offer at no charge most of the six new titles it is launching this year, as its bet on free games proved to be a winner, helping the firm return to profit in the fourth quarter.
The Shanghai company posted a better than expected net profit of 240.3 million yuan - including a 66.8 million yuan one-time gain from selling shares - for the three months to December, against a loss of 538.9 million yuan a year earlier. Profit excluding the one-off gain from the sale in November of 3.7 million shares in Sina Corp, the mainland's biggest Web portal, was 173.5 million yuan. Its revenue rose 30 per cent to 470.6 million yuan.
'The new direction seems to be working. Now, Shanda is winning new paying customers and enjoying increasing revenue,' said JP Morgan internet analyst Dick Wei.
Shanda, which pioneered online games in the mainland, surprised the industry when it announced in December 2005 that it would allow users to play its top three titles free of charge. The firm made money instead by charging users adding special features, such as extra power or colours, to their avatars.
Most analysts doubted the move, deeming it a last gasp for struggling Shanda before it retired its once popular games such as World of Legend and Magical Land.
In the last two quarters, however, Shanda registered a jump in the number of paying customers, each on average increasingly spending more on playing, especially for its Legend of Mir II.