NetDragon's Fortunes: Chinese Game Developer's Profits Soar

[qi:101] The market for online games in China shows no signs of cooling off as NetDragon, an online games developer, this week reported a nearly 2,700 percent profit increase, to $35.8 million, over the same nine-month period last year.

NetDragon’s earnings growth is based on three popular titles: Conquer Online, Eudemons Online and Zero Online. The boom, more generally, of millions of PRC citizens coming online and the resulting increase in player base helped send NetDragon’s profit margin higher by 5.8 percent to 94.5 percent in the period ended Sept. 30.

China’s online game market reached $803 million in revenues last year, according to local media. Research firms are predicting that revenue will easily break $1 billion in 2008, and continue to grow. Given that online games took in $3.8 billion in revenue globally last year, China’s piece is a pretty big slice of the pie.

There are growing opportunities for foreign-developed games in this market, too — just 60 percent of the market is made up of domestically developed and operated games. Western-developed World of Warcraft has made a significant impact there, signing on 1.5 million new players in just the first month of its release in 2005; as of March 31 of this year, its registered accounts in China totaled 7.5 million. The game’s Chinese operator, The9, is one of the three biggest online game companies in the country, after Shanda Interactive, which licensed the Korean-developed mega-hit Legend of Mir 2in 2001, and NetEase, with their popular MMO, Westward Journey.

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