China's Largest Online Games Operator Faces Challenges

From Forbes: China Shanda's Q3 net profit jumps, shares fall on challenges

"Shanda Interactive Entertainment Ltd, China's largest online games operator, reported its third quarter net profit rose 58.1 pct year-on-year to 261.1 mln yuan. But the drop off in popularity of its game Mir II and a lack of new products in the coming quarters hinted at near-term challenges in its core business, analysts said."

"Online game revenues grew 35.5 pct on a yearly basis, but dropped 6.1 pct quarter-over-quarter to 438.1 mln yuan. Shanda said that the quarterly decline in net profit and revenues was due to weakening performance of its once-blockbuster massively multiplayer online role playing game (MMORPG) Mir II."

"(...) the company's next big sales catalyst, Dungeons & Dragons, will not be out until 2006. Further, the number of concurrent users of Shanda's MMORPGs in commercial service decreased to approximately 630,000 from 763,000 in the previous quarter.

According to analysts, the company's MMORPG business faces increasing competition from the likes of Netease.com Inc, and The9 Ltd and Tencent."