Benzinga  Nov 18  Comment 
Shanda Games Limited (NASDAQ: GAME) announced today that, at an extraordinary general meeting held today, the Company's shareholders voted in favor of the proposal to authorize and approve the previously announced Agreement and Plan of Merger (the...
newratings.com  Oct 19  Comment 
BEIJING (dpa-AFX) - Shanda Games Limited (GAME), a online game developer, operator and publisher in China, reported that its net income attributable to the Company's shareholders for the first half of 2015 was RMB289.5 million or US$47.4...
newratings.com  Sep 24  Comment 
VIENNA (dpa-AFX) - Shanda Games Limited (GAME), an online game developer, operator and publisher in China, announced that it entered into an Amended and Restated Agreement and Plan of Merger with Capitalhold Limited and Capitalcorp Limited, a...
newratings.com  Sep 2  Comment 
WHITEHOUSE STATION (dpa-AFX) - Merck & Co. Inc. (MRK) announced that the U.S. Food and Drug Administration or FDA has approved a supplemental New Drug Application or sNDA for EMEND or aprepitant capsules, a substance P/neurokinin 1 or NK1 receptor...
newratings.com  Jul 23  Comment 
THOUSAND OAKS (dpa-AFX) - Amgen (AMGN) announced the submission of a supplemental New Drug Application (sNDA) to the U.S. FDA for Kyprolis (carfilzomib) for Injection to seek an expanded indication for the treatment of patients with a form of...


Shanda Interactive is an online video-gaming company catering to Mainland China . It sells MMORPGs (Massive Multiplayer Online Role Playing Games) such as the titles Archlord, Woool and Mir 2[1] which tend to sell to hardcore gamers, as well as casual games such as Maple Story and online chess that appeal to a much broader audience.[2]. Shanda also licenses management software to internet cafes in China and is promoting its new “EZ” platform, a home-entertainment set-top box that delivers games and movies without a required subscription.[3]

Business Overview

Business & Financial Metrics[4]

In 2009, Shanda generated a net income of $233.3 million on revenues of $767.8 million. This represents the first year the company reported its earnings in US dollars.

Business Segments[5]

The company generates revenue in three primary reporting segments.

  • MMORPG (86.8% of total revenue:) The MMORPG segment caters to “hardcore” Chinese gaming youth, with an immersive game experience that typically requires and commands a significant amount of time from Chinese youths. "Younger" games typically have lower revenue per subscriber since users have not been in the game world that long and don't have as much reason to spend money. The company can earn more revenues by compelling customers to spend more time in the game, thus motivating them to consider making purchases and improving their characters in game. This improves the performance of both metrics at the same time. This business is exposed to the age of the primary two titles, and is seeking a new replacement blockbuster title.
  • Casual Gaming (12.1% of total revenue): Casual games require less user-game time and typically can be played to conclusion within a shorter period of time in one session. These simpler games appeal to a larger demographic than the MMORPGs and thus diversify the company’s earnings. These games also use the free-to-play model, as well as earnings earned from internet-revenues.
  • Other (1.1% of total revenue): The company sells software associated with running internet cafes, and also is attempting to launch its “EZ” series of home-entertainment devices. However, revenues any one of these minors business are not significant. EZ’s sales come from bundling with computer manufacturers, and is thus dependent on Shanda’s agreements with computer manufacturers. While it has a number on board[6], Shanda does not have support from China’s #1 computer manufacturer, Lenovo. Such a type of agreement would likely dramatically improve sales figures for this new business.



Primary two MMORPGs are games nearing end of life, and new businesses are largely licensed from foreigners and unproven

Woool and Mir 2 are both very old titles, running on older graphics and slowly losing parts of their user base. Gamers are turning to other alternatives, such as World of Warcraft, operated in China by The9 (NCTY), that use more sophisticated 3-D graphics running on newer computers in Chinese internet cafes. It is necessary, but difficult, for the company to find a new "hit" title, and this will be dependent on a number of soft factors that accumulate into end-user appeal.

Business model transition to free-to-play appears to be generating more revenues, but further exposes company to individual games' popularity

The free-to-play model works in the case of Woool and Mir 2 because they were old games with large user bases. Since gamers had already spent a large amount of time in the game, they were "invested" in their characters and thus more willing to pay for premium content. The free-to-play model requires these "hard-core" users in order to pay for the operation of servers and to subsidize for the users who are not willing to put additional money into their characters. Acquiring these paying subscribers is dependent on each individual game's popularity, as gamers are less likely to invest in an online-gaming character without other people to socialize with and compete against online. Therefore an unpopular game will not ever recoup its initial capital outlays in the free-to-play model.


Primary competitors are Chinese operators of online-games. Although there is some competition from foreign companies, they are limited by Chinese law from achieving market penetration, since any Mainland Chinese venture has to be more than 50% Chinese owned/operated. Therefore, Shanda’s primary competitors are:

  • Perfect World (PWRD) - Another developer and operator of online games in Mainland China, using its own technologies. Its main product is self-titled Perfect World.
  • Netease.com (NTES) - the second largest company. However, concerns in 2008 surrounding the company indicate that its development pipeline is weak.
  • The9 (NCTY) - The9 operates World of Warcraft in China on behalf of Vivendi Games. World of Warcraft is the world's most single popular MMORPG title.[7]


  1. Shanda Interactive "Risk Factors" pg. 4
  2. Shanda Interactive "Operating Results" pg. 45
  3. Shanda Interactive "Risk Factors" pg. 6-7
  4. SNDA 2009 20-F pg. F-3  
  5. SNDA 2009 20-F pg. 69  
  6. Shanda Interactive FY 2007 20-F "Our EZ Initiative" pg. 33
  7. GigaOm "Is WoW the Most Popular MMO" June 10, 2007
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