New bloods are serious about Chinese games

摘要

With a 40%-plus profit margin, an arguably addictive product and a huge consumer base, Chinese online gaming was 2004's story of the year for investors interested in profiting from the market's 1.3 billion consumers. However, Shanda Interactive's early meteoric stock-price rise was followed by a sharp reversal in 2H05 once user growth slowed. Shanda, once the largest Chinese games company in terms of market cap, took a hit after releasing disappointing third-quarter earnings. And about the same time, the government released new regulations limiting playing time for games, leaving Wall Street wondering if Chinas shooting stars had burned out. Chinese online gaming hasn't changed, though. Gamers continue to spend several hours a day playing their favorite titles, and popular games still deliver high profit margins. But local gaming companies have temporarily lost their brilliant shine.