China's The9 sees record user numbers

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SHANGHAI -- China's online game operator The9 Ltd. announced record-breaking user numbers for the last quarter of 2007 along with strong revenue growth in a conference call with investors and analysts Friday morning in Shanghai.

"We had $58.1 million in revenues, representing 34 percent quarter-over-quarter growth," said company chairman and CEO Jun Zhu. That is a 50 percent increase over the same period the previous year, he added. There was also a peak of over 990,000 concurrent users, he said. "The average was 470,000 concurrent users -- also a record high."

In January, the company began technical testing of FIFA Online 2. "We have richer content, and better playability," he said.

In addition, the company has several games development projects underway, Zhu said. To support them, the company doubled its research and development budget over the last two quarters.

Meanwhile, the company's top earner, Blizzard Entertainment's World of Warcraft, continued to show strong growth, he said.

He dismissed concerns that the company might have problems with its World of Warcraft licenses and said that the company had moved away from being a one-game company, to a multi-game platform.

"I am very confident that we will continue to work with Blizzard," Zhu said, but he added that the company will continue to license other games, including bestsellers from Korea, and to develop its own content.

"World of Warcraft continued to experience popularity and gained momentum following the launch of the Burning Crusade expansion pack in September," said senior vice president and chief financial officer Hannah Lee.

Two new games -- Soul of The Ultimate Nation and Granado Espada -- were "in line with expectations," she said. "We are working closely with the developers to introduce frequent content upgrades to further improve the games’ performance."

The company's net income rose 125 percent from $5.2 million in the third quarter to $11.8 million in the fourth quarter of 2007, the company said. This was a decrease of 18 percent from the same period last year. Total revenues for 2007 were $135 million, up 30 percent from the previous year's $175 million. However, total net income was down 23 percent from 2006, to $33 million for all of 2007.

As of December 31, 2007, The9 had 33.4 million total registered users, the company said.

The9 directly or through affiliates operates licensed massively multiplayer online role playing games (MMORPGs), including consisting of MU from Korea-based Webzen, Blizzard Entertainment's World of Warcraft, Soul of The Ultimate Nation, Granado Espada, and its first proprietary game, Joyful Journey West.

It also has exclusive licenses in China for Guild Wars, Hellgate: London, Ragnarok Online 2, Emil Chronicle Online, Huxley, FIFA Online 2, Audition 2, Field of Honor and Audition. In addition, The9 is also developing two proprietary games, Fantastic Melody Online and Warriors of Fate Online.
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