Hong Kong's CDC gets in MGame

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HONG KONG -- Hong Kong-based CDC Games, an online gaming unit of Nasdaq-listed CDC Corp., on Friday announced a strategic investment in MGame, the South Korean developer whose hit game "Yulgang" it has operated in China since 2004.

In a signing ceremony on the last day of the Hong Kong Filmart, the two companies also extended the operating agreement for the massive multiplayer online role playing game until 2010 and agreed that CDC would take exclusive rights to distribute MGame's MMORPG.

"Yulgang," a martial arts fighting game that features flying monsters and lots of swordplay, earned more than $40 million in 2006 and had 46.5 million users in China, CDC Games president John Lee said.

"We believe this is the first step between promoting and improving the relations between the China and Korea interactive gaming market," said Lee, a Korean national based in Hong Kong.

Lee said that MGame's technology was strong enough to stop hackers from pirating "Yulgang" in China, where online piracy is widespread. "We've had almost no issue with this at all," he said.

The amount of CDC's strategic investment was not disclosed, but it makes it the largest non-Korean shareholder in MGame and comes as a part of a larger, previously announced $100 million initiative to develop games from around the world for the China market.

Fred Wang, CDC Games chairman and the president of Hong Kong-based motion picture company Salon Films, said the extended partnership with MGame makes sense for Hong Kong.

"Movies, animation and gaming are all coming closer together. We all know that the U.S. gaming market's income is bigger than its boxoffice, so we can see the future," Wang said. "We believe Korean companies have lots of know-how and a good Asian culture. They can help very fast development of technology here."

"Wind Fire Forest Mountain," MGame's next massive multiplayer game, is designed to look like an animated motion picture and appeal to a pan-Asian audience with a mix of characters whose names sound Japanese, Chinese or Korean.

Founded in 1996, MGame has more than 50 games serviced from the company's portal Web site and has 19 million registered users. The company has five internal game-developing studios, more than 750 employees in South Korea, and maintains offices in China, the U.S. and Japan.
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