Shanda Networking Co signed a strategic agreement with South Korea's No. 1 game designer NCsoft yesterday to share their strong expertise in research and development and game operations, the partners said yesterday in Shanghai.

 

"Shanda is a leading company in game operations, and NCsoft is a global leader in game design. Therefore it is a win-win cooperation," said Tang Jun, Shanda's president who used to be Microsoft China's president.

 

Under the deal signed yesterday, Nasdaq-listed Shanda will acquire an exclusive license for NCsoft-developed game AION, which is a 3D MMORPG (massive multiplayer online role playing game), in China. The game is expected to launch in the second half of next year in the domestic market, according to NCsoft, which has developed Lineage and Lineage II.

 

Shanda, China's No. 1 online game firm, has invested in NCsoft China for a 30-percent stake with a registered capital of US$9 million. NCsoft China will be in charge of the company's game operations in the country and will provide related technologies.

 

Although Shanda may have done well to get the license for AION as a qualified MMORPG game, there are still risks, according to Credit Suisse, which rated Shanda "neutral."

 

The game may be delayed to 2009, and Shanda will probably have to pay US$5 million to US$10 million as license fee, higher than the popular MMORPG game, the World of WarCraft, which is operated by Shanda's rival The9, according to Credit Suisse.

 

NCsoft's games, such as Lineage, Lineage II and Guild Wars, were launched in China through various partners but they received worse-than-expected market response.

 

In the second quarter, China's online game market revenue totaled 2.65 billion yuan (US$353 million), a massive 185.3-percent growth year on year. The MMORPG game revenue contributed 84.5 percent to the industry's total revenue, according to iReseach, a Shanghai-based IT consulting Co.

 

(Shanghai Daily November 8, 2007)