Chinese online game operator NetEase.com has posted a 17 percent decline in third-quarter earnings as sales remain flat amid intensified competition, which forced it to spend more on marketing and R&D.

 

Net profit fell to 260 million yuan (US$35 million) from 315 million yuan a year ago. Total revenue was 571 million yuan, compared to 572 million yuan in the same period last year, the Beijing-based company said on its Website yesterday.

 

NetEase, China's second-largest online game company, is faced with increasing competition from rivals like Sohu.com and Giant Interactive, which have launched new titles.

 

The Chinese online game market expanded by 59 percent in the third quarter from a year ago to reach 2.91 billion yuan, led by Shanda Interactive with a 19.3 percent share. NetEase trailed with 17.1 percent of the market, said Beijing-based researcher Analysys International.

 

A year ago, NetEase was No. 1 with a 25.51 percent market share. The slip was due to its games range, while other players like Sohu and Giant Interactive gain momentum, Analysys said in a research note.

 

NetEase CEO William Ding said in a statement they are continuing to expand development of new games, including fee-based and casual games.

 

To diversify their revenue stream, Ding is creating and commercializing new advertising space inventory through their free email system, the largest in China, hoping to benefit from the marketing campaigns by companies that seek to take advantage of the upcoming Beijing Olympics.

 

(Shanghai Daily November 9, 2007)