Shanda Games Q3 profit down 18 percent

Chinese online game developer net profit drops to US$111.2 million as the company puts less focus on monetization to attract more users for long term growth.
Written by Liau Yun Qing, Contributor

Shanda Games reported a 20.1 percent decline in net revenues for the third quarter to US$170.4 million as the company puts the brakes on monetization efforts to instead enhance the gameplay and lengthen lifecycle of its games.

The Chinese online game developer saw earnings in the local market decline 20.7 percent year-on-year to US$160.1 million for the three months ended September, according to a statement Tuesday.

Other revenues, which primarily included net overseas earnings from game licensing, game operations and advertising, dropped about 9 percent to US$10.3 million during the same period.

The company's gross profit was down 17.9 percent year-on-year to US$111.2 million. However, gross margin was up 65.3 percent from 63.5 percent in the same quarter last year.

"During the third quarter, we continued our strategy to decelerate monetization activities and enhance gameplay in order to lengthen the lifecycle of our games and pushed through a number of other initiatives to help revive our performance going forward," said Shanda Games CEO Zhang Xiangdong in the statement.

Zhang added that the strategy has led to a 6.2 percent increase in average monthly active users for games in China to 18.4 million.

"With an increasing number of users being introduced to our games, we believe that our growing portfolio of games and promising pipeline will continue to deliver sustainable growth over the long-term," he said.

Zhang took over leadership position in August when former CEO Tan Qunzhao resigned. The former CEO had quit over the company's poor performance and his health condition.

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