NCTY, one of the biggest Chinese gaming company, reported that Q2 ’09 revenue declined 32% to about $40 million while the company swung to a loss of about $12 million from a gain of $14.5 million in Q2 ’08, The9 lost its license to run the “World of Warcraft” in China few months ago so that most expected its business to take a hit.
In fact, The9 made a stratagy mistake in the process of arguing with WoW owner Activision Blizzard in April. Blizzard finnaly chose competitor NetEase to operate the game in China after The9’s license expired on June 7. Given that WoW consisted of nearly all of the company’s revenue, it’s obvious The9 has no alternative plan to revive its business,even though its management said in the earnings release that it had invested in a few game development studios and had entered into licensing agreement for other games like World of Fighter andKingdom Heroes 2.
Investors in NCTY must be painful for the losing of 40% from $13 since the news of WoW released, however, the worse is: whether The9 itself know how to survive the firece competition, certainly, long term investors may hold their hope because of the vaule of cash in The9 is more than the market capital.