A Return Rate of 7000%---A Miracle Made by Chinese Online Game Companies
7000% may be a dream return rate for every investor but it did happen, right in China’s game industry: in 2003 Softbank invested in Shanda and was rewarded with a return rate as high as 1400%; in September 2006, Softbank SAIF made an investment of $ 8 million in Perfect World, and within a year was paid back with 70 times of what they poured in a year ago. With the IPO of Perfect World in July 2007, the shares they bought were then valued as $ 560 million. Thereafter, many investors hold that with a good eye and perhaps a bit of luck, it is not impossible to reap up a return of dozens even hundreds of times of return in China’s online game market.
Chinese' passion for start-ups brings up many companies with great potential
The Chinese may be one of the most passionate about start-ups. This is especially the truth when it comes to online games, an industry which has an abundance of opportunities. Many, for example Shang Jin (Qilin Games) and Wang Feng (Linekong), chose start-up as a way for self-fulfillment after their initial success or acquisition of certain resources. Shang and Wang, as well as many others blessed with capital or resources, founded businesses that prove to be of great potential for investors.
According to “Report on China’s Game Industry 2009”, there are approximately 750 game development companies in China; in 2009, China boosted a revenue from online games amounting to $40 billion, 39.4% higher than 2008; those games developed by the Chinese record a revenue of $2.4 billion, or 64.5% of the total, and a 50.1% increase compared with the previous year. In the same year, 64 “made-in-China” online games developed by 29 Chinese companies were sold to over 40 countries and districts around the globe, with revenue of $109 million, up 53.9% compared with 2008. Moreover, during the same period of time, mobile game sales reached $100 million, a 25% increase. The number of online game players grew to 65.87 million, with an increase of 33.46% while the number of those paid players reached 37.15 million, an increase of 22.1%.
These statistics indicate that there are already a number of game enterprises in China, which boosts the largest population of game players but few of them are listed companies. This is due to, on the one hand, the absence of appropriate listing mechanism for them, and on the other hand, the lack of knowledge for investment and financing by the company owners and executives. As it is commented by Victor Huang, Vice President of China Renaissance, now there should be timely and effective communication between the capital market and digital entertainment market, through which the two sides will better know one another and in turn, to seek more opportunities for cooperation.
Mr. Hugo Shong, founding partner of IDG Capital Partners
As revealed by Mr. Hugo Shong, founding partner of IDG Capital Partners, in the CGBC Summit Forum in 2009, games developed by the Chinese saw an increase in their sales of over 60% that year. In fact, Chinese online game companies are becoming more and more valuable for investors with the introduction of Start-up Board in China and the increase of
exits for the industry.
With proper funding and guidance from investing and financing organizations, these online game companies are able to see how far they can go, which in terms of economics of course is what return rate they can achieve——7000% is by no means a fairy tale. Actually, this fast growing industry has already attracted funding from many enterprises dealing with production and manufacturing, for example, businessmen from Zhejiang invested in Shendiao Online and Delixi funded in Uqu. They are clear proof that online game industry is to become the next “star” in investment.
CGBC I&F Forum, a fast track for talks between capital and enterprises
China Game Business Conference (CGBC), which is held along with ChinaJoy, has held “Investment and Funding Forum” for the past four years and this year it will continue to be an important part of the conference. For 2010, CGBC, in partnership with China Renaissance Capital Partners which has been awarded “New Investment Bank of the Year” for four consecutive years, will send its invitation to investors across the globe to find their opportunities in CGBC.
Every year, hundreds of medium and small sized game companies (with employees of fewer than 150) come together at ChinaJoy. These three conferences, ChinaJoy, CGBC and CGDC, are not only a festival to celebrate their success, but also a market for them to seek business opportunities: they show themselves, talk with investors and look for the right one who would believe in their potential and pour in money. It is through this capitalization that they will find the fast track to success. Any of them may have the chance, with such support, to flourish, to get listed in a few years and become the next legend to tell about online game investment.
No wonder someone joked that deals worth millions of dollars may be born just like that, right in the cafe outside ChinaJoy/CGBC/CGDC.
For more information, please visit http://www.chinagbc.com.cn
Subject solicitation (with prizes)----- http://www.chinagbc.com.cn/YiTiZhengJiList.aspx
China Game Business Conference (CGBC) is the largest and most distinguished business event in China's game industry and its related industries. It is held in late July annually at Shanghai International Conference Center simultaneously with ChinaJoy. Through seven years' rapid and sustainable development with China's game industry and its related industries, CGBC has become an optimal platform for discussions, education, exchanges and networking centering on the development of China's game industry. The forthcoming CGBC 2010 will continue to expand its scale and scope to include the Summit Forum, the SNS & Social Game Forum, the Investment & Financing Forum, the Media Marketing Forum, the International Cooperation Forum, the Webgame Forum, the In-game Advertising Forum, the Mobile Internet Entertainment Forum, the Serious Game Forum.
For speaker and sponsor inquiries, please contact:
Mr. Joe Liu
Tel: +86-10-51659355 ext. 13
For coupon inquiries, please contact:
Ms. Phoebe Liu
Tel: +86-10-51659355 ext. 32
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