About this Blog

The purpose of this blog is for my personal use. It serves as my personal diary as I investigate Chinese internet/gaming companies for investment purpose. If you have any comments or disagreement, please give me feedbacks.

Wednesday, March 12, 2008

TLBB Status Update

My last TLBB specific post is here:

http://chinese-net-gaming-stock.blogspot.com/2008/02/tlbb-expands-oversea.html

The server counts for the TLBB can be found in the following table:

Month

Saturday

4Q2007

1Q2008

1

1




2




3

447

545


4

450

496

2

1

481

461


2




3

502

499


4

500

526

3

1

500

480


2

510

482

Holiday

4

395

431


5

401

436

Total


4186

4356

The first column is the month. There are three months in each quarter. Both 4Q2007 and 1Q2008 have a one-week long national holiday. I compare the holiday between the two quarters also.

The second column is the Saturday in each month. Most month has 4 Saturdays. I also compare the 4th and 5th day of the 1-week long national holiday. The third column and fourth column are the peak concurrent user number for that particular Saturday (or holiday).

The last row is the total (or the sum of all the rows).

You may ask why are so many days missing. Well, I can no longer stay up during the wee-hours every day to keep track of the server counts.

From the last row of the table, you can see the average concurrent user has increase by about (4356-4186)/4186 = 4%

But how can we use this estimate (+4% in ACU) to give us an estimate for the game revenue for Sohu? The answer is we need to do a lot of guess work.

Note that since I only have a few data point in calculating ACU, this ACU estimate won’t have any relevance when compare with ACU that were developed using more data points. But it is ok to use it for this particular case.

The following is a table for Giant Online’s (ZhengTu) game statistics


3Q2006

4Q2006

1Q2007

2Q2007

3Q2007

4Q2007

APA

.698



1.248

1.318

1.405

APA (%)





5.6%

6.6%

ARPU

220


320

295

305

309

ACU

271



515

481

512

ACU (%)





-6.6%

6.4%

PCU

558



1072

880

983

PCU (%)





-18%

12%

Revenue

23.7



48.9

54.1

59.6

Rev (%)





10.6%

10.2%

The second row is APA or Active Paying Account in unit of millions. The third row is the quarter over quarter (QoQ) growth of the APA. The fourth row is ARPU, or Average revenue per active paying customers. The fifth row is ACU (Average Concurrent Users) in unit of thousands. The sixth row the QoQ growth of ACU. The seventh row is PCU (Peak Concurrent Users) in unit of thousands. The eighth row is the QoQ growth rate for PCU. The ninth row is the monthly revenue in millions. Since Giant Online only have one game of significance (ZhengTu), they also represent the revenue generated from this one game. The final row is the QoQ revenue growth.

One thing interesting can be found on 3Q2007 estimate. On 3Q2007, the ACU decreased by 6.6% and PCU decreased by 18%, yet the APA increased by 5.6% and the revenue increased by 10.6%.

This shows that both PCU and ACU are not very reliable estimate for free-to-play games. APA and ARPU are much more reliable. I think since ZhengTu is a relatively new game, both APA and ARPU tend to trend up from quarter to quarter. While increase in ACU tend to for-tell increase in APA, the reverse might not be true.

The following table has the statistics for TLBB.


2Q2007

3Q2007

4Q2007

PCU

400k

400k

500k

PCU (%)



25%

APA

209k

690k

1100k

APA (%)



59%

ARPU

82

118

147

ARPU (%)



25%

Game Revenue

3.8

12.7

24

TLBB Revenue

2.3

10.9

22

TLBB Rev. (%)



102%

This table is pretty self explanatory. Compare this table with the table for ZhengTu, we can see several points. Compare TLBB’s PCU of 500k and ZhengTu’s PCU of 1072k, TLBB may still have a way to go. Not saying TLBB will eventually has as many users as ZhengTu, but considering how young TLBB is, the odds are TLBB’s PCU will significantly improve.

Compare TLBB’s APA of 1100k with ZhengTu’s APA of 1405k, you would think TLBB’s APA will grow, but not by a very big percentage from quarter to quarter.

Compare TLBB’s ARPU of 147 with ZhengTu’s ARPU of 309, I think TLBB’s ARPU can still have some distance to grow. In the earning conference, Sohu say that they predict the peak ARPU is 170. I think they are way too conservative.

I think in two to three quarters, the APA will probably be something like 1600k (or 45% increase) while ARPU be something like 190 (or 29% increase).

Now, given an ACU increase of 4% quarter to quarter, I estimate we shall have APA increase of 8%. For the ARPU, I estimate we might have 5% increase. Thus, the revenue from TLBB shall have an quarter over quarter increase of 1.08 * 1.05 = 1.134, or 13.4%. or the revenue from TLBB will be 22 * 1.134 = 24.95M

The following table is the revenue from Sohu’s other game, Blade Online


2Q2007

3Q2007

4Q2007

Blade Revenue

1.5

1.8

2.0

Assuming Blade Online no longer grows, I predict that Sohu will get 2M from Blade Online in 1Q2008.

Combine the two, we have the total game revenue of 24.95+2 = 26.95M for 1Q2008. Compare to Sohu’s guidance of 25.5 to 26.5 millions, I think Sohu gave a pretty good guidance for the gaming portion of her revenue mix.

5 comments:

Anonymous said...

Good analysis!
I noticed that when you estimate the APA, the PCU and the ARPU, you did not really closely follow the trends, only just a guess.
If follow the trends, the PCU move from 400, 400, 500, the next move would be around 550, which is around 10% increase. While the APA move from 200, 700, 1100, the next move might get to around 1350, which is around 20% increase; Same as, the ARPU might get to around 160,a 10% increase. So I estimate that the Q12008 game revenue would be around 22*1.2*1.1+2=$ 30 millions.

any thoughts?

YW

HenryC said...

I sure hope so. As a stock holder of Sohu, I certainly hope you are right.

But the thing is that, based on my server count, the ACU only went up 4% this quarter.

I just can't justify the 10% and 20% increase in your analysis.

But again, as I mentioned in my piece. If you just take the example of Giant's ZhengTu game, it is extremely difficult to use ACU to predict APA and ARPU.

Anyway, I am certainly hope you are more correct than I am!

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