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, January 7, 2009

XYW 4Q2008 Prediction

My previous article on XYW can be found here:


XYW is a new game. It starts commercial operation on 9/25/2008. It started commercial operation with minimal marketing effort. NTES don't like to market its new games. But even compare to other NTES's other games such as XY3 or TX2, XYW is more like an after thought. There was virtually no marketing at all. NTES won't even bother to put XYW on Netease's own web sites for any amount of time.

The acronyms first -

ACU = Average Concurrent Users

PCU = Peak Concurrent Users

QoQ = Quarter over Quarter

YoY = Year over Year

Now let us see how XYW does in 4Q2008. Since 4Q is the really the first full quarter in operation, there won't be any number for 3Q2008.

The server counts for the XY2 can be found in the following table:

There are 3 months in a quarter. Each month has either 4 or 5 weeks. I only use 2 days in a week. I don't do server count every weekend. I only put in the number where I have a server count in both quarter. I also pick 3 days of holidays in this calculation.

Since there is only one quarter of data for this game, please ignore the QoQ comparison.

Like server count tables for all other games, the unit in the table are in unit of thousands of players. Notice that I didn't really have any data for most of October and November 2008. The reason for that is because I didn't think this game will amount to much. Therefore, I didn't really track its usage. It is not until the end of November before I realize this game is for real. After that, I started to track its usage.

I estimate an ACU = 30k and PCU = 120k. It is an amazing number for a Netease game in its first quarter of operation.

XYW is a free-to-play game. Therefore, I am going to calculate its revenue for this quarter. Again, there is no historical revenue data for XYW. I will have to use other free-to-play game as guideline.

I will use Sohu's TLBB as a guide. During the 1st quarter in operation, TLBB had achieved a PCU of 400k while generated 2.3 million in revenue. This quarter (4Q2008) is at the similar stage in operation, the first quarter in operation for XYW. XYW is a 120k game in this quarter. Therefore, my estimate for revenue is 2.3 * (120k/400k) = 0.7 millions.

0.7 million is a pittance. But it didn't reflect what great potential XYW is in pulling major revenue in the next several quarters.

SOHU's TLBB's revenue went from 2.3 million in the 1st quarter to 51 million by the time of 6th quarter, even though its PCU are about the same.

Considering how fast is XYW growing, by the time of its 6th quarter in operation, if it reaches a PCU of 600k, it would have probably pull in similar amount (to Sohu's TLBB, or 51 million per quarter) of revenue by then.

This is just amazing. The performance of XYW has to be the most surprising to me. Considering how little attention was paid to market XYW, the success of XYW probably surprises NTES also.

In all likelihood, XYW is going to be the first mega free-to-play hit game for NTES.

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