NTES 4Q2008 Revenue Prediction Error

Based on my weekly tracking of NTES's game servers, I made a prediction of NTES's game revenue. You can find it here:

http://chinese-net-gaming-stock.blogspot.com/2009/01/ntes-games-4q2008-prediction.html

Boy, was it a horrible prediction, talking about completely off the mark. I tabulate my prediction, compared with the actual result, in the following table:

	4Q08
Predicted Game Revenue (M)	110
Actual Game Revenue (M)	98.6
% Error	11.6%
Predicted XY2 ACU (k)	211
Actual XY2 ACU (k)	197
% Error	7.1%
Predicted XYQ ACU (k)	713
Actual XYQ ACU (k)	625
% Error	14%

Note: 62 of 65 days of summer holiday occured in 3Q08.

The above table shows that my prediction was absolutely horrible.

Every week, for 2 to 3 days a week, I got up early in the morning and late at night to track NTES's game server and obtain its statistics. It is an extremely time consuming work. It is very depressing that my final result is so far from the real data.

Going back, I think I understand the reason. The way I calculate the 4Q ACU (Average Concurrent User) is by comparing my measured statistics with the actual ACU from the 3Q. But by doing that, I no longer am able to take account the seasonal factor.

I can make year over year comparison, but that would introduce other problems. NTES increase its game server capacity from time to time. Therefore, the server statistics means different from that of a year ago.

There is a seasonal factor I need to account for. I need to figure out a factor to account for the summer holiday.

But for the mean time, I will no longer provide revenue predictions.