One can find my last post on the new FF here:
As I mentioned in the above article, new FF had an Open Beta on 5/15/2009. But before I get to its status, let me answer one question.
A lot of you had asked for my comments on the upcoming 1st Quarter 2009 numbers. First, I am horrible at predicting any short term price movement. Second, I no longer feel comfortable in providing server statistics. My last prediction (4Q2008) based on the server statistics had proved badly. I need to work out the seasonality factor and having more clarity in NTES’s games monetization schedule before I can provide any good prediction. For example, both of NTES’s two new games (TX2 and XYW) had already started monetization. But both of these games are only in closed beta. Therefore, they are not really in commercialization stage yet. One can buy in-game items in the online store. But these items have very little power. Thus, NTES is just testing out the in-game mechanism of the online store. They are not really in the stage to make much money yet.
But as I mentioned before, my server statistics had show weakness in existing game in XYQ. XY2 is still growing nicely but is unlikely to compensate for the weakness of XYQ. From Yahoo’s analysts estimate, NTES is estimated to have 1Q2009 revenue of $116.29 million. I really don’t think NTES will meet that estimate.
But there are two unknowns. First, I just don’t know when NTES is going to really start to commercialize TX2 and XYW. If it starts to develop powerful in-game items, both of these games will start to contribute major money. Its first quarter will easily exceed that of analysts estimate. I don’t think so. I think they will only start to commercialize when both these games go into Open Beta. But you never know with NTES.
Another unknown is the up-front cost of operating WOW. NTES is probably going to announce a one-time charge for manpower and material to support its upcoming WOW operation. Are they going to do it in the 1Q09, 2Q09 or 3Q09?
Therefore, I think NTES will have weak near term numbers. But on the other hand, NTES is at the start of a major 2 years run. It has 3 new major licensed games (WOW, Startcraft 2, and maybe Diablo 3). It will have 8 new major games out in the next one to two years.
In addition, NTES is undergoing major efforts in its portal business and 3G wireless MVAS (Mobile Value Added Services). Yahoo’s FY2010 estimate is only $666 million. That is way too low. The analysts are not taking into its 8 new games and its effort in 3G and portal.
In a nutshell, I am concerned about its 1Q2009 number but is wildly optimistic in its prospects starting in 2Q2009 and through 2010.
Now, going back to the subject of this article, new FF had Open Beta on 5/15/2009. Despite a horrible marketing campaign, new FF had a great Open Beta.
For most other companies, marketing campaign started a year before Open Beta. Major marketing starts to pick up one or two months before the Open Beta.
But NTES is famous for underwhelming marketing effort. I think NTES’s CEO has some psychological aversion to marketing and money pinching.
For new FF, the marketing effort starts about 1 week before the Open Beta. It put some very minor marketing on 4 or 5 2nd tiers game verticals. That is the extent of marketing effort for new FF.
In addition, there are virtually no new contents specifically for the Open Beta. One major complains for the closed beta players is “Where is the beef?”
Even with such lack of marketing and content, the response had been nothing short of amazing. Within two days of Open Beta, new FF already had 37 game servers. All other secondary measures had also shown that new FF is a major hit with Chinese game players.
It is ranked number 14 in Baidu’s game ranking based on its search statistics. More than 270000 players had signed up with new FF/QQ joint promotional effort to play new FF, see the following web site:
So far, the playing experience had got high mark. It may still be a little too early to tell, but this game has all the hallmark of major hit written all over it.
It is late and I am tired. When I have more time in the next few days, I will write updated status of this game.
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.
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