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.

Friday, February 12, 2010

Coiled Spring - NTES

My last WOW related post can be found here:


Now that WOW is finally being approved by GAPP. Better yet, NTES is probably not going to get panelized. Let me look forward to see how the fundamental is going to shape NTES.

Sometimes bad news worked out for the best.

The whole WOW-GAPP episode was definite a bad news for NTES last year.

But as we get to 2010 and as WOW is now officially approved, everything is most likely going to work out for the best.

NTES's TX2 is a competitor to WOW. If WOW got approved last year and the expansion pact (Wrath of the Lich King) got approved, it would had squeeze all the oxygen out of TX2.

As it turned out, NTES can't get WOW approved and it turns all its energy in TX2. As a result, TX2 has established a thriving and highly devoted fan base, it is on its way to become the next mega hit in China. TX2 has got to the point of being able to stand on its own feet now.

Now that NTES has got its license to WOW approved, it has three mega (WOW-related) events coming up. It has two new expansion pacts (Wrath of Lich King and Cataclysm) and Starcraft 2 coming up. In normal time, these events are staggered about 2 to 3 years apart. Each of these events would had been the dominate events in China’s gaming world.

Now, because of the unique circumstance (or incompetence) of GAPP, all three events are being squeezed into one year. In other words, 6 to 7 years of game changing events are being squeezed into one year time. For the next year to 18 months, NTES is able to release the Wrath of Lich King expansion, followed by Starcraft 2 and finished by coming out with the Cataclysm expansion pact.

NTES is going to have all of China’s gaming market all to itself in the next 12 to 18 months.

Better yet, NTES doesn’t have to sacrifice TX2 for it.

NTES has about 15 major games in later stage of development right now. But two of them has early signs of being the next mega hits. They are DT2 and CSXY. None of them are the direct competitor to WOW. Both of these two games are probably going to out within the next 12 to 18 months.

NTES is already dominant in the 2D cartoonish turn-based game, it is going to be dominant in 3D mythical games with WOW and TX2. With Starcraft 2 and the new battle.net, it is going to carve out a new area (that does not exist right now) in on-line battle matching. DT2 is targeting directly at the martial art games of PWRD, GA, and CYOU. CSXY is going to create another new area that does not exist in China’s gaming world.

18 months from now, there is a good chance NTES would achieve near monopolistic position on virtually all the different areas (except casual games) of China’s gaming market.

I don't think I could have been more optimistic about a company than I am about today's NTES.


cc said...

So happy to have you back, Henry! Don't stay away for so long!

Tobi said...

hallo henry,
thank you for your opinion about ntes.
what do you think about the future of sohu (portal, search) and
will the new cyou games be a success?

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A test for now