FF will start open beta on 5/15/2009 and quick status on NTES’s new games

One can find my previous article on FF here:
http://chinese-net-gaming-stock.blogspot.com/2008/09/ntes-ff2-status-part2-open-beta.html

It is about time. The new FF went into closed beta on 2/1/2008. Most closed beta doesn’t last more than 1 year. In the above article, I predicted that FF will go into open beta at the end of 2008.

NTES sure take its sweet time. Finally, FF is going to conduct open beta on 5/15/2009. For more detailed information, see the following article:
http://news.duowan.com/0904/103892813170.html

By the way, I had always addressed this game as FF2 to make distinction between this new game (that is developed from scratch by NTES) to the FF1 that was licensed from a Korean company. But NTES address this game as new FF and its web address is http://ff.163.com/. Therefore, from now on, I will address this game as FF.

Everybody knows the exciting news of WOW and how it will accelerate the growth of NTES. But I don’t think most people know the exciting development of new NTES games.

Between 2005 and now (2009), only two games went into commercial operation. DT went into commercial operation in 2006 and XY3 went into commercial operation in 2007.

DT was a failure and the development had been stopped. XY3 had become a medium game and is pulling about $5M per quarter.

In 2008, both TX2 and XYW went into closed beta and monetization had started. But it was very low level monetization and they are definitely not in commercialization mode.

In 2006, NTES got caught in the transition from paying game to free-to-play game in China’s gaming industry; she has to pull all her games in development back to the drawing board and re-started the development cycle.

For 4 long years, NTES had virtually no new game (except a mediocre XY3) for growth.

But the waiting is over. In the next year or so, an explosion of new games will be in commercial operation.

Starting with DT, NTES had restarted the development of DT from its death bed. On 4/15/2009, it released its 2nd expansion pact.
On 5/15/2009, FF will going into open beta. For item-based free-to-play games, open beta is the same as commercialization.

On June 2009, NTES will get the license for WOW. Commercialization shouldn’t be too far behind.

On June or July 2009, whenever the movie “Transformer 2” will be in theatre, NTES’s new game BB will go into open beta.

The two games that went into closed beta in 2008, TX2 and XYW (both had already have 120k to 150k players during the weekend), shall go into open beta some times this year.

2010 will be a busy year for NTES also. Star Craft 2 will probably go commercial that year. In addition, 3 new games will probably be out that year. QN, DT2, and CSXY are all major titles. Keep a special eye out for CSXY, it has blockbuster written all over it.

I didn’t count the two Warcraft 3 games, I don’t think they will be successful.

Out of those 10 new major games (DT is not new, but its re-birth is new), most likely WOW will be a blockbuster. Besides WOW, some of these games will fail, but 2 or 3 may become blockbuster (like that of XY2 and XYQ) and others will be medium games (like that of XY3).

Therefore, while everybody is excited about WOW, the 9 other new games will probably have much more impact than that of WOW.

XYW official trailer

The previous article on XYW can be found here:
http://chinese-net-gaming-stock.blogspot.com/2009/01/xyw-4q2008-prediction.html

Netease released one of an official trailer for the new game XYW. From my last article, one can see that the game is receiving great reception by Chinese gamers. One can download the trailer from the following link:
http://xyw.gdl.netease.com/xyw2008CG.wmv

From the trailer, this game is a very pretty 2D game. Unlike XYQ, it draws the characters in a very realistic way. This is in the same way how XY2 and XY3 characters were drawn.

Currently, the last two weeks are the final exam weeks in China. Therefore, as expected, all the servers’ statistics for all Chinese games were very weak. But XYW is the only exception. It is evident that XYW is really gathering momentum.

XYW 4Q2008 Prediction

My previous article on XYW can be found here:

http://chinese-net-gaming-stock.blogspot.com/2008/09/ntes-xyw-status-closed-beta.html

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 1^st quarter to 51 million by the time of 6^th quarter, even though its PCU are about the same.

Considering how fast is XYW growing, by the time of its 6^th 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.

NTES XYW status – Closed Beta

My last article on XYW can be found here:
http://chinese-net-gaming-stock.blogspot.com/2008/07/ntes-two-new-games-went-into-closed.html

From the following article, XYW,
http://xyw.163.com/2008/9/17/4076_192653.html

XYW will start the 2nd closed beta on 9/25/2008. This closed beta is open to the public. In addition, the player characters are going to be permanent. Basically, this 2nd beta test will fit all the definition of an open beta testing.

If they want, they could start to charge money on 9/25/2008. NTES did some minor marketing for this closed beta.

In addition, from what I reported before, TX2 had its final closed beta on yesterday, 9/24/2008. There is a little marketing for that game also.

It surprises me that NTES had those two games out for the closed beta so close to each other. But those two games are in different categories. XYW is a cartoonish turn based free to play game, while TX2 is a 3d real time free to play game.

It is going to be difficult to tell when the commercialization of a game starts. For all practical purpose, TX2 had already started charging players for items starting 6/6/2008. NTES will most likely start to charge for items for the XYW soon.

After XYW, FF2 shall be out by the end of this year. After that, the new game DT2 shall be ready soon afterward. That game will probably be ready by the 1st quarter or 2nd quarter 2009. In addition, there are also the licensed game the two Warcraft games as well as the Starcraft 2 game. All of these games will probably be ready in 2009.

The next 3 quarters are going to be extremely busy for NTES.

NTES – DT2 and FF2 go into Beta testing

My last post on DT2 can be found here:

http://chinese-net-gaming-stock.blogspot.com/2008/07/ntes-two-new-games-went-into-closed.html

My last post on FF2 can be found here:

http://chinese-net-gaming-stock.blogspot.com/2008/05/ff2-game-information.html

My last post on TX2 can be found here:

http://chinese-net-gaming-stock.blogspot.com/2008/07/ntes-ceo-predicted-pcu-of-more-than-1.html

My last post on XYW can be found here:

http://chinese-net-gaming-stock.blogspot.com/2008/07/ntes-two-new-games-went-into-closed.html

It is exciting time for NTES. All its major games are going to be out at about the same time.

TX2 went into Closed Beta on 6/6/2008. It is open to everyone and the game characters won't be deleted. Actually, it had already started commercialization already. The game is doing well and is growing steadily. It didn't grow like a block-buster. But that was planned. NTES was not looking for explosive start, but rather slow and steady growth until it reaches PCU of 1 million in 1 year (according to Netease's CEO).

It already started charging for in game items already. More excitingly, starting with a couple of weeks ago, players can now buy treasure boxes. This is similar to GA's ZhengTu game. The treasure boxes are really just online lottery system. It function like online gambling. It is like a slot machine. Every times it opens, items with different values rotates. The probability of getting really good item is very low, but also very tempting. Therefore, it is hard for players to only buy one. They buy one after another until they hit a good item. It may not have very good reputation. But players just can't stop spending money on those.

XYW started Closed Beta on 7/5/2008. In this game, NTES follows the traditional definition of Closed Beta by limiting the number of players. It will delete the game character after the Closed Beta. There is also no commercialization.

DT2 is a new free-to-play game. It went into Final Internal Beta on 7/21/2008. It is not clear whether NTES will kill off DT. It maybe possible that NTES will have both games operating at the same time, with DT2 the free-to-play game and DT the paying game.

Usually, the Internal Beta is limited to players working for NTES. But NTES uses outside players for this Beta. It is limited to about 1000 invited guests. The game characters will of course be deleted after the current beta testing.

Most likely, after the Internal Beta, DT2 will have Closed Beta and Open Beta.

FF2 is a pretty interesting game. It went into Closed Beta on 7/22/2008. It is open to everyone. But the game characters will be deleted. I don't believe it will be commercialized at this point.

I think FF2 will prove to be a very popular game. It will be cater to young players and female players. It might not be able to get a lot of money per players. But eventually, it could be a 5 to 10 million per quarter game.

Now, I am going to make a table on the characteristics of Beta testing on all four games:

Game	Date	Type of Beta	# of players	Delete game Character?	Commercialization
TX2	6/6/08	Closed Beta	Open	No	Yes
XYW	7/5/08	Closed Beta	Limited	Yes	No
DT2	7/21/08	Internal Beta	Limited	Yes	No
FF2	7/22/08	Closed Beta	Open	Yes	No

As can be seen from the above table, it is all over the map. There is no consistency in how NTES determines what is Closed Beta and what is Internal Beta. It is probably up to the chief game designers of each game to decide what he/she wants.

It may be confusing to the investors. But as long as NTES comes out with great games, that is all I care.

With all these major title coming out at about the same time, the next few months is going to determine the future of NTES.

Finally, one can download the official trailer of DT2 from the following address:

http://czdldt2.163.com/dt2/dt2_1024.wmv

NTES – Two new games went into closed beta

My last update on the new game of XYW can be found here:

http://chinese-net-gaming-stock.blogspot.com/2008/06/another-new-game-for-netease.html

My last update on TX2 can be found here:

http://chinese-net-gaming-stock.blogspot.com/2008/06/tx2-commercial-operation-before-open.html

My last update on FF2 can be found here:

http://chinese-net-gaming-stock.blogspot.com/2008/05/ff2-update.html

NTES had been very slow in releasing games in the last 3 to 4 years. It only release two major titles in the last 3 years, DT two years ago and XY3 last year. DT was a complete failure while XY3 is growing at a very slow pace. The verdict is still not out on the XY3 yet.

But for some reason, the second half of 2008 and first half of next year will promise to be somewhat of a watershed period for NTES. It will have four major titles all coming out at about the same time.

First, on 6/6/2008, TX2 went “unlimited and open closed beta”. It start to charge players money for items. It is about a month now and all indication had shown that the game itself is a great game. Players love it and it is very sticky. Unfortunately, NTES resorts to its old psychotic aversion to marketing its games so the growth had not been exponential. It had its sales team going to many internet café to push for TX2. But NTES’s ground sales team is no where close to the effectiveness of the ground sales team of Giant Online (for example). In addition, there are no advertising on buses, subways, LCDs, street signs, internet gaming sites, or TV programming, etc.

As a result, the growth of TX2 had been slow so far. But still, it is still on a solid growth path.

Another game, FF2, had been in closed beta since 2/1/2008. FF2’s development team had been very secretive about its progress. But I got the feeling that, if NTES wants, it could get it out in the next couple of months. I suspect the only reason it is being hold back is not to get every major title out at the same time.

From the following two articles:

http://game.21cn.com/online/news/2008/07/01/4899043.shtml

http://tx2.163.com/news/2008/7/1/4006_190200.html

Another major title, XYW, will go into closed beta (with several thousand players) on 7/5/2008. XYW is somewhat of a composite of XY2, XY3, and XYQ. It is build on the same game engine of XY3. It will have a graphic style of XY2 (cartoonish but not too cute) and many playable features of XYQ. Of course, it will be free to play and therefore will emphasize player combat more while the other three existing games emphasize community features more.

From the above two articles, another major title, DT2, will go into closed beta in July 2008. DT2 is another free-to-play title. For a while, I had thought that DT2 would be NTES’s first free-to-play title (either DT2 or FF2), but it turned out not to be the case. It took NTES two years for DT2 to come out. I don’t know why it took so long. I had thought that DT2 is just a minor re-write of DT and just a straight conversion from paying game to free-to-play game.

Obviously, that is not the case. This speak volumes about NTES the company. There is no cookie cutter for any of its games. Every games is a major undertaking. They strives for excellence for every projects.

It is just too bad the senior managers are not willing to spend the marketing dollars to push its new games.

TX2 had been under development for about 5 years now. It still have an open beta to go. FF2 had been under development since June of 2005. By the time it comes out, probably later this year, it would be 3.5 years of development.

DT2 had been under development for two years. If it comes out later this year, it would be 2.5 years of development.

The speed of XYW’s development surprised me a little. It had only been 6 to 9 months of development. I think the reason XYW can be out so fast is because NTES doesn’t have to re-develop the underlining game engine from the ground up.

TX2 had to go through two stages of engine development work with its Australian game engine developer to optimize its game engine. FF2’s game engine is complete re-wrote from the ground up. The original DT’s game engine is in-house developed. I am certain they did a lot of game engine upgrade for DT2 also.

But for XYW, it is different. NTES spent a lot of money and effort to develop a brand new game engine for XY3. But XY3, though a somewhat successful game, didn’t become a blockbuster. Therefore, NTES decided to use its brand new game engine to develop another game. That game is XYW. The analogy will be that the foundation is build and only the floor plan is changed.

Perfect World had been doing this for all its games. They use the same game engine and spitting out new games like automobiles from an assembly line.

Going back to NTES. If one purely based on development schedules, I am certain all 4 games could go into commercial this year. But for factors such as no competition with its own games, NTES might want to stagger the release date so that one or two of the major titles could come out early next year.

Anyway, it is exciting time for NTES. I only hope NTES’s senior managers can provide more marketing help to its games.