Part 1 of this article is about XY2. I will devote part 2 for XY3. Part 1 of this article can be found here:
http://chinese-net-gaming-stock.blogspot.com/2008/03/xy2-and-xy3-server-status-part-1.html
On 11/7/2007, XY3 consolidated its servers from 140 servers to 60 servers (as of now, the server had increased to 68). It introducing an accuracy question regards the statistics from the server count. For one thing, it is not clear that they uses all brand new servers. If they use all brand new servers, then it becomes more likely that the new server will have more user capacities. In that case, they might change the player counts before declaring the server busy, full, etc.
Another factor that introduces inaccuracy is that the game is very new and there is very little data to base on. When Ntes say its server is busy, full, good , or excellent, how do that corresponds to the actually number of users on that server? There are a lot of calculations between server count that I observe every night to the generation of PCU estimate from the observations. From the limited data I collected, I am able to make some rough estimates for me to calculate PCU. But they are really very rough estimates. At this point, the confidences for these estimates are not high. It will take another one to two quarter before I will feel confident in my PCU estimate.
Something else to keep in mind is that I can no longer stay up everyday to do server count. I only do server count during weekends.
But since I am using the same data to compare 4th quarter 2007 and 1st quarter 2008, they are apple to apple comparison. Even though they are rough estimates, but they are the only thing I have to go by. Better or worse, this is all I have.
The following is the server count table:
| Month | Saturday/Sunday | 4Q2007 | 1Q2008 |
| 1 | 1 | | |
| | 2 | 121 | 127 |
| | 3 | 183 | 118 |
| | 4 | | |
| 2 | 1 | 128 | 121 |
| | 2 | | |
| | 3 | 113 | 116 |
| | 4 | 114 | 123 |
| 3 | 1 | 114 | 117 |
| | 2 | 108 | 120 |
| | 4 | 179 | 122 |
| | 5 | 166 | 124 |
| Total | | 1226 | 1088 |
The first column is the month. There are three months in each quarter. In addition, there is a one week national holiday in both 4Q 2007 and 1Q 2008. I used 2 days out of the 7 day national holiday.
The second column is the order of weekends. There are usually 4 weekends per month. The number in the third and fourth column represents the PCU for that particular weekend.
From the last row, one can see ACU decreased from 4Q07 to 1Q08 by (1088 – 1226)/1226 = -11.3%
It is a little surprising to me that there is actually an increase this quarter. Ntes didn’t really add a lot of contents this quarter. The expansion pact won’t be ready until the 2Q. It is clear that XY2 is growing again.
Now, lets try to relate ACU with the revenue. Let me use the following table:
| | 4Q2007 |
| ACU | 53 |
| ACU % | |
| Revenue | 4.9 |
| Rev. % | |
The second row of the table is the Average Concurrent User estimate. The third row is the quarter to quarter increase/decrease for the ACU. The fourth row is the revenue from XY2. The fifth row is the QoQ increase/decrease for the XY3 revenue.
For 1Q 2008, my server count suggested a decrease of -11.3%. My guess for the revenue will be a decrease of -12%. This will give me a revenue of 4.9 * 0.88 = 4.3 millions for 1Q2008.
This result is very disappointing.
There are very little features added in XY2, yet its ACU increases. On the other hand, for XY3, Ntes added a pretty major feature at the beginning of March, yet its ACU decreases. XY2 is an old game, but it is growing, while XY3 is brand new and it is decreasing in popularity.
I think Ntes erred in two major areas. First, there is virtually no advertising for any of its games during the 1Q. They ought to start to advertise for XY3. Secondly, they shall not have announced that there will be an free-to-play version of XY3 during the 2nd half of 2008.
When players want to invest their time and money in a game, they want to be sure that this game will be around for a long time. When you market a game, it tells the players that the company is willing to spend money for the game. By announcing another version of the same game, it definitely introduce uncertainty in players’ mind about whether the current version of game will survive.
In summary, I am very happy with XY2’s performance while very dissatisfied at XY3’s performance. Again, the problem is not the game, but the marketing of the game.
