Today the Chinese game operator Shanda Interactive Entertainment Limited reported its Q1 earnings, which were at a record high of $162 million. This is an increase of 42% year-over-year and 9.1% above the prior quarter. Shanda's guidance for this quarter was set at plus 3 to 5%. Net income for Shanda grew 25% year-over-year and 10.6% quarter-over-quarter to $52.8 million.
The boost in revenue is being credited in part to the April launch of Shanda's new Aion: The Tower of Eternity MMORPG. This resulted in Shanda's MMORPG sector's revenue growing 47.4% year-over-year and 8% quarter-over-quarter to $138.2 million. Right now the game is only operating in Asian territories, where users play by purchasing prepaid time cards. In the US, Aion will be operated by NCSoft and charge a $14.99 monthly subscription fee.
Shanda also reported its total number of active paying freemium MMORPG accounts increased to 22.1% to 7.19 million in Q1. The company credits this to a major effort to try and convert more of its free users into paying users in the company's freemium titles. As a result, ARPU (average revenue per user) across Shanda's freemium titles in Q1 '09 was down to $6.41 from Q4 '08's $7.24. Clearly the lower ARPU is not at all harmful to Shanda's bottom line given the increase in the total number of players willing to convert.
One of Shanda's major freemium properties of interest is an online version of THQ's popular console RTS franchise Company of Heroes. Shanda is essentially developing the title, which THQ will receive royalties on and may be able to operate in other territories. A recent report by DFC Intelligence considers Shanda's family of games the fourth most profitable MMORPG of 2008 and in general Shanda can be considered one of China's largest and most well-established online game operators.
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