NetDragon Websoft Profits Down 64%

By On August 25, 2009 · Leave a Comment

Today Chinese MMORPG publisher and operator NetDragon announced results for the first six months of 2009, revealing a 63.9% quarter-over-quarter decline in profits for Q2. NetDragon's revenues were down only 6.3% quarter-over-quarter, to $24 million. Despite this, NetDragon made only $2.6 million in profits for Q2, as compared to $48 million in Q1 2009. The drop in profits appears to be driven by increased costs resulting from the launch of new titles and acquisition of significant new licenses during the Q1 period.

"10 years into our mission, the 'future' as we
imagined it in 1999 is now upon us all, and an even brighter and
opportunity-laden future in online games and multimedia lies ahead. We have
been investing in people and infrastructure over the past few years, thereby
raising our R&D capacity and improving quality, as marked by numerous game
launches, EPs and other product releases. As more and diversified content and
products reach maturity, the direct monetization and cross-promotional
potential is immense," said Liu Dejian, Chairman and Executive Director of NetDragon.

NetDragon's major launch for Q1 was the game Way of the Dragon in March 2009. NetDragon also issued new expansions Eudemons Online and Zero Online in multiple languages including English during the first half period. Licensees issued localized versions of Zero Online in Vietnam and Thailand. April 2009 saw the release of an English version of Tou Ming Zhuang Online called The Warlords. Perhaps most interesting to Western observers, NetDragon also secured the rights to develop and operate a new version of Ultimate Online from Electronic Arts during this period.

The games Tian Yuan and Disney Fantasy Online were tested in closed beta during this period. The company also issued several mobile games for Chinese smartphones, including Panda Reader and 91 Assistant. Q2 saw the release of Heroes of Might and Magic Online, based on a Western game franchise, in July and the release of a new expansion for Conquer Online in English in July and in Spanish in August.

In addition to Ultima Online, other future projects for NetDragon Websoft include another Western license, Dungeon Keeper Online, and a new title called CJ7 Online. NetDragon's year-over-year for the first half of 2009 is $49.3 million, up 4.6% year-over-year. Year-over-year profit is down 42.4% to 9.7 million, largely driven by the Q2 drop-off.