Shanda’s development history

Shanda is currently the largest online game operator in China. Shanda provides a series of online games for users' online entertainment. These games include products independently developed and operated by agents. Among them, "Legend 2" operated by Shanda was rated as the most popular online game in China in a user survey conducted by IDC. In addition Shanda launched the first self-developed online game "Legendary World".

The games operated by Shanda include massively multiplayer online games (including massively multiplayer online role-playing games, or MMORPG games) and casual games. The interactive format of these games creates a strong sense of community among users. Shanda Games' huge user base not only increases user loyalty, but also helps attract new users. Shanda MMORPG games allow users to interact with other users in the virtual world by playing a specific role or with a specific identity. As the game plot continues to develop, users can continue to accumulate experience, play different roles, and communicate with other players in real time. Since MMORPG games require a long time to accumulate character experience and enhance their own abilities, such games are more sticky, which means that users will spend longer playing these games. Compared with MMORPG games, Shanda's casual games are simpler and do not take a long time, so they have attracted a wider range of users, especially family users.

The reason why Shanda Games is so widely welcomed is that, in addition to the characteristics of the game itself, the more important reason is that Shanda’s game operation capabilities and the services provided by Shanda greatly enrich the user’s gaming experience. , these aspects include:

Each Shanda game has a dedicated team management, who are responsible for formulating operational plans, allocating internal resources, and performing hourly maintenance for the virtual community;

Shanda not only has independent research and development capabilities, but also has rich experience in localized operation of games;

Shanda has established a nationwide sales and charging network;

Shanda has established A server network spread across the country;

Shanda has a complete customer service system, including a 24-hour call center.

Shanda’s goal is to maintain and continuously improve its position in China’s online gaming industry. Shanda will adopt the following strategies to achieve this goal:

Enrich Shanda’s game product line through independent research and development, strategic joint ventures or cooperation, mergers and acquisitions, and the introduction of agent products;

Increase infrastructure investment to further enhance Shanda’s game operation platform;

Use the existing user base, sales and charging network to further enrich Shanda’s revenue sources;

Actively expand other online entertainment platform.

November 1999

Shengda was established and launched China's first graphical online virtual community game "Network Return to Valley".

September 2001

Shanda officially entered the online game operation market and kicked off the public testing of the large-scale online game "Legend".

November 2001

"Legend" operated by Shanda was officially launched and quickly topped the sales rankings of various software.

May 2002

Shanda established a customer service call center and answered an average of 6,000 calls from users every day.

June 2002

Shanda established a user reception center, which receives an average of 300 users per day.

October 2002

The highest number of simultaneous online users of "Legend" operated by Shanda exceeded 600,000.

January 2003

Shanda acquired Shenzhen Fenglinhuoshan Computer Technology Co., Ltd., a well-known enterprise in the domestic mobile field and chess and card field.

February 2003

Shangda acquired Shanghai Shulong Technology Co., Ltd., a national mobile application service provider.

March 2003

Shanghai Shengpin Network Development Co., Ltd. was established by Shanda Investment, dedicated to the development of online games.

March 2003

Shanda signed a strategic financing agreement of US$40 million with SoftBank Asia.

April 2003

Shanda officially launched SMS value-added services integrating online gaming platforms.

May 2003

Shanda officially launched electronic payment business, promoting the new development of interactive entertainment e-commerce.

June 2003

Shanda and Xinhua Holding Group Co., Ltd. jointly invested in the establishment of Shanghai Shanda Xinhua Co., Ltd. to develop online game peripheral products.

June 2003

Shanda invested in BOTHTEC to develop "Galaxy Heroes", marking the first time that Chinese capital entered the Japanese game industry.

July 2003

The first online game "Legendary World" independently developed by Shanda was put into public testing.

September 2003

Shanda acquired Chengdu Jisheng Technology Co., Ltd., the largest Internet cafe management software company in the country.

September 2003

The highest number of simultaneous online users of "Legendary World" operated by Shanda exceeded 300,000, and the highest number of simultaneous online users of all Shanda's games exceeded 1 million, refreshing its own record. world record.

October 2003

Shanghai Shengjin Software Development Co., Ltd. was established by Shanda Investment, dedicated to the development of online games.

January 2004

Shanda invested in Beijing Digital Red Software Technology Application Co., Ltd., the largest game software supplier of China's Nokia Symbian OS platform and J2ME platform.

January 2004

Shanda acquired the American ZONA Company, one of the world's leading online game engine core technology development companies.

February 2004

The highest number of simultaneous online users of Shanda's "Pao Pao" exceeded 500,000, setting a new record for the world's large-scale casual online games.

February 2004

Mr. Tang Jun, the former president of Microsoft (China), joined Shanda as president.

February 2004

China’s first self-developed large-scale 3D online game "Miracle" was launched for public testing.

May 2004

Shanda’s initial public offering (IPO) of 13.8 million American depositary receipts (ADS) on the Nasdaq market in the United States at a price of US$11 per share. Shanda*** raised US$151.8 million through this IPO.

The arduous listing process

At 11:20 a.m. Eastern Time on May 13, Shanda Network (stock code: SNDA) was officially listed on the NASDAQ stock exchange in the United States. trade. Although Shanda lowered the issue price by 15 US dollars from the original 13 US dollars to 11 US dollars, the amount of public solicitation funds still reached 152.4 million US dollars, closing at 11.97 US dollars that day. Online games interpret the myth of the stock market. The 31-year-old chairman Chen Tianqiao plays the "Legend" game that affects wealth. His family owns more than 60% of the equity, equivalent to about 5 billion yuan, which is 4 billion more than the Hurun Rich List at the beginning of the year. Yuan valuation. Chen Tianqiao's "book wealth" even caught up with Ding Lei's, and for a time he had the momentum to catch up from behind.

With the magic of the Nasdaq stock market, Chen Tianqiao and Shanda Network became a new Internet legend in 2004.

In fact, Shanda’s listing process was also full of hardships. Shanda initially planned to raise US$300 million from Nasdaq, with an expected price-to-earnings ratio of more than 25 times. At the last moment before the issuance, Shanda and Goldman Sachs, the investment bank responsible for its issuance, lowered the issuance price by 15% to US$11 and listed the stock. It has also been reduced from the more than 17.3 million shares planned to be issued in the prospectus to 13.85 million shares. Based on this stock price, Shanda's public offering will raise US$152.4 million, only half of the original plan. Because of this, some people in the industry commented, "This is similar to the first batch of Chinese concept stocks, and it is tantamount to another 'bloody' listing."

In order to successfully list on Nasdaq, Chen Tianqiao also spent a lot of money to recruit Tang Jun, the former president of Microsoft China, to serve as the president of Shanda Network. The reason why Chen Tianqiao invited Tang Jun to join at this critical moment was not only to strengthen the company's management capabilities, but also to enhance the company's image and add chips to the listing.

The single way to make money is a problem for Chen Tianqiao. Before going public, Chen Tianqiao used crazy acquisitions and diversified expansion to build an online Disney empire. Shanda Network achieved success with "Legend", but Shanda did not just stop at "Legend". Especially after the launch of "Legend World", Shanda strengthened itself through large-scale acquisitions of game development teams at home and abroad. Therefore, in addition to "Legend" and "Legend World", games such as "Miracle", which were originally called the 3D version of "Legend World", are Shanda Network's core weapons in hoping to gain the confidence of Wall Street investors.

No matter what, as the first Chinese gaming company to be successfully listed overseas, Shanda has created an impressive wealth legend in China. Shanda's profitability is extremely high. Each Shanda player brings an income of RMB 0.14 per hour to Shanda. Facts have also proved that in 2003, Shanda's cash income was approximately US$33 million, its net operating income was US$72 million, and its profit margin was as high as 45%. Especially with the successful listing on Nasdaq, on the one hand, Shanda Network has become increasingly distant from its competitors. On the other hand, Shanda Network has also officially integrated into the international stage, and the company has embarked on a new development process.

The wealth of online games

“Subjectively speaking, we don’t call Shanda’s family strategy a transformation, but objectively we are indeed transforming. If the main business of an enterprise changes, This is of course called transformation." Chen Tianqiao believes that Shanda has not transformed its business model. His basis is that the online game business model completely represents the future family interactive entertainment business model.

“We feel that the operation and business model accumulated by online games may indicate the future development direction of the interactive entertainment business. That is, the operation support platforms they need should be similar, nothing more than login, Authentication, billing, payment, security, and security management. "Qu Haibin believes that the online game platform is enough to accommodate future interactive entertainment businesses.

According to Qu Haibin’s understanding, the unified billing platform accumulated in Shanda Online Game Operations, nearly 20,000 servers, millions of simultaneous online users, and a complete customer service system can all be directly Wealth for future interactive entertainment business.

Not only that, in the past year Shanda has begun to intentionally integrate online games into its home entertainment strategy. An obvious example is that Shanda has stopped the research and development of large-scale online games because large-scale online games are considered unsuitable for family use. The company's nearly 1,000-person R&D team has all turned to the development of casual games related to family entertainment strategies.

In the fourth quarter of 2005, the average number of simultaneous online users for all Shanda's commercially operated MMORPGs (massively multiplayer online role-playing games) dropped from 630,000 in the previous quarter to 548,000, while casual games had the highest number The number of people online at the same time (including Bianfeng's chess and card game users and Haofang's battle platform users) reached 1.661 million, an increase of 9.2 from 1.521 million in the previous quarter. In addition, the proportion of casual game revenue relative to large online games in the fourth quarter has also risen to 35%.

“The completion of online game content is an important step in Shanda’s home entertainment strategy. Currently, Shanda’s games have approximately 2.3 million people online at the same time, two-thirds of which are casual puzzle games, and the rest are role-playing games. Of course, this is the most criticized game, so we first improved the variety of games. Since two years ago, we have developed Crazy Tank, Bubble Hall, MapleStory, etc. "Chen Tianqiao was excited before. expressed to the media.

“Shanda’s battle plan is actually a set of very targeted actions. We launched regional operations in September, and then launched the free model immediately in November. In fact, these were all planned long ago. are all a set of arrangements made to seize the market and follow-up family management strategies.

"Ling Hai said.

Thanks to the newly acquired card game platform "Game Tea Garden" and the implementation of new charging models and new regional operation models for three major MMORPGs, the fourth The highest number of concurrent online users for all Shanda's commercially operated games increased from 2.55 million in the third quarter to 2.68 million in the third quarter, while the highest number of concurrent online users for all Shanda's commercially operated games only increased from 2.52 million in the previous quarter. 2.55 million people.

“Online games as a content resource are also an advantage for us in promoting our family entertainment strategy. Shanda spokesperson Zhuge Hui believes that game content will be the killer application to activate end users.

No matter from which perspective, the performance of Shanda’s online games in the future will directly affect the success or failure of Shanda’s home entertainment strategy. , and investors and the industry are mainly worried about whether Shanda's online games will have new growth points in the future after several major large-scale online games begin to show decline.

Game changes

“The competition in online games is definitely much more intense than it was two or three years ago, because everyone now respects this industry. However, there are not many companies that are truly profitable. This industry still has some cohesion effects. The top five largest companies may occupy more than 80% of the market share in this market. " Shanda President Tang Jun said.

Nevertheless, Shanda has faced severe challenges in the field of online games. NetEase, Shanda's largest competitor, has relied on two self-developed games in recent quarters, "Fantasy Westward Journey Online" and "Fantasy Westward Journey Online". "Westward Journey Online II" is getting closer to Shanda's game dominance. In the fourth quarter, NetEase's online game revenue reached US$49.7 million, exceeding Shanda's US$38.7 million in the same quarter. NetEase is also approaching Shanda's online number. Shanda. In addition, the 3D online game "World of Warcraft" distributed by The9 in the same city has achieved great success, diverting a considerable number of Shanda online game users.

Fierce market competition has "forced" Shanda. In the past year, Shanda has begun to try new operating models for online games, the most prominent of which are regional operations and free operations.

On September 8, 2005, Shanda announced that it would expand its operations to three of its networks. After five months of trial operation for the games "Age of Heroes", "Dream Kingdom" and "Miracles", Shanda Network's regional operation model began to be promoted nationwide, with plans to cultivate 100 regional agents. In addition to the three games that have already implemented regional operations, Shanda has also opened the regional operation authorization of two casual games, "Hot-Blooded Heroes" and "Grand Monopoly".

It is reported that. Business operation will become the main model of Shanda Games in the future. Several new games including "Bianfeng Chess", "Legend", "Legend" and those launched in 2006 will adopt this model. It is expected that the number of licensed games will reach 10 within the year. “With regional operations, local operators can provide unique services to local users, which we couldn’t do before. The revenue growth of the three products currently operated regionally is very obvious. " said Zhang Xiangdong, vice president in charge of Shanda Online Game Operations.

If regional operations are still limited to a few non-core online games, then free operation is a heavy bomb dropped by Shanda . In November 2005, Shanda announced that its core online games "Legendary World", "Legend of Blood" and "Dream Kingdom" will be permanently free and will no longer charge users a monthly fee, instead relying on providing value-added services to users.

The free operation immediately caused an uproar in the industry. Competitor NetEase even claimed that Shanda was killing the goose that laid eggs, which would have an adverse impact on the entire industry. Online game revenue decreased by 30.4% compared with the previous quarter.

“Shanda is being its own revolutionary. If you look at it rationally, it should be understandable that online games are free, because it is like a buffet turning into a shopping mall (a super large shopping mall).

We have adopted some desperate measures to resolutely transform. This change will definitely require consumers to go through a familiar process, and will definitely cause changes in the company's short-term revenue. "According to Shanda insiders, there was a considerable debate within Shanda on whether to implement a free model in 2005. In the end, it was Chen Tianqiao who made the decision that December must be free.

"The adverse effects of free operations are already there. Peaking in the fourth quarter of last year, Shanda's large-scale online game revenue has been growing steadily in the first quarter of this year. "According to people close to Shanda.

It is reported that Shanda will launch two large-scale online games "Dungeons and Dragons" and "ArchLord" in 2006. Shanda's acquired subsidiary Actoz will also provide Shanda with 3 games. In terms of casual games, "Grand Monopoly" just started commercial operation in December 2005. "The operation is very good. " Shanda insiders said.

No matter how great the achievements of regional operations and free operations, all Shanda can do is to extend the life cycle of the games it currently operates. For Shanda's future, how to find the next one "Legend"-style large-scale online games are still an unavoidable topic.