Shanda Entertainment, China's largest online gaming company, has announced a change to its revenue model for existing and future MMORPG titles following falling share prices and a decline in concurrent online users.
The company recently posted mixed Q3 financial results, which showed increased year-on-year revenues but a noticeable decrease in concurrent online users for its portfolio of MMORPG titles, resulting in falling share prices. MMORPG gaming, accounting for almost seventy per cent of the company's revenue stream, showed a quarter-over-quarter decline of 8.4 per cent.
Shanda's CEO, Tianqiao Chen, had attributed a large proportion of the losses to a waning interest in the company's long-running Legend of Mir II game, as the number of concurrent online users dropped from 763,000 to 630,000 over a single quarter. Legend of Mir II will be the first title to adopt the new free-play revenue model, along with Shanda-created RPG, Magic Land.
The free-to-play revenue model, which has been tried throughout Asia and will be tested in the West by companies including Sony Online Entertainment, relies on generating revenue through the sale of extra services such as powerful in-game items or bonus levels, allowing gamers to legitimately pay real money for in-game items and characters. Shanda will gradually adopt this model for its existing and future projects, including its brand new MMO, The World of Legend.
Tianqiao Chen, CEO of Shanda, stated: "After several years of operating our casual games under the similar revenue model and after extensive research into the Chinese online games market, we believe that adopting the Avatar-based revenue model for more games will benefit the company in the long run. However, it might have a negative impact on the short-term revenues of our MMORPGs."