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Shanda Games shows weakness as profits dip

Games division blamed for fall in profits, despite year-on-year revenue increase for Chinese publisher

Chinese company Shanda Interactive Entertainment has announced its first quarter financial results, with revenues experiencing a 19 per cent increase on the previous year.

Net revenues for the entire company rose to RMB 1,318.2 million (£131m/$193m). Revenues for Shanda Games though saw only a 10 per cent increase year-on year, to a total of RMB 1,143.2 million (£114m/$168m).

Net income for Shanda Interactive Entertainment fell sharply in the first quarter, from RMB 374.7 (£37m/$55m) million in 2009 to RMB 272.4 million (£27m/$40m) this year.

A weakness in Shanda Games, which includes income from massively multiplayer online games and casual titles, was blamed for the fall in profits, as revenues fell by 14 per cent from the previous quarter.

The decline in popularity of title Mir II, following an unpopular expansion pack in late 2009, was singled out as a particular problem.

However, revenues from other sources, including literature, chess and board game platform Hurray! and a new e-sports platform saw a 138 per cent jump in year-on-year revenues.

"In the first quarter we managed to achieve 19 per cent revenue growth over the same period last year despite softness in Shanda Games' business," said Tianqiao Chen, chairman, CEO and president of Shanda.

"While Shanda Online performance was similarly affected, by contrast, our other interactive entertainment businesses came through strongly and reported 138 per cent revenue growth from the year ago period," he added.

"These are encouraging signs that our 'centralised platform, decentralised content' strategy is beginning to bear fruit. Shanda is currently in a critical transition period, and we are fully committed and are working relentlessly to transform ourselves to build a leading interactive entertainment media group," concluded Chen.

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