Chapter 56 Ma Huateng Surfing Game Ice and Fire

Entering 2004, the grand worries of life and death seemed to come to an end. In February 2004, Tang Jun, the former president of Microsoft China, joined Shanda amidst the astonishment of the crowd.Under Tang Jun's mediation, Shanda went public on May 13, 2004, facing the cold spring when the U.S. stock market was indifferent to China's new stocks.After Shanda Networks announced a one-day delay in listing, the offer price per share was also lowered from the original 13 to 15 US dollars to 11 US dollars, and the financing scale was reduced by 40%.The general evaluation of the media is "bleeding listing", but Chen Tianqiao doesn't think so. For him, the cold wave of the stock market and the decline of stock prices are just challenges that must be encountered in the process of upgrading online games. Listing on NASDAQ means a grand With a bigger and wider stage.

In July 2004, NO.1 Shanda Network in the online game industry successfully landed on the NASDAQ stock market, becoming China's first online game stock.Subsequently, Shanda's stock price soared. The "New York Times" on August 1, 2004 pointed out that among the 32 technology companies that were newly listed in the world in 2004, Shanda's stock price rose by 72.7% from the date of issue to the present. top of the list. On November 29, 2004, Shanda acquired South Korea's Actoz for US$91.7 million in cash, completely ending the two-year copyright dispute. Chen Tianqiao, who worked in an investment company after graduation, obviously has a soft spot for capital operations.Comparing Shanda’s reverse merger of South Korea’s Actoz and Lenovo’s acquisition of IBM PC business, Chen Tianqiao believes that the significance of the former is far greater than that of the latter. “Reverse mergers of upstream manufacturers by downstream manufacturers in the industry chain will greatly improve the ambition of Chinese people.”

Chen Tianqiao once spent nearly 2 billion yuan to successfully acquire 19.5% of the stock of China's largest portal network Sina in just 43 days, becoming the largest shareholder of Sina, subverting the pattern of China's Internet.Prior to this, Shanda had successively acquired nearly 10 companies in North America, Japan and China; in 2004, Shanda's pace of expansion was further accelerated, setting a record of completing 6 capital operations within two months. In the days when Shanda first suppressed and then rose in Nasdaq, Zhu Jun was going all out to win the agency rights of a game, and his biggest competitor was Shanda.This game is "World of Warcraft" by the American game company Blizzard. At that time, this game had already proved to be a huge success in the North American market.

In this battle with Chen Tianqiao for agency rights, Jun Zhu put a lot of thought into it.During the negotiation with Blizzard, Jun Zhu asked every Ninetowns employee who participated in the bidding to wear a T-shirt with the number 500,000 written on it.This peak concurrent user was an astronomical figure in 2003.Jun Zhu's hard work has paid off. In April 2004, Ninetowns signed a China strategic cooperation agreement with Blizzard Entertainment(R), becoming the exclusive agency operator of "World of Warcraft" in China.But before that, the news that Ninetowns will form a joint venture company with Singtel, Sohu and Intel to form a "Quartet" to jointly operate "World of Warcraft" has been reported by domestic media.

However, in order to obtain the exclusive agency operation right of "World of Warcraft" in China, The9 promised as much as US$51.3 million in agency fees, of which only free copyright fees amounted to US$3 million.At the same time, The9 must also come up with 13 million US dollars as "World of Warcraft" promotional expenses in the Chinese game market.After the commercial operation of the game, Ninetowns must also pay US$1.6 million to US$3.7 million as copyright tax every quarter within four years. "A world is waiting..." Zhu Jun used this sentence to describe the situation when "World of Warcraft" landed in China, just like describing the fans looking forward to the World Cup.

The "World of Warcraft" that Jun Zhu put a lot of effort into really lived up to expectations. It not only enriched Jun Zhu's purse, but also made Ninetowns grow stronger and set foot on NASDAQ.Five months after Shanda went public, Ninth City, unwilling to be lonely, was also listed on the NASDAQ stock exchange at lightning speed, following the success of Shanda Network.The stock of Ninth City has been soaring since its listing, showing a beautiful upward arrow in front of everyone, from $17 at the time of listing to a climax of $25. Chen Tianqiao and Zhu Jun landed on NASDAQ, giving birth to two young upstarts in China's Internet industry.During this period, Tencent also listed in Hong Kong. "Tencent holds more than 200 million US dollars in cash after listing, and the online game market will also become a key industry for our next investment." On July 10, 2004, at the 8th China International Software Expo Domestic Online Game Development Forum, Ma Huateng, chairman of Tencent, revealed Tencent's ambitions for the online game market.

At that time, Tencent had established an online game team of more than 100 people to develop and operate online games.In addition to the original small casual games, large-scale online game products will also be launched, and it is not ruled out to use the huge funds in hand to acquire suitable online game development organizations. By continuously summarizing experience and lessons and continuously obtaining feedback from users, Tencent finally decided to use chess and card games as an entry point into the game market, and established a QQ game portal.Subsequent facts proved that this was a wise choice—because the cost of chess and card games is lower than that of large-scale games, the update speed is fast, and the operation effect is very good. By August 2004, QQ Games became the largest casual game portal in China. That year, the number of simultaneous online users of QQ games exceeded 2 million.

When Ma Huateng was about to show off his ambitions, there was another person who also coveted the game market.This person is Shi Yuzhu. The introduction written by Forbes editor Andrew Farrell for Shi Yuzhu is as follows: "Shi Yuzhu, the richest Shanghai resident. In 1991, he founded a giant after graduating from Zhejiang University, the cradle of China's software industry. A 70-story skyscraper that was never built and went bankrupt. The latest news about him is that the man is back and making a splash as an online gaming service, Giant Networks." Why did Shi Yuzhu enter the game industry? According to Shi Yuzhu himself, he entered the game industry because he played games for a while.There is a saying in the industry that: Shanda's "legendary" inside story made Shi Yuzhu discover the road to the United States. In 2004, Shi Yuzhu, who had planned for two years, proposed to the core management to enter the online game industry. At the end of 2004, Zhengtu Network Technology Co., Ltd. invested by Shi Yuzhu was established.

In 2004, Shi Yuzhu transferred his main industries "Melatonin" and "Golden Partner" to Duan Yongji of "Stone".In his spare time, Shi Yuzhu played online games. With his ingenuity, he found that he was useless in online games. Only one or two games could score 60 points. Most of them failed and could only play online games. 45 points.Shi Yuzhu has been addicted to the online game world for a few months, and he easily discovered the lifeline of online games: all games are charged according to the idle time, many white-collar players have money but no time to level up, and more young players have time to play , but not so much money, so power leveling, cheating and other situations were derived.

After that, Shi Yuzhu began to wonder why the operator didn’t change the charging mode. Ordinary players don’t charge, and a few players who want high-level treatment but don’t have time to fight monsters and level up can achieve their goals through charging. Wouldn’t everyone be happy? Soon, Shi Yuzhu entered online games.Shi Yuzhu's method of building a team also seems very deviant.He once told the media that domestic experts in online game research and development actually have connections with each other, and there is even a QQ group where they invite the most powerful ones, that is, the first-class domestic teams.Shi Yuzhu prepared 200 million US dollars, and spent 40 million on research and development, most of which were spent on salaries. The server investment was more than 10 million, enough for 300,000 people to be online at the same time, and branch offices were established in major provinces across the country.

"100 million U.S. dollars will be invested directly, and 100 million U.S. dollars will be used as a reserve." With sufficient financial resources, Shi Yuzhu has a different feeling about the online game market from others. "This industry is not as intense as others imagined. Rich people are very rich. Ding Lei's 3 billion in cash is there, but most companies develop a game, and it is very tight to take out two or three million. Can’t keep up”, Shi Yuzhu concluded, “The success rate of investment below 5 million is less than 10%, and there is no failure for investment of more than 20 million.” “Let’s say it openly, our goal is to learn from Ding Lei and Chen Tianqiao, Pay tribute to Ding Lei and Chen Tianqiao, and get closer to Ding Lei and Chen Tianqiao", "Journey" has just started, but Shi Yuzhu has already set the goal of learning. While Shi Yuzhu devoted himself to learning from the "predecessors" of Chinese Internet games, Chen Tianqiao encountered a dilemma. In terms of the grand strategy, Chen Tianqiao proposed a family digital entertainment strategy, but in the specific implementation of the strategy, Chen Tianqiao boldly planned a product that is in line with the logic of future development, but out of date - a product that connects TV and the Internet and gathers a lot of entertainment content. "The Grand Box".In 2005, when this product was developed, several games that brought Shanda the main income were also growing, but they were entering a period of decline. In the fourth quarter of 2005, Shanda lost nearly 500 million yuan. At the end of 2005, Chen Tianqiao adjusted his change strategy in a timely manner and adopted a gradual business model to cope with the ups and downs of the online game industry. At the moment when Chen Tianqiao felt the freezing point, Jun Zhu of Ninetowns felt the boiling point. In 2005, after The9 introduced "World of Warcraft" at a price of 3 million US dollars, almost all online game fans in China began to be fascinated by this game.In today's increasingly fierce online game competition, Warcraft earns more than 1.4 million RMB per day from point cards.In addition, stand-alone games such as "Iron Armor Storm", "Three Kingdoms", and "Qin Shang" developed by Ninetowns enjoy a high reputation in the European and American markets; the online game "Tianjiao" is running smoothly; Ranked at the forefront of the online game expectation list. Ding Lei is in a similar situation to Zhu Jun. On November 8, 2005, Netease released its financial report for the third quarter of 2005: the total revenue for the quarter reached 46.3 billion yuan (US$57.2 million), an increase of 110% over the previous quarter and an increase of 826% over the same period in 2004.From the financial report, NetEase's online game service revenue in the third quarter of 2005 reached 37.3 billion yuan (46.1 million US dollars), accounting for 80% of the company's total revenue, continuing the absolute advantage in the second quarter. "This is just a start, it just increases our understanding of the content of the game." Netease COO Dong Ruibao said.Dong Ruibao feels that NetEase's wireless business is not its strong point.The reason is that "the threshold for such products is relatively low, and NetEase's technical advantages are not yet manifested." However, "if we use 3G, we can also have our own advantages." Therefore, "for the time being, games account for a year or two. The proportion is still relatively high."At the same time, what made Ding even more proud to say "big words" was that Dell, the world's number one PC manufacturer, announced its cooperation with NetEase to jointly promote the online games "Westward Journey Online II" and "Fantasy Westward Journey Online". However, Ding Lei still intends to dig deeper vertically. In 2005, he launched a casual "bubble game", including 10 chess and card, racing and sports games, covering high, middle and low-end players, and launched 10 new games every six months. The speed to occupy the market.If calculated by MMORPG (multiplayer network role-playing game), Netease's market share exceeds 30%. When NetEase went further and further on the road of independent research and development, Tencent also gained a lot. In 2005, Tencent invested more than 30 million yuan and took more than two years to independently develop the first large-scale online game "QQ Fantasy", which was finally unveiled to the public. "QQ Fantasy" is the first large-scale online game independently developed by Tencent. As for how to choose between "research and development" and "agent", Ma Huateng chose the strategy of "two-pronged approach, focusing on research and development".In Ma Huateng's view, agents are rare, and there are great uncertainties. It may also be inspired by the lawsuits between Shanda and Korean companies. Ma Huateng seems to have concerns about the risks brought by agents. He said, "Agents are easily affected by the external environment. For companies that want long-term development, it is very dangerous to place all bets on it, so we still tend to bury our heads in independent research and development." Completion is guaranteed.In Ma Huateng's view, when Tencent makes any investment, it hopes to achieve two effects: one is to make a good product, and the other is to cultivate a team to lay a solid foundation for future independent research and development. In October 2005, Tencent, while striking while the iron was hot, acquired 19.9% ​​of the shares of Shenzhen Wangyu Technology Co., Ltd., which is good at R&D and operation of large-scale games. Provide technical support and daily maintenance for "China Game Center", and also operate the multi-angle online game "Huaxia Online".Ma Huateng declared: "We hope to better combine investment and acquisition technologies, products and platforms. This is not only beneficial to specific products, but also a great boost to the company." The online game platform ranks third, and in the past few years relying on its own strength to operate online games very well, it is complementary to Tencent, which has insufficient experience in game development and operation.