The9 Limited Engages in Major Joint Venture for Mobile Game Expansion
The9 Limited, a well-known Internet company listed on Nasdaq under the ticker symbol NCTY, has recently announced a significant development. The company’s wholly-owned subsidiary, Shanghai The9 Information Technology Co., Ltd., is moving forward with a joint venture agreement with Shanghai ZhongShun HengXin Network Technology Co., Ltd. The commitment involves an acquisition of 51% equity in ZhongShun's subsidiary, Shanghai ZhongXinShun Network Technology Co., Ltd.
Highlights of the Joint Venture
This joint venture is exciting as it will leverage two proprietary mobile games that ZhongShun has developed. The first title, Glory All Stars, is a successful action role-playing game (RPG) with impressive figures. Since its launch, it has amassed more than RMB2 billion in gross revenue. This title boasts a stable gross margin of approximately 40%, reflecting its popularity and financial viability.
The second title is Ultraman: Hero Beyond Time, which is created around the iconic Ultraman character. This game is designed to appeal to a broad audience, providing upgraded mechanics and drawing on the massive fan base of the Ultraman IP. The9 aims for Ultraman: Hero Beyond Time to outperform the established benchmarks set by Glory All Stars.
Financial Aspects of the Joint Venture
The structure of the joint venture ensures that all after-tax profits will be shared equally among the partners. They plan to distribute these profits quarterly as dividends based on the equity held. The consideration for acquiring the 51% equity includes RMB69 million (about US$9.7 million) in cash, complemented by The9's issuance of restricted shares valued at RMB46 million (approximately US$6.5 million). These payments will be contingent on the success of the joint venture over the next three years, which aligns with ZhongShun’s commitments to deliver on profitability.
Management's Views on the Collaboration
In expressing enthusiasm about this new partnership, Yu Su, the CEO of ZhongShun, indicated that they are thrilled about joining forces with The9. The impressive earnings of Glory All Stars establish a strong foundation for future success. Yu highlighted how they expect Ultraman: Hero Beyond Time to achieve significant performance, aiming to exceed Glory All Stars within three years post-launch. Moreover, they have reported over 2.5 million registered users during the closed beta testing phase, showcasing a strong initial interest.
Future Prospects of the Joint Venture
Looking beyond these two exciting titles, the joint venture is actively preparing a lineup of additional proprietary games, signaling the intent to develop a rich ecosystem of franchises. With The9’s established publishing prowess combined with ZhongShun’s expert development capabilities, both companies are optimistic about delivering further blockbuster games. This collaboration is seen not only as a business venture but also as a strategic partnership aimed at creating long-term value for shareholders.
Commitment to Innovation
The9 Limited continues to be committed to innovation within the gaming industry and aims to establish itself as a leader in the sector. The focus on developing high-quality gaming experiences is evident in their approach to creating engaging and appealing content that resonates with players around the world. This joint venture with ZhongShun is a crucial step in realizing their vision of becoming a diversely integrated internet company that excels in online gaming.
Frequently Asked Questions
What is the focus of the joint venture between The9 and ZhongShun?
The joint venture primarily focuses on operating two mobile games: Glory All Stars and Ultraman: Hero Beyond Time, with plans to develop additional games.
How will profits be shared in the joint venture?
All after-tax profits from the joint venture will be distributed quarterly as dividends according to the equity ratio held by the partners.
What is The9 Limited known for?
The9 Limited is recognized as an Internet company, engaged in online game operations along with new ventures in cryptocurrency mining.
What are the expected benefits of Ultraman: Hero Beyond Time?
With its strong IP foundation, Ultraman: Hero Beyond Time is expected to potentially outperform its predecessor, Glory All Stars, in terms of user engagement and revenue.
How has The9 Limited performed financially with its games?
Glory All Stars has shown significant success, generating over RMB2 billion in gross revenue while maintaining a substantial gross margin, reflecting strong market performance.
