Perfect World has performed well. From its results, it seems that online gaming industry is doing good business in China. After that, it was time for Giant Interactive Group (GA, Financial) to follow in its footsteps in the first quarter. Let us have a closer look at Giant Interactive as to how the company is performing.
A solid performance
Giant’s revenue for the quarter rose 26% to $81 million from the year ago period. The growth was mainly on account of the success that the company had in its ZT Online 2 franchise, which became a blockbuster. But one thing to note is that Giant had not launched any new game in the quarter, and neither did it give any outlook on its expansion packs. Moreover, it didn’t undertake any marketing campaign. In spite of these factors, the company managed to perform well.
Albeit the company has not undertaken any major initiative, yet its active paying accounts leapt 23% from last year and now stand at around 2.2 million. Also, its average revenue per user grew 5.6% from a year ago period. Again, the main reason cited behind these improvements is ZT Online 2's outstanding performance. As the players crossed stage after stage and spent more on transactions within the game, the company’s top line increased considerably.
And it is expected that Giant will maintain this growth momentum in the ongoing quarter. It had released the first expansion pack for ZT Online 2 in April, which saw a record 541,000 peak in its users. The company is focusing on its franchisees and is launching various marketing initiatives to promote awareness among users that will get more players on board. It seems that Giant is doing its best to turn this game into its revenue driver.
Diversification moves
But building a team around just one player isn’t a great idea, which management has already considered, and in accordance with that, it has a few projects in its pipeline. Currently, the company is working on six games, including two casual games, which will be published on social networking sites. It has also launched a massively multiplayer online role playing game known as World of Xianxia, which is a 3D Chinese fantasy game.
China is considered to be the biggest online gaming market in the world, which doesn't come as a surprise considering its massive population on the internet. According to a research, it is estimated that the online gaming industry in China might be worth as much as $13 billion in the next two years from around $9 billion this year. This is a huge potential for online gaming companies like Perfect World and Giant Interactive and it looks that it is all set to tap this and turn it into its growth driver.
Conclusion
However, we must not forget that the success of these companies depends on one key factor, the success of the games. It’s ultimately the success of the games that is reflected on the company’s stock prices. Giant has already delivered around 33% return to its investors. With a decent legacy of games behind it and aspirations to build upon its accomplishments, Giant Interactive can continue to deliver value to its investors as it has done so far this year.
