Shanda Interactive Entertainment Ltd. ADRSNDA

Morningstar Rating

Stock Research and Analysis

by Iris Tan

As a front-runner in China's online game industry, Shanda enjoyed huge success in the past with its creative business models and strategies. Now the company is transforming from an online gaming firm to an integrated entertainment platform. Though we Read more

Bulls Say

Through the consolidation of Korean software developer Actoz, joint investment in NCsoft China, and profit-sharing deals with several Chinese early stage game developers, Shanda has strengthened its game development capacity.

Shanda has integrated the three leading Chinese online literature platforms in China. The new platform is well-positioned to capture business opportunities in the emerging market, and its user-generated storylines should provide additional sources of content for Shanda's games.

Although Shanda boasts the largest active paying gamer bases in China, its active paying accounts account for only 19% of total gamers and the average revenue per player is much lower than that of Giant GA, which suggests Shanda should have substantial room to grow.

Shanda has the ability to spot trends and respond quickly to challenges. For example, it enjoyed first-mover advantages by launching licensed games and revamping its revenue model in China.

To recruit and retain the best talent in the Chinese gaming industry, Shanda offers the most competitive compensation package to its employees. This should help ensure top-quality game offerings and user experiences, and further improve the firm's competitive position. Read more

Bears Say

Shanda's network PC games platform Haofang will face significant challenges when NetEase licenses Blizzard's Battle.net, the online gaming service platform to facilitate the online play of its PC games.

Some Chinese gamers have started to complain about the free-to-play business model, which they say forced them to pay more and more for virtual, in-game items instead of earning the items through skillful play, destroying the balance of online games.

The hit-or-miss nature of the online game business and increasing competition led to a market that's more fragmented among companies, types of products, and demographic attributes.

Government regulations could hurt the Chinese online game industry. New policies in 2008 included the restriction on trading of virtual currency, plan of pre-installment of Green Dam Web Filter Software, and tighter censorship on imported games. Read more

Strategy

With the company's 3C (content, community, and commerce) strategy, Shanda is striving to convert its separate online games into an integrated entertainment platform to boost its platform stickiness and Read more

Management

Co-founder, chairman, and CEO Tianqiao Chen; his brother, co-founder Danian Chen; and his wife, Qianqian Luo, own 47% of Shanda. In 2008, the company paid aggregate cash compensation of approximately $1.9 million, or about 0.1% of its net income, to Read more

Profile

Shanda is an interactive entertainment company in China, offering diversified content through its platform including online games, literature, music and other services. Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Daily Dividend Reports: PEP, ADP, L, AVP, PKY
Watch more