CDC Games will be the company's largest external shareholder and John Lee, president of CDC Games Corporation, will serve as a board observer of MGame.
Through this equity investment, CDC Games has changed from a licensee to MGame's largest external investor and has obtained exclusive distribution rights for MGame's next Massive Multiplayer Online Role Playing Game (MMORPG) WFFM (Wind Forest Fire Mountain) in China. WFFM is ranked as one of the top 10 most anticipated games in China, with many of the core designers of WFFM from the original Yulgang project. In addition to acquiring exclusive distribution rights for WFFM in China, CDC Games has extended the license of Yulgang to 2010.
As the "first free to play, pay for merchandise" game in China, Yulgang is still growing healthily and steadily 20 months after its commercial launch. Registered users of the game have increased to 46.5 million as of the end of February 2007. The increased users also represent a continuing development of a centralized online gaming platform for CDC Games, which is intended to allow users to enjoy the company's online game portfolio under a single login account, using a common virtual currency for all games. This platform will greatly enhance the flexibility for users to select online games according to their own preference and help build long-term brand loyalty with CDC Games.
Founded in 1996, MGame is a frontrunner in the online game industry in Korea. It launched its first online game in 1997 and subsequently launched one of the first MMORPG games in Korea. The company provides a wide variety of games ranging from Web Board Games (Go, JangGi, GoStop, etc), Casual Games (Worms, Bomberman), Action Games (Sticks), Musical Games (O2Jam), to MMORPGs (Yulgang, Hero, Knight and Ares). Over 50 different games are in service on the company's portal site with 19 million registered members. MGame has 5 internal game developing studios and has over 750 employees in Korea and has offices in China, U.S. and Japan, and hiring over 100 employees for a global game service. Currently MGame has 4 new games in development including Holic, WFFM, Pop Strikers and Crash Battle. The company has also exported successful titles, such as Yulgang, to over 20 countries worldwide. MGame was the recipient of the President award at the Korea Games Conference in 2005.
"This investment underscores CDC Games' continuing evolution into a leading global developer of online games," said Mr. Fred Wang, chairman of CDC Games. "As we expand from a licensing partnership into a co-owner of the intellectual property, we will gain increasing ability to co-develop and distribute games that are culturally aware, entertaining and educational to the millions of online game users in China."
"We are pleased to deepen our long-term strategic partnership with MGame," said John Lee, president of CDC Games. "Yulgang continues to demonstrate its value as a lasting blockbuster. We are confident that its growing user base will not only increase our revenue stream but will also benefit our growing pipeline of jointly owned online games. We plan to leverage our centralized online game platform to achieve greater exposure for our new games at lower marketing cost. We believe our new games will achieve remarkable milestones in our drive to become a leading global developer of online games."
"This is an exciting time in our history when China's entertainment and gaming sector has begun to blossom, and CDC Games has played an important role in helping MGame expand successfully to China." said Mr. Seung-Chul Son, chairman of MGame Corp. "We are pleased to deepen our partnership with CDC Games, a leader with superior expertise and vast resources. We are confident that with this strategic investment, both CDC Games and MGame will achieve greater success in expanding our market share in China as well as other future markets."
This is CDC Games' latest investment as part of its previously announced establishment of CDC Games Studio, a wholly owned subsidiary of CDC Games that will have up to $100 million in investment funding. CDC Games Studio invests in strategic games development partners to accelerate the development of new and original online games initially for the China market. CDC Games Studio also supports emerging game developers which may already have operations in China or are seeking to relocate or expand into China and provides to them the resources they need to rapidly develop innovative products for distribution in China and targeted global regions.
This investment in MGame is the latest in a series of steps taken by CDC Games to strengthen CDC's pipeline of jointly owned games to deepen its games portfolio, strengthen its move into games development and expand its distribution channels and geographic reach on a global scale. Recently, CDC Games announced an investment in Auran, a leading developer of online games in Australia; and a joint venture with Abandon Mobile to distribute Freaky Creatures, the first mobile community-based game of its kind to combine user created content, strategy, simulation and popular trading card game elements, with true cross-platform gaming connectivity between mobile handsets and personal computers. CDC Games also recently announced its investment in Possibility Space, a developer of free-to-play online games. In late 2006, CDC Games announced its investment in Gorilla Banana, an online games developer from Korea - CDC.
