idreamsky

iDreamSky Technology, a Chinese 3rd-party mobile game publishing platform, filed with the U.S. Securities and Exchange Commission for a Nasdaq IPO to raise up to US$115 million of funding.

As a game publisher, iDreamSky distributes third-party games that published and operated on its platform through both proprietary distribution channels and third-party channels, such as app stores and device pre-installations. The company’s proprietary distribution channels include in-game cross promotions, its self-operated iDreamSky Game Center and gaming community Uu.cc. In addition, the company also offers live game services and gain user insights through multi-dimensional data analysis engine to drive ongoing game optimization and monetization.

The company is known for collaborating with top-tier international mobile game developers localize to culturalize their editions of hit games for the China market. In order to achieve this goal, iDreamSky will replace some names or sayings in the original game with what Chinese users are familiar with or change the in-app charging patterns (like pricing and charging points) to adapt to the payment habits of Chinese player base. It has helped several popular titles to enter China, including Fruit Ninja, the Temple Run series and Subway Surfers. Jeff Lyndon, co-founder of iDreamSky, once shared with us his insights on operating imported online games in China at TechCrunch Shanghai.

According to the prospectus, iDreamSky recorded 98.3 million of average monthly active users, or MAUs, as of the first quarter of 2014. Its total revenues increased from RMB19.4 million in 2012 to RMB246.6 million (US$40.7 million) in 2013, and from RMB22.1 million in the three months ended March 31, 2013 to RMB174.1 million in the three months ended March 31.

Game revenues constituted the bulk of the company’s total revenues, accounting for 99.9%  of total revenues in the three months ended March 31, 2014. Based on a freemium model, the game revenues are primarily derived from sales of in-game virtual items, including items, avatars, skills, privileges or other in-game consumables, features or functionality.

The proceeds will be invested in acquisitions of game licenses and other intellectual properties rights related to mobile games, as well as mergers and acquisitions, the prospectus noted.

Co-founded by a trio team in Shenzhen in 2009, the company now has hundreds of employees scattered in the U.S., Hong Kong, Beijing, Chengdu, Nanjing, etc. It has received US$10 million of financing on aggregate from Redpoint Ventures and Legend Capital in 2012. THL A19 Limited, a company controlled by Tencent, is the largest shareholder of iDreamkSky with a 26.6% stake.

Several Chinese game companies initiated their IPO plans in the past one-year period driven by mobile game heat and the IPO wave of Chinese enterprises. Webgame developer Forgame get listed on Hong Kong stock market for HK$ 900 million last year, while veteran Chinese causal game developer OURGAME also filed for a Hong Kong IPO recently.

It is worth noting that iDreamSky is the only Chinese game company that choose the U.S. stock market in the one-year period. Although another Chinese mobile gaming company Chukong has filed for an U.S. IPO in April, the company then decided to postpone it due to low valuation.