A raft of A-share companies has made ambitious moves to acquire mobile gaming companies in the burgeoning nascent market. Investors saw opportunities in the industry which boasted 286 million subscribers (source in Chinese) as of the end of 2012, boosting the performance of shares related to the sector.
Ourpalm (SZ:300315) announced recently that it would acquire a 100 percent stake in Dovo Technology Inc., a game developer, with 810 million yuan (source in Chinese). Dovo Technology generated 57.08 million yuan of net profit in 2012. Ourpalm is seeking for another acquisition target to expand its gaming empire.
Zhejiang Daily Media Group (SH:600633) acquired two gaming subsidiaries under Shanda Group; Datang Telecom (SH:600198) merged Yaowan.com; B-Ray Media (SH:600880) acquired Gamegoo Information Technology and Huayi Brothers (SZ:300027) merged Yinhan Technology.
Moreover, a spate of mobile game shares surged recently. Ourpalm shares soared 275.77 percent on aggregate year-to-date, recording historical records continuously. Zhongqingbao Interaction Network (SZ:300052), an operator of MOM and browser games, soared 211.30 percent in the first half of this year.
The heat even expanded to shares that are remotely related to the mobile game concept, such as Bewinner Communications (SZ:002148), Talkweb Info (SZ:002261), B-Ray Media (SH:600880) and Telling Telecom (SZ:000829).
Although mobile Internet has attracted large amounts of capital injection from both private equity and venture capital, there is still no reliable commercialization mode for the industry to guarantee sustainable profits. The commercialization prospects are blurry even for services with large audiences, such as Weibo, WeChat, Momo and Changba.
Mobile game is seen as one of the first profitable services on smartphones. And there are successful cases. Beijing Chukong Technology’s ISO version of Happy Fisher recorded monthly revenue of 30 million yuan in February this year, according CEO of the company Chen Haozhi. WWII, a mobile game developed by Wistone raked in around 270 million yuan since its release in the latter half of 2009, disclosed Wu Gang, CEO of the firm.
Industry practitioners hold a common view that it is difficult for a single game to achieve success. Around two dozens of games will take 60 percent to 70 percent of the market, while the rest millions of them will sink into oblivion.