Give a guess, who's the winner?

And let me show you some interesting figures.

Do you remember my words in my last blog? Well, Shanda just released its Q4 and 2007 earning report. Let's have a look at the highlights:

Q4 Earning Results:
Net Revuenue - US$97.8 million, up 51.8% YoY, up 8.8% QoQ
MMORPG Revenue - US$82.6million, up 59.4% YoY, up 9.3% QoQ
Casual Game Revenue - US$11.7million, up 19.0% YoY, up4.4%
Net income - US$40.1 million, up 21.8% YoY, 22.5 QoQ

Full Year 2007 Earning Results:
Net revenues - US$337.8 million, up 49.1% from 2006.
Game revenue - US$324.6 million, up 53.6% from 2006.
Net income - US$191.1 million, up 163.8% from 2006
Earnings per diluted ADS were RMB19.08 (US$2.62), compared with RMB7.32 per diluted ADS in 2006

And here's a company list sorted with net income:

Shanda - US$ 191.1M
NetEase - US$ 173.29M (include AD and WVAS and etc)
Giant - US$ 155.7M
Perfect World - US$ 49.6M
The9 - US4 33.0M

Impressive, isn't it?

Now let me show you something else. The first one is a list of research & develpment cost.

R&D Cost:
NetEase - US$ 24.7M (include AD and WVAS and etc)
Shanda - US$ 22.4M
Perfect World - US$ 7.4M
The9 - US$ 5.6M
Giant - US$ 3.6M


Then, let's have a look at this list of sales and marketing cost in 2007.

Sales and Marketing Cost
NetEase - US$ 32.2M (include AD and WVAS and etc)
Giant - US$ 25.9M
Shanda - US$ 24.6M
Perfect World - US$ 17.8M
The9 - US$ 14.1M



Can you see the reason why Shanda is the winner of 2007? Having the 3rd or 2nd biggest expense on marketing, and the 2nd or 1st biggest expense on R&D (we don't have accurate figures of NetEase's gaming business cost yet), Shanda obviously reached an excellent balance between marketing/sales and development.

However, Giant achieved a rocket growth by paying huge markeing/sales expense. As we said, Giant's incredible network in 2nd and 3rd tier cities could help it to reach gamers who have been waiting for entertainment. Yes, the smart spreaders from Giant made it.

2008 is crowded. So many gaming companies are digging the gold mine in lower-tier cities as deep as they can. Listed companies have dominating advantage to unlisted competitors. We estimate more small gaming companies disappear or be merged in the first half of 2008, while listed ones showing investors more splendid results.

Again, let's wait and see.